Kotha Nageswara Rao, Visakhapatnam V. THE ITO, Visakhapatnam

ITA 84/VIZ/2016

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9792 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SATYANADHAM
• Keywords: Business income

Judgement Text

ITA NO.84/VIZAG/2016 KOTHA NAGESWARA RAO, VISAKHAPATNAM. ` 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER ./I.T.A.NO.84/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) KOTHA NAGESWARA RAO, VISAKHAPATNAM VS. ITO, WARD - 1(4), VISAKHAPATNAM [PAN: ARAPK1102G ] ( / APPELLANT) ( ! / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T. SATYANADHAM, DR / DATE OF HEARING : 30.08.2016 / DATE OF PRONOUNCEMENT : 26.10.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL IS FILED BY ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-1, VISAKHAPATNAM DATED 15.2.2016 FOR THE ASS ESSMENT YEAR 2011-12. ITA NO.84/VIZAG/2016 KOTHA NAGESWARA RAO, VISAKHAPATNAM. ` 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF FOOD SUPPLY TO CANTEEN. IN THE ASSESSMENT ORDER, T HE A.O. HAS OBSERVED THAT THE ASSESSEE HAS DEPOSITED TO HIS SAVINGS BANK ACCOUNTS IN ING VYSYA BANK & BANK OF INDIA TO THE TUNE OF ` 52,96,904/- AND ADMITTEDLY THE RECEIPTS MADE IN THE ABOVE TWO ACCOUNTS ARE THE ASSESSEES BUSINESS RECEIPTS AND THE SAME WERE NOT INCLUDED IN THE ASSE SSEES GROSS RECEIPTS IN THE TRADING, PROFIT & LOSS ACCOUNT IN THE RETURN FILED BY THE ASSESSEE. A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS UNDER S TATED THE TURNOVER, ACCORDINGLY HE HAS ESTIMATED AT 19% ON GROSS PROFIT . ON APPEAL, THE LD. CIT(A) HAS SCALED DOWN THE ESTIMATION MADE BY THE A .O. TO 15%. RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : 5.3.1 THE AR CONTENDED THAT THE RATE OF PROFIT ADOPTED BY THE AO FOR ESTIMATING PROFITS OUT OF THE UNACCOUNTED TURNO VER (AMOUNTS DEPOSITED IN THE ABOVE TWO BANK ACCOUNTS) IS ON THE HIGHER SI DE. ON THE OTHER HAND, THE AO ADOPTED THE RATE OF PROFIT @ 19% OF TH E TURNOVER (REPRESENTING THE DEPOSITS IN THE TWO SAVINGS BANK ACCOUNTS) ON THE GROUND THAT THE ASSESSEE HAD ALREADY CLAIMED ALL TH E EXPENSES IN HIS BOOKS OF ACCOUNTS AND THAT NO FURTHER DEDUCTION WAS REQUIRED. 5.3.2 CONSIDERING ALL, IT IS CLEAR THAT THE ASSESS EE WAS FOUND TO HAVE MADE DEPOSITS IN THE IMPUGNED SAVINGS BANK ACC OUNTS WHICH WERE NOT RECORDED IN HIS BOOKS OF ACCOUNT. THEREFORE, L OGICALLY IT CAN BE INFERRED THAT ALL THE EXPENSES WERE CLAIMED IN THE BOOKS OF ACCOUNT. ON THIS GROUND, THERE IS NO CASE FOR GRANTING FURTHER DEDUCTIONS. HOWEVER, ESTIMATION OF PROFIT @ 19% APPEARS TO BE ON THE HIG HER SIDE CONSIDERING THE ASSESSEES LINE OF BUSINESS. ACCORDINGLY, THE A O IS DIRECTED TO ESTIMATE NET PROFIT FROM THE ABOVE DISCUSSED TURNOVER @ 15% AS PER WHICH ADDITIONAL INCOME FROM UNDISCLOSED TURNOVER WORKS O UT TO ` 7,94,535/- ITA NO.84/VIZAG/2016 KOTHA NAGESWARA RAO, VISAKHAPATNAM. ` 3 3. ON BEING AGGRIEVED, ASSESSEE FILED AN APPEAL BEF ORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ESTIMATION AT 15% IS ON HIGHER SIDE AND THE SAME MAY BE REDUCED T O 8%. 4. ON THE OTHER HAND, THE LD. D.R. HAS SUPPORTED TH E ORDER PASSED BY THE AUTHORITIES BELOW. 5. I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THE ASSESSMENT ORDER, AO HAS FOUND THAT ASSESSEE HAS DE POSITED AN AMOUNT OF ` 52,92,904/- TO HIS BANK ACCOUNTS IN ING VYSYA BANK AND BANK OF INDIA. ACCORDING TO THE A.O., THE AMOUNT DEPOSITED IN THE BANK ACCOUNTS ARE UNACCOUNTED PROFITS TOWARDS THE SALES AND WERE NOT DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS. ACCORD INGLY, A.O. HAS ESTIMATED AT 19% OF THE GROSS PROFIT AND THE SAME I S ADDED AS INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) HAS RED UCED IT TO 15%. I FIND THAT THE ADDITION CONFIRMED BY THE CIT(A) IS O N HIGHER SIDE. I AM OF THE OPINION THAT IF ESTIMATION IS MADE AT 10%, IT I S A REASONABLE ESTIMATION. ACCORDINGLY, THE ORDER PASSED BY THE C IT(A) IS SET ASIDE AND I ESTIMATE PROFIT AT 10% OF THE GROSS PROFIT AND DI RECT THE A.O. TO COMPLETE THE ASSESSMENT ACCORDINGLY. ITA NO.84/VIZAG/2016 KOTHA NAGESWARA RAO, VISAKHAPATNAM. ` 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCT16. SD/- ( . ) (V. DURGA RAO) /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 26.10.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT KOTHA NAGESWARA RAO, D.NO.22, FL AT NO.22, JEEVAN JYOTHI APARTMENTS, RAMA NAGAR, VISAKHAPATNAM 2. / THE RESPONDENT THE ITO, WARD-1(4), VISAKHAPATN AM 3. ) / THE PRINCIPAL CIT-1, VISAKHAPATNAM 4. ) ( ) / THE CIT(A)-1, VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM