Raghunath Babu Gadamsetty , Nellore V. Income Tax Officer, Ward-1, Nellore

ITA 945/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9838 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 25-03-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Assessee Lawyers: K P ANDURANGAIAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A - SMC , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO .944 & 945/HYD/2018 ASSESSMENT YEAR: 2013 - 14 & 2014 - 15 RAGHUNATH BABU GADAMSETTY, NELLORE. PAN: ACVPG 7634 H VS. ITO, WARD - 1, NELLORE. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K. PANDURANGAIAH REVENUE BY: SMT. NEEJU GUPTA, DR DATE OF HEARING: 25/03/2019 DATE OF PRONOUNCEMENT: 03 /0 4 /2019 ORDER PER SMT. P. MADHAVI DEVI, J.M.: BOTH THE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2013 - 14 AND 2014 - 15 AGAINST THE DIFFERENT ORDERS OF THE CIT(A), TIRUPATI , BOTH DATED 14/02/2018. 2. AT THE OUTSET, IT IS SEEN THAT THERE IS A DELAY OF 2 DAYS IN FILING OF THE APPE AL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 11/ 09/2018 EXPLAINING THE REASONS FOR DELAY AND PRAYED THAT THE DELAY MAY BE CONDONED. TAKING THE SAME INTO CONSIDERATION, AND BEING SATISFIED WITH THE REASONS FOR THE DELAY, THE DELAY O F 2 DAYS IS CONDONED AND I PROCEED TO ADJUDICATE THE APPEAL ON MERITS. 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING IN LIQUOR, FILED HIS RETURN OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS. THE RETUR NS WERE SELECTED FOR SCRUTINY UNDER CASS AND UPON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, A.O. OBSERVED THAT THE ASSESSEE HAS ESTIMATED LOW PROFITS. THE ASSESSEE FURNISHED HIS EXPLANATION STATING THAT HIS BUSINESS PREMISES IS SITUATED IN A BUS INESS AREA SURROUNDED BY VARIOUS SHOPS LEADING TO LAKSHMIPURAM AND WAS ONLY 100 YARDS AWAY FROM NARAYANA HIGH SCHOOL , AND WAS HAVING ONLY ONE COUNTER SALES AND SINCE THE ROAD WAS FULL OF TRAFFIC AND NOT SURROUNDED BY LABOUR COLONIES ITS SALES WAS LOW . V I DE LETTER DATED 10/03/2016 , THE A.O. REQUIRED THE ASSESSEE TO FURNISH ITEM - WISE A N D QUANTITY WISE SALES AND ALSO THE STOCK PARTICULARS. THE ASSESSEE DID NOT COMPLY WITH THE SAID LETTER AND THEREFORE, A.O. PROPOSED TO ESTIMATE THE INCOME @ 5% OF THE GOODS PUT TO SALE. THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS PAID LICENSE FEES OF RS. 48 LAKHS AND IN VIEW OF THE FACTS, THE ASSESSEE COULD NOT EARN HIGHER PROFIT. THE A.O. WAS NO T SATISF IED WITH THE ASSESSEES CONTENTIONS AND ESTIMATED THE PROFIT @ 5% OF THE GOODS PUT TO SALE S FOR BOTH THE ASSESSMENT YEARS. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE A.O. AND THEREFORE, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 3 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN SIMILAR CIRCUMSTANCES, THIS TRIBUNAL IN VARIOUS CASES HAS ESTIMATED THE PROFIT @ 3% OF THE GOODS PUT TO SALE. HE PRAYED FOR SIMILAR DIRECTIONS IN THE ASSESSEE S CASE. HE FILED THE COPIES OF THE DECISIONS OF THE TRIBUNAL RELIED UPON BY HIM. 6. LEARNED DEPARTMENTAL REPRESENTATIVE WAS ALSO HEARD. HAVING REGARD TO THE RIVAL CONTENTIONS AND ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, I FIND THAT UNDER SIMILAR C IRCUMSTANCES, THIS TRIBUNAL HAS BEEN UPHOLDING THE ESTIMATION OF INCOME @ 3% OF THE COST OF GOODS PUT TO SALE. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, THE DECISION OF THE COORDINATE BENCH [ TO WHICH THE UNDERSIGNED (JM) IS ONE OF THE SIGNATORIES] IN THE CASE OF IN THE CASE OF SRI VENKATESWARA WINES, SECUNDERABAD IN ITA NO.1206/HYD/2015 HAS HELD AS UNDER: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND THERE FORE, THE ESTIMATION OF INCOME IS JUSTIFIED. 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 SOLD, WHILE THE ASSESSEE IS SEEKING THE ESTIMATION AT 3% OF THE COST OF GOODS SOL D. WE FIND THAT IN THE CASE OF VENKATESWARA W INES, NIZAMABAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN NOTE OF THE DECISION OF HON'BLE HIGH COURT OF TELANGANA AND ANDHRA PRADESH IN THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL (SUPRA) TO HOLD AS UNDER : '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 ASSESSEE BUT THE ASSESSEE HAD FAILED TO PRODUCE THE SAME. THEREFORE, AO HAD ESTIMATED THE 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 ASSESSEE CARRYING ON THE SAME BUSINESS OF SALE OF IMFL HAS ESTIMATED THE INCOME AT 5% OF THE TURNOVER. THIS, IN OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL. THE ITA.NO.1206/HYD/2015 SAI VENKATESWARA WINES, SECUNDERABAD UNIFORM NET PROFIT CANNOT BE ADOPTED IN EACH AND EVERY CASE OF SIMILAR BUSINESS. ESTIMATION OF NET PROFIT MUST BE ON THE BASIS OF FACTS INVOLVED IN EACH AND EVERY CASE. THEREFORE, IN OUR VIEW, THERE IS NO ERROR COMMITTED BY THE AU IN ESTIMATING 4 THE PROFIT AT 2.5% OF THE TOTAL TURNOVER. THUS GROUNDS OF APPEAL NO.2 & 3 ARE ALLOWED.' 5.1. IN THE CASE BEFORE US, THE ASSESSEE IS AGREEABLE TO THE ESTIMATION OF INCOME AT 3% OF THE COST OF GOODS SOLD. AS THE FACTS BEFORE US ARE SIMILAR TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF VENKATESWARA WINES, NIZAMABAD (SUPRA) AND THE UNIFORM RATE OF PROFIT CANNOT BE ADOPTED IN THE CASE OF EVERY ASSESSEE IN SIMILAR BUSINESS, WE ALLOW GROUND NO.2 OF THE ASSESSEE. 7 . RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, THE AO IS DIRECTED TO ESTIMATE THE NET PROFIT AT 3% OF THE COST OF GOODS PUT TO SALE. ACCORDINGLY, GROUND S RAISED BY THE ASSESSEE ARE ALLOWED. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 03 RD APRIL , 2019 . SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 03 RD APRIL , 2019 OKK COPY TO: - 1) K. PANDU RANGAIAH, B.A. B.L., ADVOCATE, 5 - 1 - 679, STONEHOUSEPET, NELLORE - 524002. 2) INCOME TAX OFFICER, WARD - 1, NELLORE. 3) THE CIT(A) ,TIRUPATI. 4) THE PR. CI T, TIRUPATI. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE