Sri Govindarajulu Pujari, Hyderabad V. ITO,Ward - 1,, Guntakal

ITA 935/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87290 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: K A SAI PRASAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 935/HYD/2014 ASSESSMENT YEAR: 2010-11 SRI GOVINDARAJULU PUJARI, HYDERABAD PAN BHLPP0587H VS. INCOME TAX OFFICER, WARD 1, GUNTAKAL (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD REVENUE BY : SHRI RAJAT MITRA DATE OF HEARING 03-02-2015 DATE OF PRONOUNCEMENT 06-02-2015 O R D E R PER SAKTIJIT DEY, J.M.: THE AFORESAID APPEAL OF ASSESSEE IS AGAINST ORDER DATED 17/01/2014 OF LD. CIT(A), GUNTUR PERTAINING TO AY 2 010-11. 2. REGISTRY HAS POINTED OUT DELAY OF FOUR DAYS IN F ILING APPEAL. ASSESSEE HAS FILED A PETITION PRAYING FOR CONDONATI ON OF DELAY SUPPORTED BY AN AFFIDAVIT. AFTER EXAMINING THE CAUS E OF DELAY, AS SHOWN IN THE AFFIDAVIT, WE ARE INCLINED TO CONDONE THE DELAY OF FOUR DAYS AND ADMIT THE APPEAL FOR HEARING ON MERIT. 3. ASSESSEE HAS RAISED FOUR GROUNDS. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE, HENCE, NO ADJUDICATION IS REQUIR ED FOR THE SAME. LD. AR DID NOT PRESS GROUND NO.3, THEREFORE, THE SA ME IS DISMISSED AS NOT PRESSED. 2 ITA NO. 935/HYD/2014 SRI GOVINDARAJULU PUJARI 4. THE ONLY SURVIVING ISSUE AS RAISED IN GROUND NO. 2 IS WITH REGARD TO PROFIT AT 5% FROM WINE BUSINESS. 5. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPU TE ARE, ASSESSEE AN INDIVIDUAL IS ENGAGED IN RETAIL TRADE OF WINES. ASSESSEE IS ALSO A DEALER OF PEPSI. FOR THE AY UNDER CONSIDERATION, AS SESSEE FILED ITS RETURN OF INCOME ON 11/10/2010 DECLARING TOTAL INCO ME OF RS. 2,44,510. DURING THE ASSESSMENT PROCEEDING, AO AFTE R VERIFYING THE BOOKS OF ACCOUNT AND OTHER INFORMATIONS AVAILABLE O N RECORD, WAS OF THE VIEW THAT GROSS PROFIT SHOWN BY ASSESSEE IS VER Y LOW. WHEN ASSESSEE WAS ASKED TO EXPLAIN THE REASON FOR SUCH L OW GROSS PROFIT, ASSESSEE EXPLAINED THAT DUE TO HEAVY COMPETITION IN THE PARTICULAR LINE OF WINE BUSINESS TO ATTRACT RETAILERS, DISCOUN T OF 2% WAS OFFERED. AO NOT BEING SATISFIED WITH THE EXPLANATION OF ASSE SSEE AS WELL AS THE BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE, REJECTED T HE BOOK RESULT AND PROCEEDED TO ESTIMATE THE PROFIT FROM WINE TRAD E AT 5% OF THE COST OF GOODS SOLD. WHILE DOING SO, AO RELIED UPON A DEC ISION OF ITAT, HYDERABAD BENCH IN CASE OF M/S MAYURI WINES VS. ITO , ITA NO. 148 TO 177/HYD/12 DATED 07/05/12. BEING AGGRIEVED WITH THE ESTIMATION OF NET PROFIT AT 5%, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A), HOWEVER, CONFIRMED THE ESTIMATION OF PROFIT AT 5%. 6. LD. AR SUBMITTED BEFORE US THAT ITAT IN CASE OF ITO VS. M/S KANAKADURGA WINES IN ITA NO. 591/HYD/2011, DATED 28 /07/11 HAS CONSIDERED THE ESTIMATION OF NET PROFIT AT 3% TO BE APPROPRIATE IN CASE OF RETAIL WINE BUSINESS. LD. AR SUBMITTED THAT THE AFORESAID VIEW OF THE TRIBUNAL WAS ALSO UPHELD BY THE HONBLE AP HIGH COURT IN CASE OF CIT VS. SRI KAMLEKAR SHANKAR LAL VIDE ITTA NO. 21 O F 2013, DATED 23/07/2013. THUS, LD. AR SUBMITTED THAT THE PROFIT RATE OF 3% SHOULD BE ADOPTED. 3 ITA NO. 935/HYD/2014 SRI GOVINDARAJULU PUJARI 7. LD. DR, ON THE OTHER HAND, SUBMITTED THAT UNIFOR M NET PROFIT RATE CANNOT BE ADOPTED IN ALL CASES AS ESTIMATION OF PRO FIT IS DISCRETIONARY AND DEPENDS UPON THE FACTS OF EACH CASE. THEREFORE, AS IN CASE OF ASSESSEE, NET PROFIT RATE OF 5% WAS FOUND TO BE APP ROPRIATE, THE SAME CANNOT BE DISTURBED ONLY BECAUSE IN SOME OTHER CASES 3% RATE HAS BEEN ADOPTED. LD. DR FURTHER SUBMITTED THAT TH OUGH ITAT, HYDERABAD BENCH INITIALLY ADOPTED THE NET PROFIT RA TE OF 3% IN CASE OF WINE BUSINESS, BUT SUBSEQUENTLY IN A NUMBER OF CASE S HELD 5% NET PROFIT RATE TO BE APPROPRIATE. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. AT THE OUTSET, WE AGREE WI TH THE SUBMISSIONS OF THE LD. DR THAT UNIFORM NET PROFIT RATE CANNOT BE ADOPTED IN EACH AND EVERY CASE. ESTIMATION OF NET PROFIT, IN OUR VI EW, MUST BE ON THE BASIS OF FACT INVOLVED IN EACH CASE. EVEN THE HON BLE HIGH COURT, IN THE DECISION CITED BY LD. AR, HAS OBSERVED THAT EST IMATION OF PROFIT BY ADOPTING A PARTICULAR RATE IS ALWAYS DISCRETIONARY AND WILL DEPEND UPON THE FACTS OF EACH INDIVIDUAL CASE. THEREFORE, WHEN THE AUTHORITY CONCERNED HAS EXERCISED DISCRETION WHILE ESTIMATING PROFIT AT A PARTICULAR RATE, IT CANNOT BE INTERFERED WITH SUCH EXERCISE OF DISCRETION, UNLESS SUCH EXERCISE OF DISCRETION IS A BSOLUTELY ARBITRARY. 9. IF WE EXAMINE THE FACTS OF THE PRESENT CASE FROM THE MATERIAL SUBMITTED BEFORE US, IT APPEARS THAT THE NET PROFIT PERCENTAGE DECLARED BY ASSESSEE FROM AY 2009-10 TO 2013-14 VAR IES BETWEEN 1.54% TO 3.50%. THOUGH, IT IS A FACT THAT INITIALL Y THE TRIBUNAL HAD ADOPTED THE NET PROFIT RATE OF 3% IN CASE OF RETAIL TRADE IN WINE, BUT, SUBSEQUENTLY, IN MANY CASES, THE TRIBUNAL HAS APPRO VED ESTIMATION OF PROFIT AT 5%. THEREFORE, CONSIDERING THE TOTALITY O F FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT ESTIMATION PROFIT AT 5% ON THE COST OF GOODS IN THE PRESENT CASE IS JUST IFIED. ACCORDINGLY, 4 ITA NO. 935/HYD/2014 SRI GOVINDARAJULU PUJARI WE UPHOLD THE ORDER OF LD. CIT(A) BY DISMISSING THE GROUND RAISED BY ASSESSEE. 10. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 06/02/2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 6 TH FEBRUARY, 2015 KV COPY TO:- 1) SRI GOVINDARAJULU PUJARI, C/O M/S CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOK NAGAR, HYDERABAD 500 020. 2) ITO,WARD 1, GUNTAKAL. 3) CIT(A), GUNTUR. 4) CIT, TIRUPATI. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.