Kandi Rajender Reddy, Warangal V. Income Tax Officer, Ward-5, Warangal

ITA 661/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0635 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 10-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: P VINOD
• Keywords: Agreed addition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.661/HYD/2018 ASSESSMENT YEAR: 2013 - 14 KANDI RAJENDER REDDY, WARANGAL. PAN: AYUPK 1278 Q VS. ITO, WARD - 5, WARANGAL. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P. VINOD REVENUE BY: SHRI KIRAN KATTA DATE OF HEARING: 06.09.2018 DATE OF PRONOUNCEMENT: 12 .09.2018 ORDER PER SMT. P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE A.Y. 2013 - 14 FILED AGAINST THE ORDER OF CIT (A) - 3, HYDERABAD DATED 30.01.2018. ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(A) CONFIRMING THE ORDER OF THE A.O. IS ERRONEOUS BOTH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LD. CIT(A) THOUGH REFERRED TO THE DECISION OF THE HIGH COURT OF A.P., AND ALSO TO THAT OF THE BOMBAY HIGH COURT WITH REGARD TO JUDICIAL DISCIPLINE, FAILED TO APPRECIA TE FUNDAMENTAL THAT A DECISION OF A LARGER BENCH PREVAILS AND THUS ERRED IN NOT FOLLOWING THE DECISION OF A DIVISION BENCH OF ITAT ADOPTING 3% AND CONFIRMING THE ESTIMATION OF 5%. 3. THE LD. CIT(A) FURTHER FAILED TO FOLLOW THE RATIO LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS THAT WHERE TWO VIEWS ARE POSSIBLE THE ONE FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED AND THUS ERRED IN FOLLOWING THE DECISION THAT IS AGAINST THE ASSESSEE THOUGH THE FACTS THEREIN ARE NOT COMPARED. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS IN THE BUSINESS OF RUNNING A WINE SHOP UNDER THE NAME KANDI WINES. HE FILED THE RETURN OF INCOME FOR THE A.Y. 2013 - 14 DECLARING AN INCOME OF RS. 10,82,740/ - AND AGRICULTURAL INCOME OF R S. 8,62,945/ - ON 18.09.2013. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSEE WAS ASKED TO FURNISH THE BOOKS OF ACCOUNT AND BILLS / VOUCHERS IN SUPPORT OF THE SALES RECORDED AND THE VOUCHERS FOR THE EXPENDITURE. IN RESPONSE TO THE SA ME, THE ASSESSEE SUBMITTED THAT MAINTAINING OF SALE BILLS IS NOT POSSIBLE IN HIS LINE OF BUSINESS AND EXPRESSED HIS INABILITY TO PRODUCE THE SALE BILLS AND VOUCHERS. THEREFORE, THE A.O. OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT AN D THEREFORE INCOME HAS TO BE ESTIMATED. ACCORDINGLY, HE ESTIMATED THE INCOME AT 5% OF THE PURCHASES WHICH WORK ED OUT TO RS. 21,99,464/ - AND BROUGHT IT TO TAX. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT ITAT IN SIMILAR CASES HAS HELD THAT THERE IS BOUND TO BE SOME AMOUNT OF GUESS WORK ON THE PART OF THE A.O. IN THE ABSENCE OF COMPLETE DETAILS ON ACCOUNT OF REJECTION OF B OOKS OF ACCOUNT AND NON - FURNISHING OF GOOD AND SUFFICIENT REASONS AND ALSO HELD THAT UNLESS THE ORDER OF THE A.O. IS ARBITRARY OR ILLOGICAL, THE APPELLATE AUTHORITY SHOULD AVOID SUBSTITUTION OF THEIR OPINION TO THAT OF THE A.O. THUS, HE CONFIRMED THE ORDE R OF THE A.O. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US SEEKING FOR ESTIMATION OF INCOME AT 3% OF COST OF THE GOODS PUT TO SALE. 4. LEARNED COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE CIT(A), ALSO PLACED RELIANCE UPON THE FOLLOWING DECISIONS , WHEREIN THE COORDINATE BENCH ES OF THIS TRIBUNAL 3 HAS ESTIMATED THE INCOME FROM WINE SHOPS AT 3% OF THE COST OF GOODS PUT TO SALE. 1) SRI VENKATESWARA WINES VS. ITO (ITA NO.1206/HYD/2015, DT: 27.11.2015); 2) SECUNDERABAD WINES VS. ITO ( ITA NO.181/HYD/2016, DT: 20.07.2016) 3) LATE SHRI MUSHKAM SUDERSHAN GOUD VS. ITO (ITA NO.94/HYD/2017, DT: 28.04.2017 4) VARSA BHADRAIAH VS. ITO (ITA NO.23/HYD/2018, DT: 27.07.2018). 5. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT EVEN BEFORE THE A.O., THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HIMSELF PLEADED FOR ESTIMATION OF INCOME @ 5% OF THE PURCHASE S P UT TO SALE AND THEREFORE, IT IS AN AGREED ADDITION AND SHOULD NOT BE INTERFERED WITH. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND ON PERUSAL OF THE MATERIAL ON RECORD, WE FIND THAT THE TRIBUNAL IN VARIOUS CASES OF WINE SHOPS HAS BEEN ESTIMATING THE INCOME AT 5% TO 3% OF THE COST OF GOODS PUT TO SALE. IN THE CASE BEFORE US, WE FIND THAT THE ASSESSEE HIMSELF HAS REQUESTED THE A.O. TO ESTIMATE THE INCOME AT 5% AND BEFORE THE CIT(A) PLEADED FOR ESTIMATION OF INCOME AT 3%. BEFORE THE CIT(A), T HE ASSESSEE HAS GIVEN DETAILED SUBMISSIONS AS TO WHY THE INCOME SHOULD BE ESTIMATE D AT 3%. SINCE IN SIMILAR CASES (SUPRA) THE ITAT HAS ESTIMATED THE INCOME FROM WINE SHOPS AT 3%, RESPECTFULLY FOLLOWING THE SAME, WE RESTRICT THE ESTIMATION TO 3 % OF THE COST OF THE GOODS PUT TO SALE. THE APPEAL IS ACCORDINGLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 12 TH SEPTEMBER, 2018 OKK 4 COPY TO: - 1) KANDI RAJENDER REDDY, C/O. K. VASANTKUMAR , A.V. RAGHURAM & P. VINOD, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD - 1. 2) INCOME TAX OFFICER, WARD - 5, STATION ROAD, WARANGAL. 3) THE CIT(A) - 3 , HYDERABAD 4) THE PR. CIT - 3 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE