ITO, Ward-14(5), Hyd, Hyderabad V. Banda Mallesh, Hyd, Hyderabad

ITA 761/HYD/2015

• Counselvise Citation: 76122514 RSA 2015
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Section: 148

Judgement Text

ITA NO.761 OF 2015 BANDA MALLESH HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ABENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.761/HYD/2015 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER WARD 14(5) HYDERABAD V S. SHRI BANDA MALLESH HYDERABAD PAN: ANQPM 6104 Q (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI S.K. GUPTA, DR FOR ASSESSEE : NONE DATE OF HEARING : 0 7 .09 .2015 DATE OF PRONOUNCEMENT : 18 .09. 2015 O R D E R PER SMT.P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2008-09. IN T HIS APPEAL, THE REVENUES GRIEVENCE IS THAT THE CIT (A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE ON ESTIMATION OF THE INCOME AT A CERTAIN PERCENTAGE OF TURNOVER WITHOUT APPRECIATING THAT THE ACTUAL ISSUE INVOLVED IS DETERMINATION OF SUPPRESS ION OF THE SALE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, WHO IS IN THE BUSINESS OF PURCHASE AND SALE OF LIQU OR, FILED HIS RETURN OF INCOME FOR THE RELEVANT A.Y 2008-09 ON 1. 4.2009 DECLARING INCOME OF RS.5,75,280 WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, AO OBSERVED THAT AS PER T HE GOVT. OF A.P, REVENUE (EXCISE-II) DEPTT. ORDER IN GOMS NO.18 4 DATED ITA NO.761 OF 2015 BANDA MALLESH HYDERABAD PAGE 2 OF 5 7.02.2005, THE RETAILERS MARGIN I.E THE GROSS PROFI T IS 27% ON SALE OF ORDINARY LIQUOR PRODUCTS, 20% ON SALE OF MEDIUM AND PREMIUM BRANDED INDIAN LIQUOR AND 25% ON SALE OF BE ERS AND BASED ON THIS G.O, THE SALES SHOULD BE AT A MARGIN OF 24% OF COST OF GOODS SOLD. THEREFORE, AO WAS OF THE OPINION THA T THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT. HE, THEREFORE, ISSUED NOTICE U/S 148 OF THE ACT AND REO PENED THE ASSESSMENT. DURING THE ASSESSMENT PROCEEDINGS U/S 1 43(3) R.W.S. 147 OF THE I.T. ACT, THE AO REQUIRED THE ASS ESSEE TO PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS F OR THE EXPENSES DEBITED TO THE P&L A/C. HOWEVER, THE ASSES SEE FAILED TO FURNISH THE NECESSARY DETAILS BUT FILED A REPLY STA TING THAT THE BOOKS OF ACCOUNTS WERE LOST AND HENCE COULD NOT BE PRODUCED FOR VERIFICATION. AO, THEREFORE, ISSUED A SHOW CAUSE NO TICE REQUIRING THE ASSESSEE TO EXPLAIN AS TO WHY SALES AMOUNT SHOU LD NOT BE TAKEN AT RS.5,07,24,503 BEING IS 124% OF THE PURCHA SES OR COST OF GOODS SOLD AND WHY AN ESTIMATION OF 5% ON THE SA LES OF RS.5,07,24,503 COULD NOT BE TAKEN FOR COMPUTING THE TAX. IN REPLY TO THE ABOVE SHOW CAUSE NOTICE, ASSESSEE SUB MITTED THAT HIS BUSINESS PREMISES IS LOCATED IN A SLUM/INSIDE T HE ROAD AND HENCE ASSESSEE COULD ONLY SELL THE PRODUCTS AT LOW MARGIN RANGING FROM 1 TO 2% WITH THE INTENTION TO CLOSE TH E BUSINESS DUE TO LOCAL DISTURBANCES. IT WAS FURTHER REQUESTED THAT THE PROFITS MAY BE ESTIMATED AT 2% OF THE TURNOVER AS T HE BOOKS OF ACCOUNTS ARE NOT AVAILABLE. AO, HOWEVER, WAS NOT SA TISFIED WITH THE ASSESSEES CONTENTION AND HELD THAT THE ASSESSE E HAS NOT MADE ANY OBJECTION FOR CONSIDERING THE SALES AT RS. 5,07,24,503 BUT HAS RAISED OBJECTION FOR ESTIMATING THE PROFIT AT 5% ONLY, AS THE SHOP IS ALLEGEDLY LOCATED IN A SLUM AREA. HE HE LD THAT THE ITA NO.761 OF 2015 BANDA MALLESH HYDERABAD PAGE 3 OF 5 ASSESSEE IS NOT CORRECT IN STATING THAT THE SHOP IS LOCATED IN A SLUM AREA, AS THE SHOP WAS LOCATED IN ROAD NO.12, B ANJARA HILLS, HYDERABAD WHICH IS A PRIME LOCALITY IN HYDERABAD. H E OBSERVED THAT IN THE STATE OF ANDHRA PRADESH, THE LIQUOR SHO PS ARE ALLOTTED BY THE STATE GOVT. ON AUCTION BASIS AND ON PERUSAL OF THE PURCHASES MADE BY THE ASSESSEE DURING THE YEAR, IT IS SEEN THAT THE WINE SHOP IS RUNNING IN GOOD CONDITION AND MADE A TOTAL TURNOVER OF RS.4,75,90,534. HE THEREFORE, HELD THAT THE ASSESSEES EXPLANATION IS NOT ACCEPTABLE AND THERE APPEARS TO BE NO MITIGATING FACTORS TO DESERVE ANY CONSIDERATION TO TAKE A LENIENT VIEW. HE THEREFORE, ADOPTED THE FIGURE OF RS.5,07,2 4,503 AS THE TURNOVER OF THE ASSESSEE. FURTHER, HE BROUGHT THE DIFFERENCE IN THE TURNOVER ESTIMATED BY THE AO AND THE TURNOVER R EPORTED BY THE ASSESSEE (I.E.RS.5,07,24,503RS.4,75,90,534) = RS.31,33,969) TO TAX BY ADDING THE SAME TO THE INCOME RETURNED BY THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT(A), WHO ALLOWED THE SAME AND THE REVENUE IS IN APPEAL BEFORE US. WHILE THE LEARNED DR SUPPORTED THE ORDER S OF THE AO, NONE APPEARED ON BEHALF OF THE ASSESSEE. IT IS NOTI CED THAT THE NOTICE FOR HEARING TO THE ASSESSEE WAS DISPATCHED B Y THE REGISTRY OF ITAT, BUT NO ACKNOWLEDGEMENT IS YET RECEIVED. TH EREFORE, IT IS PRESUMED TO HAVE BEEN SERVED TO THE ASSESSEE. 3. ON CONSIDERATION OF THE FACTS ON RECORD, WE FIND THAT THE ASSESSEE HAS REQUESTED TO ESTIMATE HIS INCOME AT 1 OR 2% OF HIS TURNOVER, WHILE AO HAS ESTIMATED THE INCOME AT 24% OF THE COST OF GOODS SOLD. THE ASSESSEE HAD RAISED AN OBJECTION BEFORE THE CIT (A) STATING THAT THE AO HAS ERRED IN RESORTING TO ESTIMATION OF SALES AT 124% OF THE VALUE OF STOCK PUT TO SALE DUR ING THE YEAR ITA NO.761 OF 2015 BANDA MALLESH HYDERABAD PAGE 4 OF 5 AND MAKING THE ADDITION OF RS.31,33,969 ON THE BASI S OF SUCH ESTIMATED SALES AND IN ESTIMATING THE VALUE OF SALE S. DURING THE COURSE OF THE HEARING OF THE APPEAL, ASSESSEE SUBMI TTED THAT THE AOS ESTIMATION OF SALES AT 124% OF THE COST OF GOO DS IS ON THE HIGHER SIDE AND IS NOT PRACTICAL. IT WAS FURTHER SU BMITTED THAT, AS HELD BY THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. MEKALA BAL REDDY IN ITTA NO.28 & 29 OF 2013 , DATED 30.07.2013, THE REASONABLE PROFIT RATE TO BE ADOPTE D IS 5% OF THE GOODS PUT TO SALE. THE CIT (A) HAS CONSIDERED THIS SUBMISSION OF THE ASSESSEE TO HOLD THAT THE INCOME OF THE ASSESSE E IS TO BE ESTIMATED AT 5% OF RS.4,75,90,534 I.E. THE SALE RE PORTED BY THE ASSESSEE. WE FIND THAT THE AO HAS ESTIMATED THE SAL ES TO BE AT 124% OF THE COST OF GOODS SOLD AND THEREFORE, HAS A RRIVED AT A FIGURE OF RS. 5,07,24,503 AS THE TURNOVER OF THE AS SESSEE. THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. MEKALA BAL REDDY (SUPRA) IN A SIMILAR SET OF FACTS HAS HELD THAT THE INCOME OF THE ASSESSEE IS TO BE ESTIMATED AT 5% OF THE GOODS PUT TO SALE. THE ASSESSEE HAS REPORTED AN ACTUAL SA LE OF RS.4,75,90,534, WHEREAS THE FIGURE OF RS.5,07,24,50 3 IS THE ESTIMATED TURNOVER AT 124% OF THE COST OF GOODS SOL D. IN BOTH THE CASES, THE ISSUE IS OF ESTIMATION OF TURNOVER BY AD OPTING DIFFERENT RATES OF GROSS PROFIT. THE AO HAS NOT DETERMINED TH E SUPPRESSION OF SALES AS ALLEGED IN THE GROUND OF APPEAL OF THE REVENUE. IT IS THE CASE OF ACTUAL SALE PLUS GROSS PROFIT @ 5% THER EON VS. ESTIMATED SALE BY ADOPTING 24% G.P.ON COST OF GOODS SOLD. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT (A) WHEREIN HE HAS DIRECTED THE AO TO ESTIMATE THE PROF IT AT 5% OF THE SALES REPORTED BY THE ASSESSEE WHICH IS CONSONA NCE WITH THE DIRECTIONS OF THE HON'BLE HIGH COURT IN SIMILARLY PLACED ITA NO.761 OF 2015 BANDA MALLESH HYDERABAD PAGE 5 OF 5 ASSESSEES. IN VIEW OF THE SAME, WE DO NOT SEE ANY R EASON TO INTERFERE WITH THE ORDER OF THE CIT (A) AND THE REV ENUE APPEAL IS DISMISSED. 4. IN THE RESULT, REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICI AL MEMBER HYDERABAD, DATED 18 TH SEPTEMBER, 2015. VNODAN/SPS COPY TO: 1. INCOME TAX OFFICER WARD 14(5), 6 TH FLOOR, C BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 2. SHRI BANDA MALLESH, PROP: M/S. PEDDAMMA WINES, 8-2- 682/ 32/3 N.B. NAGAR, ROAD NO.12, BANJARA HILLS, HYDERAB AD 3. CIT (A)-4, HYDERABAD 4. CIT-IV HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER