The ITO, Eluru V. Kodi Andha Rao, Eluru

MA 35/VIZ/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6684 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 28-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A ARUNA
• Assessee Lawyers: BANGANI
• Keywords: Prejudicial to interest
• Section: 143(3); 263

Judgement Text

MP NO.35 /VIZAG/2016 KODI ANANDA RAO, ELURU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER M.P. NO.35/VIZAG/2016 (ARISING OUT OF I.T.A.NO.191/VIZAG/2012) ( / ASSESSMENT YEAR: 2007-08) ITO, WARD - 2 ELURU KODI ANANDA RAO ELURU [PAN NO. ARMPR0665L ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI M.R. BANGANI, DR / RESPONDENT BY : S MT. A. ARUNA, AR / DATE OF HEARING : 18.05.2018 / DATE OF PRONOUNCEMENT : 23.05.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS MISCELLANEOUS APPLICATION FILED BY THE REVENU E REQUESTING FOR MODIFICATION OF THE ORDER PASSED BY THIS TRIBUNAL V IDE ITA NO.191/VIZAG/2012 DATED 24.3.2016 U/S 254(2) OF THE ACT. 2. IN THIS CASE THE ASSESSEE IS ENGAGED IN THE PUR CHASE AND SALE OF IMFL LIQUOR BUSINESS AND FOR THE ASSESSMENT YEAR 2007-08, THE MP NO.35 /VIZAG/2016 KODI ANANDA RAO, ELURU 2 ASSESSMENT WAS MADE U/S 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER CALLED AS 'THE ACT') BY AN ORDER DATED 4.8.2009. IN THE ASSESSMENT, THE ASSESSING OFFICER REJECTED THE BOOK S OF ACCOUNTS AND ESTIMATED THE INCOME @ 4% OF NET PURCHASES AND COMP UTED THE TOTAL INCOME AT ` 1,75,119/-. THE COMMISSIONER OF INCOME TAX HAS TA KEN UP THE CASE FOR REVISION U/S 263 OF THE ACT AND HELD T HAT THE ASSESSMENT MADE U/S 143(3) OF THE ACT WAS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE A.O. TO ESTIMATE TH E INCOME @ 2% OF THE ESTIMATED SALES OR 16 TIMES OF THE PURCHASE VAL UE WHICHEVER IS HIGHER AND ALSO DIRECTED THE A.O. TO VERIFY THE SOU RCES OF INTRODUCTION OF CAPITAL, UNSECURED LOANS AND THE LICENSE FEE. 3. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF I NCOME TAX, THE ASSESSEE CARRIED THE MATTER BEFORE THE TRIBUNAL AND THE HONBLE ITAT, VISAKHAPATNAM BENCH IN ITA NO.191/VIZAG/2012 HELD THAT IN SO FAR AS ESTIMATION OF INCOME, THERE IS NO ERROR WHIC H IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND REJECTED THE CITS ORDE R AND UPHELD THE ACTION OF THE CIT IN RESPECT OF UNSECURED LOANS AND THE CAPITAL IS CONCERNED. THE REVENUE FILED MISCELLANEOUS APPLICATION STATIN G THAT THE ITAT IN THE EARLIER INSTANCES AND ALSO SUBSEQUENTLY HAS ORDERED TO ESTIMATE MP NO.35 /VIZAG/2016 KODI ANANDA RAO, ELURU 3 THE NET PROFIT FROM BUSINESS OF THE SALE OF IMFL BY APPLYING THE RATE OF 5% OF THE PURCHASES MADE NET OF ALL OTHER DEDUCTION S. IN THE PRESENT CASE, THE ITAT HAS REJECTED THE DIRECTION OF THE CI T IN RESPECT OF ESTIMATION OF PROFIT WITHOUT CONSIDERING THE ESTIM ATION OF INCOME IN OTHER ORDERS OF COMPARABLE CASES AND THE CASE LAWS CITED IN MISCELLANEOUS APPLICATION, HENCE, REQUESTED TO CONS IDER THE CASE FOR ESTIMATION OF INCOME @ 5%. THE A.O. RELIED ON THE FOLLOWING DECISIONS OF THE ITAT, HYDERABAD AND VISAKHAPATNAM FOR ESTIMA TION OF INCOME @ 5% OF PURCHASES. 1. PENTAGOLUSULA VENKATESH S. RAYAVARAM MANDALAM, VS. ITO, ANAKAPALLI IN ITA NO.387/VIZAG/2015 2. T. APPALASWAMY VS. ACIT CIRCLE-5(1), VISAKHAPATNAM IN ITA NOS.65 & 66/VIZAG/2012. IN THE CASE OF THE PALLA KARUNAKAR REDDY VS. CIT-VI , HYDERABAD ALSO THE JURISDICTIONAL HIGH COURT OF AP&TS HAS PAS SED AN ORDER ESTIMATING THE INCOME AT 5% OF PURCHASES. DURING THE APPEAL HEARING, THE LD. D.R. RELIED ON THE MISCELLANEOUS APPLICATION AND ARGUED THAT THE ESTIM ATION OF INCOME @ MP NO.35 /VIZAG/2016 KODI ANANDA RAO, ELURU 4 5% IS TO BE CONSIDERED AS PER THE SUBMISSIONS MADE IN THE MISCELLANEOUS APPLICATION. 4. ON THE OTHER HAND, THE LD. A.R. ARGUED THAT THE HONBLE ITAT CONSIDERED THE ISSUE WHETHER THE CIT HAS ASSUM ED THE JURISDICTION RIGHTLY OR NOT AND HELD THAT THERE IS NO CASE FOR A SSUMPTION OF JURISDICTION BY THE CIT SINCE THERE WAS NO ERROR CA USING PREJUDICE TO THE REVENUE. HENCE, ARGUED THAT THERE IS NO MISTAKE WHI CH REQUIRE MODIFICATION OF THE ORDER U/S 254(2) OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE COMMISSIONER OF INCOME TAX HAS HELD THAT THE ASSESSMENT MADE U/S 143(3) OF THE ACT WAS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE DUE TO LACK OF ENQUIRY BY THE A.O. A ND NON-APPLICATION OF THE DECISION OF HONBLE A.P. HIGH COURT. THE ITAT HEARD THE BOTH THE SIDES AND GONE THROUGH THE ORDERS OF THE COMMISSION ER OF INCOME TAX AS WELL AS THE ASSESSMENT ORDER PASSED U/S 14(3) AN D HELD THAT THE ASSESSMENT MADE U/S 143(3) OF THE ACT IS NEITHER ER RONEOUS AND NOR PREJUDICIAL INTEREST OF THE REVENUE. IT IS OBSERVED THAT THE A.O. ESTIMATED THE INCOME @ 4% AFTER REJECTING THE BOOKS OF ACCOUN TS AND CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE. THE A.O. EXAMINED THE BOOKS MP NO.35 /VIZAG/2016 KODI ANANDA RAO, ELURU 5 OF ACCOUNTS, SALE BILLS AND PURCHASE BILLS, ETC. AN D ALSO CALLED FOR THE EXPLANATION OF THE ASSESSEE AS TO WHY THE INCOME SH OULD NOT BE ESTIMATED @ 5% OF PURCHASES IN RESPECT OF SALES MAD E FOR WHICH THE ASSESSEE SUBMITTED ITS EXPLANATION. AFTER CONSIDER ING THE EXPLANATION OFFERED BY THE ASSESSEE, THE A.O. HAS ESTIMATED THE INCOME @ 4%, THEREFORE, THE ITAT HELD THAT THE A.O. HAS CONSIDER ED ALL THE ISSUES AND THEN RESORTED FOR ESTIMATION OF INCOME @ 4%, HENCE, THE SAME CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF THE REVENUE AND ACCORDINGLY, HELD THAT THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX IS WITHOUT JURISDICTION IN RESPECT OF TH E ESTIMATION OF INCOME. IN THIS CASE, THE LIMITED ISSUE IS WHETHER THE COMMISSIONER OF INCOME TAX IS RIGHT IN ASSUMING THE JURISDICTION U/ S 263 OF THE ACT IN RESPECT OF ESTIMATION OF INCOME @ 4% OR NOT. THE S AID ISSUE WAS CONSIDERED BY THE TRIBUNAL AND HELD THAT THE COMMIS SIONER OF INCOME TAX HAS ASSUMED THE JURISDICTION INCORRECTLY. ESTIM ATION OF INCOME DIFFERS FROM CASE TO CASE DEPENDING ON FACTS AND HA S NO UNIVERSAL APPLICATION. THE REVENUE COULD NOT SHOW ANY OF THE MISTAKE WHICH REQUIRE MODIFICATION OR RECTIFICATION. THEREFORE, THERE IS NO MISTAKE IN THE ORDER PASSED BY THE ITAT AND THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. MP NO.35 /VIZAG/2016 KODI ANANDA RAO, ELURU 6 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION FI LED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 RD MAY18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ! /VISAKHAPATNAM: % /DATED : 23.05.2018 VG/SPS )! *! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-2, ELURU 2. / THE RESPONDENT SRI KODI ANANDA RAO, PROP: Y.S. LIQUORS, CHATAPARRU, ELURU RURAL MANDAL, ELURU 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. ! . , . , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM