Podugu Madhusudan, Nagarkurnool V. ITO, Mahabubnagar

ITA 769/HYD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3223 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 11-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: CHAITANYA KUMAR
• Keywords: Depreciation
• Section: 142(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.769/HYD/2009 A.Y. 2002-03 SHRI PODUGU MADHUSUDANAN, NAGARKURNOOL (PAN AIHPP 2072 L) VS ITO, WARD 2 MAHABUBNAGAR (APPELLANT) (RESPONDENT) ITA NO.770/HYD/2009 A Y 2002-03 SHRI PODUGU LAVANYA, NAGARKURNOOL (PAN AIHPP 1982 D) VS ITO, WARD 2 MAHABUBNAGAR (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHAITANYA KUMAR RESPONDENT BY : K.V.N. CHARYA D.R. O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS PREFERRED BY THE ABOVE ASSESSEES A RE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-V, DATE D 19.5.2009 AND PERTAINS TO THE ASSESSMENT YEARS 2002-2003. SINCE COMMON I SSUES ARE INVOLVED, THEY ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST COMMON GROUND IS WITH REFERENCE TO REOPE NING OF ASSESSMENT U/S 147 OF THE IT ACT. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT SERIOUSLY PRESSED THIS GROUND. HENCE, TH IS GROUND IS DISMISSED AS NOT PRESSED. ITA NOS.769 & 770/HYD/2009 SH.P. MADHUSUDHANAN & SMT. P. LAVAYA, NAGARKURNOOL 2 2 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, VIDE QUERY NO.13 OF THE QUESTIONN AIRE DATED 27.7.2006, ISSUED ALONG WITH NOTICE U/S 142(1) OF THE ACT, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE NET P ROFIT IN HIS CASE SHOULD NOT BE ESTIMATED AT 10% OF THE SALES. ACCORDING T O THE ASSESSEE, THERE WERE MANY PROBLEMS FACED IN THE POULTRY I NDUSTRY IN THAT LOCALITY AND OBJECTED TO SUCH PROPOSITION FOR ESTIMA TING PROFIT AT 10% OF THE SALES. HOWEVER, THE ASSESSING OFFICER HAS NOT A CCEPTED SUCH SUBMISSIONS OF THE ASSESSEE. HE NOTED THAT NO PROPER BOOKS O F ACCOUNTS WERE MAINTAINED BY THE ASSESSEE AND MOREOVER THE BOOKS WERE NOT AUDITED U/S 44AB OF THE ACT, DESPITE THE TURN OVER DURING THE PREVIOUS YEAR EXCEEDING RS.40 LAKHS. HE HELD THAT IN TH E CIRCUMSTANCES OF THE CASE OF THE ASSESSEE THE INCOME FROM THE BUSINESS HAS T O BE ESTIMATED. HE NOTED THAT IN CASE OF ASSESSEES DERIVING INCO ME FROM POULTRY BUSINESS, HAVING 12,000 OR LESS LAYER BIRDS AND WITH TURNOVER OF LESS THAN RS.40 LAKHS THE NET INCOME OFFERED RANGES FROM 2 TO 2.5 LAKHS BEFORE DEPRECIATION. SINCE THE ASSESSEE WAS HAVING 20,024 LAYER BIRDS, HE OBSERVED THAT THE INCOME FROM PRODUCTION AND SALE OF EGGS IN HIS CASE WOULD BE RS.4,17,166 (2,50,000 X 20024/12000). HOWEVER, ESTIMATING THE NET PROFIT RATE IN THE CASE OF THE ASSE SSEE AT 7% OF THE GROSS SALES, THE ASSESSING OFFICER ESTIMATED THE NET PROFIT A ND THUS THE ITA NOS.769 & 770/HYD/2009 SH.P. MADHUSUDHANAN & SMT. P. LAVAYA, NAGARKURNOOL 3 3 TAXABLE IN THE CASE OF THE ASSESSEE AT RS.4,55,000 (7% OF RS.65,00,000) AND COMPLETED THE ASSESSMENT ACCORDINGLY THAT WORKS OUT TO ESTIMATION OF INCOME AT 7% ON GROSS RECEIPT. THE AUTHORISED REPRES ENTATIVE SUBMITTED BEFORE US THAT THESE ISSUES ARE COVERED BY THE O RDER OF THIS TRIBUNAL DATED 31.12.2009 IN THE CASE OF M/S BALAJI PO ULTRY FARM IN ITA NO.771 TO 773/HYD/2009 FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 WHEREIN THE TRIBUNAL HAS DIRECTED THE ASSESSI NG OFFICER TO ADOPT 4% TURNOVER, NET OF ALL EXPENDITURE EXCEPT INT EREST AND REMUNERATION TO PARTNERS AS INCOME OF THE ASSESSEE. WE HAVE CAREFULLY GONE THROUGH THAT ORDER OF THE TRIBUNAL. IN THAT CASE, TRIBUNAL CONSIDERED DISTINGUISHED FEATURES OF THAT CASE RELATING T O THE ASSESSEE, I.E. ASSESSEE NOT OWNED ANY ASSETS OF THE BUSINESS, HEAVY REN T AND INTEREST TO BANK WHICH WORKS OUT TO 2.5% TO 3% OF TURN OVER. AS SUCH, IT WAS ESTIMATED THE NET INCOME OF THE ASSESSEE AT 4% OF THE GROSS TURNOVER AND THAT RATIO CANNOT BE APPLIED TO THE PRESENT SET OF FACTS OF THE CASE. IN OUR OPINION, CIT(A) FOLLOWED THE ORDER OF THE TRIBUNAL DATED 18.5.2007 IN THE CASE OF T. KRISHNA MUR THY, KADTHAL IN ITA NOS.361 TO 367/HYD/2007 FOR THE ASSESSMENT YEAR 1995- 96 TO 2001-02, AND AS SUCH WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE ORDER FOLLOWED BY THE CIT(A) IS VERY APPROPRIATE. MORESO, THERE IS NO DISPUTE THAT THE ASSESSEE NOT MAINTAINED BOOK S OF ACCOUNTS FOR PURCHASE OF MEDICINES AND MAINTENANCE OF THE SHEDS AND PAYMENT TO ITA NOS.769 & 770/HYD/2009 SH.P. MADHUSUDHANAN & SMT. P. LAVAYA, NAGARKURNOOL 4 4 WORKERS. THESE PAYMENTS ARE NOT PROPERLY SUPPORTED BY THE EVIDENCE. ACCORDINGLY, WE FIND NO REASON TO DEFER WITH THE FINDI NGS OF THE CIT (A) IN FOLLOWING THE ORDER OF THE TRIBUNAL CITED SUPRA. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT (A) ON THIS ISSUE. 4. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT : 14/5/2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 14 TH MAY, 2010 COPY FORWARDED TO: 1. SHRI PODUGU MADHUSUDHAN, NAGARKURNOOL C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO.103, INDIRAD EVI NILAYAM, ST. NO.7, HIMAYATNAGAR, HYDERABAD. 2. ITO, WARD 2, MAHABUBNAGAR 3. CIT(A)-V HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP