Sri Nukala Tirumala Rao, Eluru v. The DCIT, Cental Circle-2, Visakhapatnam, Visakhapatnam

ITA 122/VIZ/2012 | 2007-2008
Pronouncement Date: 02-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 12225314 RSA 2012
Assessee PAN AHEPV6582V
Bench Visakhapatnam
Appeal Number ITA 122/VIZ/2012
Duration Of Justice 1 year(s) 11 month(s) 22 day(s)
Appellant Sri Nukala Tirumala Rao, Eluru
Respondent The DCIT, Cental Circle-2, Visakhapatnam, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 02-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 02-04-2014
Date Of Final Hearing 05-03-2014
Next Hearing Date 05-03-2014
Assessment Year 2007-2008
Appeal Filed On 10-04-2012
Judgment Text
ITA NOS.118 TO 123/VIZAG/2012 NUKALA VENKATA RAMA DAS ELURU IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER ITA NO S . 118 TO 120 /VIZAG/ 2012 ASSESSMENT YEARS : 2004-05 2006-07 2007-08 RESPEC TIVELY NUKALA VENKATA RAMA DAS ELURU VS. DCIT CENTRAL CIRCLE-2 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AHEPV 6582V ITA NOS.121 TO 123/VIZAG/2012 ASSESSMENT YEARS : 2006-07 2007-08 2008-09 RESPEC TIVELY NUKALA TIRUMALA RAO ELURU VS. DCIT CENTRAL CIRCLE-2 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AIYPN 7078D ASSESSEE BY: SHRI Y. SURYACHANDRA RAO CA REVENUE BY : SHRI K.V.N. CHARYA CIT(DR) DATE OF HEARING : 07.03.2014 DATE OF PRONOUNCEMENT : 02.04.2014 ORDER PER J. SUDHARKAR REDDY ACCOUNTANT MEMBER:- ALL THESE APPEALS FILED BY THE ASSESSEES ARE DIREC TED AGAINST THE ORDER OF THE CIT(A)-I HYDERABAD DATED 17.02.2012 IN THE C ASE OF NUKALA VENKATA RAMANA DAS AND ORDER DATED 17.2.2012. AS THE ISSUE RAISED IN ALL THESE APPEALS ARE COMMON FOR THE SAKE OF CONVENIENCE HEAR D TOGETHER AND DISPOSE OF BY WAY OF THIS COMMON ORDER. 2. THE FACTS ARE BROUGHT OUT AT PARA-2 OF THE CIT(A )S ORDER WHICH IS EXTRACTED FOR READY REFERENCE: 02.0 SEARCH AND SEIZURE OPERATION U/S.132 OF THE I.T. AC T WAS CONDUCTED IN THE CASE OF NUKALA RAMAKRISHNA ON 16-11-2007. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CERTAIN DOCUMENTS RELATING TO THE APPELLANT WERE FOUND AND SEIZED. CONSEQUENTLY NOTICES U/S.!53C WERE ISSUED AND THE ASSESSEE HAD FILED RETURNS OF INCOME FOR THE ASST. YEARS 2004-05 ITA NOS.118 TO 123/VIZAG/2012 NUKALA VENKATA RAMA DAS ELURU 2 2006-07 AND 2007-08 ADMITTING INCOME OF RS.1 000/- RS. 1 00 000/- AND RS. 1 50 0007- RESPECTIVELY. DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASS ESSEE HAD SHOWN PROFIT IN FISH TRADE AT 0.10% 0.16% AND 0.19% FOR AYS 2004-05 2006-07 AND 2007-08 RESPECTIVELY WHICH WAS VERY LOW. THE ASSESSING OFFICER CALLED FOR THE EXPLANATI ON OF THE ASSESSEE AND AFTER STUDYING THE REPLY FILED BY THE ASSESSEE HE REJECTED THE EXPLANATION FOR THE REASONS THAT IN TH E CASES OF SRI MOTURI KANAKESWARA RAO AND SRI MOTURI RAMA APPALA GANGADHARA RAO WHO ARE ALSO ENGAGED IN FISH BUSINESS THE PROFIT WAS SHOWN AT 8.4%; THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT; AND THE ASSESSEE NEITHER PRODUCED BOOKS OF ACCOUNT NOR ANY DOCUMENTS TO SUBSTANTIATE HIS CLAIM. FOR THESE REASONS THE AO REJECTED THE EXPLANATION GIVEN BY T HE ASSESSEE AND PROCEEDED TO ESTIMATE THE PROFIT AT 8.4%. SUCH PROFIT ESTIMATED BY THE AO FOR THE AYS 2004-05 2006-07 AN D 2007- 08 IS RS. 77 809/- RS. 49 60 7327- AND RS. 65 44 5 70/- RESPECTIVELY. WITH THE ABOVE ADDITION THE AO COMPLETED THE ASSESSMENTS FOR THE 3 YEARS AND RAISED THE TAX DEMA ND OF RS. 4 922/- FOR AY 2004-05 RS. 24 68 888/- FOR AY 2006 -07 AND RS. 30 27 176/- FOR AY 2007-08. 3. THE LD. CIT(A) AT PARA-5 OF HIS ORDER AGREED WIT H THE CONTENTION OF THE ASSESSEE THAT ESTIMATION OF PROFIT @ 8.4% IS EXCESS IVE. HE HELD AS FOLLOWS: CONSIDERING THE CASE FROM ALL ANGLES I FEEL ESTIMAT ING THE NET PROFIT @ 2% IS VERY REASONABLE FOR THE ASSESSMENT YEARS 2006 -07 & 2007-08 AND AS FAR AS ASSESSMENT YEAR 2004-05 IS CONCERNED ESTIMA TION OF THE AO IS UPHELD BECAUSE OF THE LOW TURNOVER. 4. AGGRIEVED THE ASSESSEE IS BEFORE US WITH THE FO LLOWING GROUNDS: 1. THE HONBLE CIT(APPEALS) OUGHT TO HAVE CONSIDERED T HE ESTIMATION OF INCOME OF APPELLANT ON SALE OF FISH WHICH IS QUI TE REASONABLE WHEN COMPARED TO THE COMPARABLE CASES WHICH WERE RANGING FROM 0.2% TO 0.6%. 2. THE ASSESSING OFFICER NOR APPELLATE AUTHORITY HAS NOT IDENTIFIED ANY ASSET WITH THE ADDITIONAL INCOME ESTIMATED OVER AND ABOVE THE ESTIMATIONS MADE BY THE APPELLANT IN ANY FORM OF ASSET. 3. THE APPELLANT PRAYS THE HONBLE ITAT TO CONSIDE R AND RETAIN THE ESTIMATION OF THE APPELLANT. 4. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIM E OF HEARING. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AS FO LLOWS: I) AT THE TIME OF APPEAL PROCEEDINGS BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) HYDERABAD STATEMENTS OF INDIV IDUAL/FIRMS CASES WHERE THE TURNOVER IS IN CORES OF RUPEES AND WHO HAVE SHOWN ITA NOS.118 TO 123/VIZAG/2012 NUKALA VENKATA RAMA DAS ELURU 3 BELOW 1 % PROFIT ON THEIR SALES TURNOVER WERE SUBMI TTED AS DETAILED BELOW TO THE COMMISSIONER OF INCOME TAX APPEALS HY DERABAD TO HAVE A COMPARISON BUT THESE CASES WERE NOT TAKEN INTO C ONSIDERATION BEFORE PASSING ORDERS ON SHRI NUKALA VENKATA RAMA DASS AP PEAL. NAME & ASSESS- M TRADING P.A.N NO: % CONCERNED ADDRESS OF THE M ENT YEAR TURN - TURN - INCOME TAX ASSESSEE OVER OF FISH OVE R. OFFICER. RS. LANKAPALLI 2009-10 15.76 AALPL4761G 0.60 % WARD-1 MALLESWARA CRORES ELURU. RAO NCR AQUA 2007-08 34.38 AACFN4559R 0.27% WARD-1 INTERNATIONAL CRORES BHIMAVARM. P. KIISHNAM RAJU 2008-09 16.19 CRORES AGGPP6789F 0.65% WARD-1 ELURU KRISHNA PRIYA 2008-09 49.48 0.23% WARD-1 FISHERIES CRORES BHIMAVARM. BHIMAVARAM. II) IN CASE OF SRI LANKALAPALLY MALLESWARA RAO WHO IS AN INCOME TAX ASSESSEE WITH P.A.NUMBER:AALPL4761G WARD -1 ELURU AN OPERATION UNDER SECTION 133A WAS CONDUCTED BY TH E INCOME TAX OFFICER WARD 1 ELURU ON 02-11-2011 AND THE SAID A SSESSEE DISCLOSED FISH TRADING @ 0.60% OF SALES TURNOVER OF RS. 15 76 08 115/- AND THE SAME WAS ACCEPTED BY THE INC OME TAX OFFICER WARD-1 ELURU FOR THE ASSESSMENT YEAR 2009-10. (COP Y OF THE ASSESSMENT ORDER IS HEREWITH SUBMITTED FOR KIND PER USAL). IN THE SUBSEQUENT ASSESSMENT YEARS ALSO BELOW 1 % ON SALES TURNOVER WAS ACCEPTED BY THE INCOME TAX OFFICER WARD-1 ELURU. III) IN CASE OF SRI NUKALA TIRUMALA RAO WHO H AS SHOWN 1.20% ON SALES TURNOVER DURING THE ASSESSMENT YEARS 2006- 07 2007-08 AND 2008-09 WAS ASSESSED @ 8.40% BY THE ASSESSING OFFIC ER VISAKHAPATNAM. ON APPEAL THE COMMISSIONER OF INCOME TAX APPEALS HYDERABAD HAS REDUCED IT FROM 8.40% TO 2%. IV) IN THE CASE ON HAND WHERE 0.16 % DURI NG THE ASSESSMENT YEAR 2006-07 AND 0.19 % DURING THE ASSESSMENT YEAR 2007- 08 WAS SHOWN ON SALES TURNOVER IN THE RESPECTIVE YEARS THE COMM ISSIONER OF INCOME TAX APPEALS HYDERABAD REDUCED IT FROM 8.40 % ASSES SED BY THE ASSESSING OFFICER VISAKHAPATNAM TO 2 % ON PAR WITH SRI NUKALA ITA NOS.118 TO 123/VIZAG/2012 NUKALA VENKATA RAMA DAS ELURU 4 TIRUMALA RAO EVEN THOUGH THERE IS VAST DIFFERENCE BETWEEN THE ESTIMATION MADE BY THE SRI NUKALA TIRUMALA RAO AND MY SELF WHICH IS NOT JUSTIFIED. V) BY VIRTUE OF LUCK SRI NUKALA TIRUMAL A RAO GOT MORE PROFIT THAN SHRI NUKALA VENKATA RAMA DAS AND SO HE HAS SHOWN 1. 20 % ON SALES TURNOVER. WHEREAS SHRI RAMA DAS GOT LESS PROFIT DUE TO HIS MISFORTUNE OR LACK OF BUSINESS SKILLS AND SO SHRI R AMA DAS HAVE SHOWN 0.16 % DURING THE ASSESSMENT YEAR 2006-07 AND 019 % DURING THE ASSESSMENT YEAR 2007-08 ON SALES TURNOVER. COMP ARING HIS PROFIT WITH OTHER BUSINESS MEN IN THE SAME TRADE IS NOT JU STIFIED AS THE PROFIT DEPENDS ON BUSINESS SKILLS CAPABILITIES AND ABILIT IES OF THE EACH INDIVIDUAL BUSINESS MAN. VI) SHRI RAMA DAS SUBMITS THAT HE INCURRED HEAVY LO SSES IN HIS FISH BUSINESS AND CLOSED THE SAME. HE HAVE ALSO SOL D AWAY ALL HIS IMMOVABLE ASSETS TO CLEAR HIS LOANS. THIS FACT HE HAVE SUBMITTED TO THE ASSESSING OFFICER INCOME TAX DEPARTMENT VIS AKHAPATNAM AT THE TIME OF ASSESSMENTS DURING 2008-09. NOW HE IS W ORKING UNDER SRI NUKALA RAMA KRISHANA RAO FISH MERCHANT FOR A PETTY AMOUNT OF RS. 4 000/- PER MONTH TO EKE OUT LIVELIHOOD. 6. THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE CIT(A) HAS GIVEN GOOD RELIEF TO THE ASSESSEE AND NO FURTHER DEDUCTIO N IS WARRANTED. HE SUBMITS THAT THE COMPARABLE CASES CANNOT ON THE FAC TS OF THIS CASE BE TAKEN FOR DETERMINING THE PERCENTAGE OF PROFIT SPECIFICA LLY WHEN THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS. SHE POINTED OUT THAT THE REVENUE HAS NOT DISPUTED THE ORDER OF THE CIT(A) AND UNDER THOS E CIRCUMSTANCES THE SAME HAS TO BE UPHELD. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDERS OF THE AUT HORITIES BELOW WE HOLD AS FOLLOWS. 8. THERE IS NO DISPUTE OF THE FACT THAT IN THIS CAS E THE INCOME IN QUESTION HAS TO BE DETERMINED ONLY ON THE BASIS OF ESTIMATIO N. THE LD. CIT(A) HAS ESTIMATED THE NET PROFIT AT 2%. WE FIND THAT THERE IS NO BASIS ON WHICH THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS COME TO SUCH CONCLUSION. THE LD. CIT(A) HAS NOT CITED ANY COMPARABLE CASES W HERE THE REVENUE HAS ADOPTED A PARTICULAR PERCENTAGE AS THE NET PROFIT P ERCENTAGE IN THIS LINE OF ITA NOS.118 TO 123/VIZAG/2012 NUKALA VENKATA RAMA DAS ELURU 5 TRADE. HE HAS ALSO NOT GIVEN ANY REASON FOR REJECT ING THE COMPARABLE CASES RELIED UPON BY THE ASSESSEE ON THE ISSUE OF PERCENT AGE OF PROFIT TO BE ESTIMATED. THE PERCENTAGE ADOPTED IS ARBITRARY. T HE LD.D.R. HAS ALSO NOT DEMONSTRATED AS TO HOW ON FACTS THE CASES CITED BY THE ASSESSEE ARE NOT COMPARABLE. DISTINGUISHING FEATURES HAVE NOT BEEN BROUGHT OUT. UNDER THESE CIRCUMSTANCES WE ARE NOT IN A POSITION TO REJECT TH E COMPARABLES CITED BY THE ASSESSEE FOR BENCH MARKING. 9. BE THAT AS IT MAY THE LD. COUNSEL FOR THE ASSES SEE ON A QUERY FROM THE BENCH HAS SUBMITTED THAT A PERCENTAGE OF 1% OF THE TURN OVER MAY BE FIXED AS THE PROFIT THOUGH THE COMPARABLE CASES SH OW A MUCH LESSER PERCENTAGE. THUS ON THE FACTS AND CIRCUMSTANCES O F THE CASE WE ARE OF THE OPINION THAT THIS IS A FAIR ESTIMATE GIVEN BY THE L D. COUNSEL FOR THE ASSESSEE. UNDER THESE CIRCUMSTANCES WE DIRECT THE ASSESSING OFFICER TO DETERMINE THE INCOME OF THE ASSESSEES AT 1% OF THE TURNOVER AND P ASS ORDERS ACCORDINGLY. 11. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED IN PART. PRONOUNCED IN THE OPEN COURT ON 2 ND APRIL 2014. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM DATED 2 ND APRIL 2014 ITA NOS.118 TO 123/VIZAG/2012 NUKALA VENKATA RAMA DAS ELURU 6 COPY TO 1 SHRI NUKALA VENKATA RAMA DAS D.NO.7E-4-1/5 MEKA RAJU STREET MOTEPALLIVARI LANE EASTERN STREET ELURU-1 2 SHRI NUKALA TIRUMALA RAO D.NO.23A-6-12 SANKARA MATTAM STREET RAMA CHANDRA RAO PETA LAXMIKALA BEAUTY PARLOUR ELURU-5 34 002 3 DCIT CENTRAL CIRCLE-2 VISAKHAPATNAM 4 THE CIT VISAKHAPATNAM 5 THE CIT(A) VISAKHAPATNAM 6 THE DR ITAT VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM