Gudipelli Raji Reddy, Warangal V. Income Tax Officer, Ward-1, Warangal

ITA 662/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0643 (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: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 10-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: P VINOD
• Keywords: Business income
• 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.662/HYD/2018 ASSESSMENT YEAR: 2013 - 14 GUDIPELLI RAJI REDDY, WARANGAL. PAN: AJXPR 4826 P VS. INCOME TAX OFFICER, WARD - 1, WARANGAL. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. VINOD REVENUE BY: SRI KIRAN KATTA, DR 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 31.01.2018. ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(A) CONFIRMING THE ORDER OF THE A.O. IS E RRONEOUS 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 APPRECIATE 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 ESTIMA TION OF 5%. 3. THE LD. CIT(A) FURTHER FAILED TO FOLLOW THE RATIO LAID DOWN BY THE HONBLE 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 TH E 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 LIQUOR. HE FILED THE RETURN OF INCOME FOR THE A.Y. 2013 - 14 DECLARING AN INCOME OF RS. 12,80,980/ - ON 29.09.2013. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSEE WAS ASKED TO PRODUCE P & L ACCOUNT, BALANCE SHEET AND AUDITORS REPORT ALONG WITH BILLS AND VOUCHERS IN SUPPORT OF THE EXPENDITURE CLAIMED IN P & L ACCOU NT. IN RESPONSE ASSESSEE SUBMITTED THE RELEVANT DETAILS AND ON VERIFICATION OF THE SAME, A.O. FOUND THAT CERTAIN VOUCHERS PERTAIN ING TO EXPENDITURE ARE SELF - MADE IN NATURE . HE FURTHER OBSERVED THAT THE SALES ARE ENTIRELY IN CASH AND THE ASSESSEE IS UNABLE T O PRODUCE THE SALE BOOK. TAKING INTO ACCOUNT THE DEFICIENCIES ON THE PART OF THE ASSESSEE, A.O. REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME AT 5% ON PURCHASES WHICH WORKS OUT TO RS. 23,39,566/ - AND BROUGHT IT TAX UNDER THE HEAD BUSINESS INCOME. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE DISMISSING THE APPEAL, CIT(A) OBSERVED THAT THE 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 O F COMPLETE DETAILS ON ACCOUNT OF REJECTION OF BOOKS 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 T O THAT OF THE A.O. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US PLEADING FOR ESTIMATION OF INCOME AT 3% OF COST OF THE GOODS PUT TO SALE. 4. LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE FOLLOWING DECISIONS WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL HAS ESTIMATED THE INCOME FROM WINES AT 3% OF THE COST OF GOODS PUT TO SALE. 3 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, SUPPORTS THE ORDERS OF THE AUTHORITIES BELOW . 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 (CITED SUPRA) HAS BEEN ESTIMATING THE INCOME AT 5% TO 3% OF THE COST OF GOODS PUT TO SALE. AFTER TAKING INTO CONSIDER ATION SIMILAR CIRCUMSTANCES OF THE PRESENT CASE WITH THAT OF THE CASES DECIDED BY THE TRIBUNAL, WE DIRECT THE A.O. TO RESTRICT THE ESTIMATION TO 3 % OF THE COST OF THE GOODS SOLD AS THE INCOME OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSE E ARE TREATED AS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2018. S D/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 12 TH SEPTEMBER, 2018 OKK 4 COPY TO: - 1) GUDIPELLI RAJI 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