Ravikanth Jelli, Hyderabad V. Income Tax Officer, Ward-11(1), Hyderabad

ITA 778/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4204 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 19-02-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 26-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATYA PINISETTY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 778/HYD/2018 ASSESSMENT YEAR: 2014-15 RAVIKANTH JELLI, HYDERABAD [PAN: AENPJ5195A] VS INCOME TAX OFFICER, WARD-11(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS, AR FOR REVENUE : SHRI SATYA PINISETTY, DR DATE OF HEARING : 19-02-2019 DATE OF PRONOUNCEMENT : 13-03-2019 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS IS ASSESSEES APPEAL FOR THE AY. 2014-15, AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 24-01-2018. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN INDIVIDUAL, IS IN THE BUSINESS OF RETAIL TRADING OF L IQUOR, FILED HIS RETURN OF INCOME ON 06-10-2014, ADMITTING INCOME OF RS . 5,97,770/-. PURSUANT TO SELECTION UNDER CASS, ASSESSM ENT WAS PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER AS KED THE ASSESSEE TO FURNISH THE BOOKS OF ACCOUNT/BILLS AND VO UCHERS ITA. NO. 778/HYD/2018 :- 2 -: FOR VERIFICATION. SINCE THE ASSESSEE COULD NOT PRODU CE THE BOOKS OF ACCOUNT AND THE EXPENDITURE VOUCHERS IN SUPP ORT OF HIS CLAIM ARRIVE AT THE NET PROFIT, THE ASSESSING OFFIC ER REJECTED THE SAME AND PROCEEDED TO ESTIMATE THE INCOME OF THE AS SESSEE AT 5% OF THE GOODS PUT TO SALE AND BROUGHT IT TO TAX. 2.1. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFF ICER AND ASSESSEE IS IN FURTHER APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE HON'BLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT(A) OUGHT TO HAVE HELD THAT THE A SSESSING OFFICER ERRED IN REJECTING THE BOOK RESULTS WITHOUT BRINGIN G ANY MATERIAL ON RECORD. 3. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE ASSESSING OFFICER ERRED IN ESTIMATION OF PROFIT WITHOUT POINT ING OUT ANY DEFICIENCIES IN THE ACCOUNTS MAINTAINED BY THE ASSE SSEE WHICH WERE SUBJECTED TO AUDIT AS PER PROVISIONS OF THE IT ACT. 4. THE HON'BLE CIT(A) OUGHT TO HAVE HELD THAT THE A SSESSING OFFICER OUGHT NOT TO HAVE RESORTED FOR ESTIMATION OF PROFIT BY REJECTING THE BOOK RESULTS IN THE ABSENCE OF ANY SUPPORTING MATER IAL ON RECORD. 5. ALTERNATELY, THE HON'BLE CIT(A) OUGHT TO HAVE OB SERVED THAT THE ASSESSING OFFICER ERRED IN ESTIMATION OF THE PROFIT AT 5% WHICH IS VERY HIGH IN THE LINE OF BUSINESS. 6. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE ASSESSING OFFICER OUGHT TO HAVE FOLLOWED THE DECISION OF THE HON'BLE ITAT, HYDERABAD IN THE CASE OF MIS. SAI VENKATESHWARA WIN ES (ITA NO.1198/HYD/2015 DATED 20.11.2015) WHEREIN IT WAS H ELD THAT ESTIMATION OF THE NET PROFIT AT 3% ON PURCHASES OR SOCK PUT FOR SALE WAS REASONABLE. ITA. NO. 778/HYD/2018 :- 3 -: 7. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE ASSESSING OFFICER ERRED IN ESTIMATION OF THE PROFIT AT 12% ON CONTRACT RECEIPTS WHICH IS VERY HIGH IN THE LINE OF BUSINESS. 8. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF H EARING. 3. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATER IAL ON RECORD, WE FIND THAT IN SIMILAR CASES, THIS TRIBUNA L HAS BEEN HOLDING THAT THE ESTIMATION OF INCOME AT 3% OF THE COST O F GOODS PUT TO SALE IS REASONABLE AND BOTH OF US ARE S IGNATORIES TO VARIOUS DECISIONS HOLDING AS ABOVE. FOR THE SAKE O F CONVENIENCE AND READY REFERENCE, RELEVANT PARAS IN TH E CASE OF M/S. SAI VENKATESWARA WINES IN ITA NO. 1198/HYD/201 5, DT. 20-11-2015 ARE REPRODUCED HERE: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BO OKS OF ACCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIE D. IT IS ONLY THE RATE AT WHICH THE INCOME IS TO BE ESTIMATED IS BEFORE US . A.O. HAS ESTIMATED THE INCOME AT 5% OF THE COST OF GOODS SOL D, WHILE THE ASSESSEE IS SEEKING THE ESTIMATION AT 3% OF THE COS T OF GOODS SOLD. WE FIND THAT IN THE CASE OF VENKATESWARA WINES, NIZAMA BAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN NOTE OF THE DECISION OF HONBLE HIGH COURT OF TELANGANA AND ANDHRA PRADESH IN THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL (SUPRA) TO HOLD AS UND ER : 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE AO HAS CALLED FOR BOOKS OF ACCOUNT OF THE ASSES SEE BUT THE ASSESSEE HAD FAILED TO PRODUCE THE SAME. THEREFORE, AO HAD ESTIMATED T HE INCOME OF THE ASSESSEE AT 2.5% OF THE TURNOVER. THE CIT WANTS THE SAME TO BE ESTIMATED AT 5% OF THE TOTAL TURNOVER BECAUSE THE TRIBUNAL IN THE CASE OF AN ASS ESSEE CARRYING ON THE SAME BUSINESS OF SALE OF IMFL HAS ESTIMATED THE INCOME A T 5% OF THE TURNOVER. THIS, IN OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINAT E BENCH OF THIS TRIBUNAL. THE UNIFORM NET PROFIT CANNOT BE ADOPTED IN EACH AND EV ERY CASE OF SIMILAR BUSINESS. ESTIMATION OF NET PROFIT MUST BE ON THE BASIS OF FA CTS INVOLVED IN EACH AND EVERY CASE. THEREFORE, IN OUR VIEW, THERE IS NO ERROR COM MITTED BY THE AO IN ESTIMATING THE PROFIT AT 2.5% OF THE TOTAL TURNOVER. THUS GROU NDS OF APPEAL NO.2 & 3 ARE ALLOWED. ITA. NO. 778/HYD/2018 :- 4 -: 5.1. IN THE CASE BEFORE US, THE ASSESSEE IS AGREEAB LE TO THE ESTIMATION OF INCOME AT 3% OF THE COST OF GOODS SOLD. AS THE F ACTS BEFORE US ARE SIMILAR TO THE FACTS BEFORE THE TRIBUNAL IN THE CAS E OF VENKATESWARA WINES, NIZAMABAD (SUPRA) AND THE UNIFORM RATE OF PR OFIT CANNOT BE ADOPTED IN THE CASE OF EVERY ASSESSEE IN SIMILAR BU SINESS, WE ALLOW GROUND NO.2 OF THE ASSESSEE. 3.1. RESPECTFULLY FOLLOWING THE SAME, GROUND NOS. 2 TO 6 RAISED BY ASSESSEE ARE ALLOWED. 3.2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUN D NO. 7 DOES NOT ARISE FROM THE ASSESSMENT ORDER, HENCE THE S AME IS REJECTED. 4. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2019 SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED 13 TH MARCH, 2019 TNMM ITA. NO. 778/HYD/2018 :- 5 -: COPY TO : 1. RAVIKANTH JELLI, C/O. B. NARSING RAO & CO., CHAR TERED ACCOUNTANTS, PLOT NO. 554, ROAD NO. 92, JUBILEE HIL LS, HYDERABAD. 2. INCOME TAX OFFICER, WARD-11(1), HYDERABAD. 3. CIT(APPEALS)-5, HYDERABAD. 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.