G.V.V.Satyanarayana,, Kadiapulanka v. The ITO., Rajahmundry

ITA 169/VIZ/2016 | 2011-2012
Pronouncement Date: 04-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 16925314 RSA 2016
Assessee PAN AJAPG2742E
Bench Visakhapatnam
Appeal Number ITA 169/VIZ/2016
Duration Of Justice 5 month(s) 23 day(s)
Appellant G.V.V.Satyanarayana,, Kadiapulanka
Respondent The ITO., Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 04-10-2016
Assessment Year 2011-2012
Appeal Filed On 11-04-2016
Judgment Text
ITA NO.169/VIZAG/2016 GVV SATYANARAYANA KADIAPULANKA 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH VISAKHAPATNAM . BEFORE SHRI V. DURGA RAO JUDICIAL MEMBER ./I.T.A.NO.169/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) G.V.V. SATYANARAYANA KADIAPULANKA VS. ITO WARD - 3 RAJAHMUNDRY [PAN: AJAPG2742E ] ( / APPELLANT) ( ! / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM AR / RESPONDENT BY : SHRI T. SATYANANDAM AR / DATE OF HEARING : 04.10.2016 / DATE OF PRONOUNCEMENT : 04.10.2016 / O R D E R PER V. DURGA RAO JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A) RAJAHMUNDRY DATED 28.1.2016 FOR THE ASSESSM ENT YEAR 2011-12. ITA NO.169/VIZAG/2016 GVV SATYANARAYANA KADIAPULANKA 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS CARRYING THE BUSINESS OF IMFL AND FILED ITS RETURN OF INCOME BY DECLARING TO TAL INCOME OF ` 2 56 498/-. THE ASSESSEES CASE WAS SELECTED FOR S CRUTINY AND ASSESSMENT WAS COMPLETED BY THE A.O. BY DETERMINING TOTAL INCOME OF THE ASSESSEE AT ` 40 18 6305/- BY ESTIMATING THE INCOME AT 20% OF STOCK PUT TO SALE. ASSESSEE CARRIED MATTER IN APPE AL BEFORE THE CIT(A). THE LD. CIT(A) HAS SCALED DOWN THE SAME TO 10%. 3. THE ONLY GROUND RAISED BY THE ASSESSEE IS RELATI NG TO ESTIMATION OF PROFITS. AT THE TIME OF HEARING LD. COUNSEL FOR T HE ASSESSEE HAS SUBMITTED THAT IN THE SIMILAR LINE OF BUSINESS THE COORDINATE BENCH OF VISAKHAPATNAM BENCH HAS PASSED AN ORDER IN THE CASE OF TANGUDU JOGISETTY IN ITA NO.96/VIZAG/2016 BY ORDER DATED 2. 6.2016 AND ESTIMATED THE INCOME OF THE ASSESSEE AT 5% OF THE S TOCK PUT TO SALE. ASSESSEE SUBMITTED THAT THE SAME MAY BE FOLLOWED. 4. ON THE OTHER HAND LD. D.R. HAS RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS REGARD WE FIND THAT AS SUBMITTED BY THE ASSESSEE THE VERY SAME ISSUE OF ESTIMATION OF PROFIT IN THE TRADE OF IMFL WAS CO NSIDERED BY THE ITA NO.169/VIZAG/2016 GVV SATYANARAYANA KADIAPULANKA 3 COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF TAN GUDU JOGISETTY (SUPRA) AND HELD THAT ESTIMATION OF 5% NET PROFIT O N PURCHASE IS REASONABLE AND DIRECTED THE A.O. TO ESTIMATE THE NE T PROFIT OF 5% ON TOTAL PURCHASES NET OF ALL DEDUCTIONS. THE RELEVAN T PORTION OF THE ORDER IS EXTRACTED AS UNDER: 8. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A.O. ESTIMATED NET PROFIT OF 20% ON STOC K PUT FOR SALE. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS N OT MAINTAINED PROPER BOOKS OF ACCOUNTS AND VOUCHERS IN SUPPORT OF PURCHASES AND SALES. THE A.O. FURTHER OBSERVED THAT THE ASSE SSEE HAS FAILED TO MAINTAIN STOCK REGISTERS AND BOOKS OF ACCOUNTS M AINTAINED BY THE ASSESSEE ARE NOT SUSCEPTIBLE FOR VERIFICATION THEREFORE REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED NET PROFIT OF 2 0% BY RELYING UPON THE DECISION OF HONBLE A.P. HIGH COURT. IT IS THE CONTENTION OF THE ASSESSEE THAT THE NET PROFIT ESTIMATED BY TH E A.O. IS QUITE HIGH WHEN COMPARED TO THE NATURE OF BUSINESS CARRIE D ON BY THE ASSESSEE. IT IS FURTHER SUBMITTED THAT THE CASE LA W RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE CASE BEFORE THE HONBLE A.P. HIGH COURT WAS THAT TH E ASSESSEE IS INTO THE BUSINESS OF TRADING IN ARRACK WHEREAS IT IS IN THE BUSINESS OF DEALING IN IMFL. THE ASSESSEE FURTHER CONTENDED THAT IMFL TRADE WAS CONTROLLED BY THE STATE GOVERNMENT THROUG H A.P. STATE BEVERAGES CORPORATION LTD. AND THE PRICES OF THE PR ODUCTS ARE FIXED BY THE STATE GOVERNMENT. THE ASSESSEE BEING A LICE NSE HOLDER OF STATE GOVERNMENT CANNOT SELL THE PRODUCTS OVER AND ABOVE THE MRP FIXED BY THE STATE GOVERNMENT. WE FIND FORCE I N THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE A .O. HAS ESTIMATED THE NET PROFIT BY RELYING UPON THE DECISI ON OF A.P. HIGH COURT IN THE CASE OF CIT VS. R. NARAYANA RAO IN ITA NO.3 OF 2003 WHICH IS RENDERED UNDER DIFFERENT FACTS. THE A.P. HIGH COURT HAS CONSIDERED THE CASE OF AN ARRACK DEALER WHEREAS T HE ASSESSEE IS INTO THE BUSINESS OF DEALING IN IMFL. THEREFORE WE ARE OF THE VIEW THAT THE A.O. WAS NOT JUSTIFIED IN RELYING UPON THE JUDGEMENT WHICH WAS RENDERED UNDER DIFFERENT FACTS TO ESTIMAT E THE NET PROFIT. ON THE OTHER HAND THE LD. A.R. FOR THE ASSESSEE R ELIED UPON THE DECISION OF ITAT VISAKHAPATNAM BENCH IN THE CASE O F T. APPALASWAMY VS. ACIT IN ITA NO.65 & 66/VIZAG/2012. WE HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY THE ASSES SEE IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND FINDS THAT THE COORDINATE BENCH ITA NO.169/VIZAG/2016 GVV SATYANARAYANA KADIAPULANKA 4 OF THIS TRIBUNAL UNDER SIMILAR CIRCUMSTANCES HELD THAT ESTIMATION OF 5% NET PROFIT ON PURCHASES IS REASONABLE. THE RELE VANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER: 3. WE HAVE HEARD THE PARTIES PERUSED THE ORDERS O F THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON R ECORD. IT IS THE CONTENTION OF THE LD. A.R. THAT THE ESTIMATION OF P ROFIT AT 16% IS HIGH AND EXCESSIVE CONSIDERING THE NORMAL RATE OF P ROFIT IN THIS LINE OF BUSINESS. WHEREAS THE LD. D.R. SUPPORTED THE O RDER OF THE CIT(A). HAVING CONSIDERED THE SUBMISSIONS OF THE A SSESSEE WE ARE OF THE VIEW THAT THE ISSUE IS NO MORE RES INTEG RA IN VIEW OF A SERIES OF DECISIONS OF THE ITAT HYDERABAD BENCH IN SIMILAR CASES. THE COORDINATE BENCH IN CASE OF ITA NO.127/HYD/12 A ND OTHERS DATED 18.05.2012 AS WELL AS A NUMBER OF OTHER CASES HAVE HELD THAT PROFIT IN CASE OF BUSINESS IN INDIAN MADE FOREI GN LIQUOR HAS TO BE ESTIMATED AT 5% OF THE PURCHASES MADE BY THE ASS ESSEE. THEREFORE FOLLOWING THE DECISION OF THE ITAT HYDER ABAD BENCH WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AS SESSING OFFICER TO ESTIMATE THE PROFIT FROM THE WINE BUSINESS OF THE A SSESSEE BY APPLYING THE RATE OF 5% OF THE PURCHASES MADE NET O F ALL OTHER DEDUCTIONS. THE ASSESSING OFFICER SHOULD ALSO BEAR IN MIND THAT IN NO CASE THE INCOME DETERMINED SHOULD BE BELOW THE I NCOME RETURNED. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE RATIOS OF COORDINATE BEN CH WE ARE OF THE VIEW THAT THE NET PROFIT ESTIMATED BY THE A.O. BY RELYIN G UPON THE DECISION OF HONBLE A.P. HIGH COURT (SUPRA) WHICH WAS RENDERED UNDER DIFFERENT FACTS IS QUITE HIGH. ON THE OTHER HAND THE ASSESS EE RELIED UPON THE DECISION OF COORDINATE BENCH AND THE COORDINATE BEN CH UNDER SIMILAR CIRCUMSTANCES ESTIMATED THE NET PROFIT OF 5% ON TOT AL PURCHASES NET OF ALL DEDUCTIONS. NO CONTRARY DECISION IS PLACED ON RECORD BY THE REVENUE TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH. THEREFORE WE DIRECT THE A.O. TO ESTIMATE THE NET PROFIT OF 5% ON TOTAL PURCHASES NET OF ALL DEDUCTIO NS. ORDERED ACCORDINGLY. 6. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE CO ORDINATE BENCH OF THE TRIBUNAL WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT MATTER BACK TO THE A.O. TO ESTIMATE THE PROFIT FROM THE BUSINESS OF THE ASSESSEE BY APPLYING THE RATE OF 5% OF THE PURCHASE S MADE NET OF ALL ITA NO.169/VIZAG/2016 GVV SATYANARAYANA KADIAPULANKA 5 OTHER DEDUCTIONS. THUS THIS GROUND OF APPEAL RAIS ED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH OCT16. SD/- ( . ) (V. DURGA RAO) /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 4.10.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI G.V.V. SATYANARAYANA D.NO.5 -126 TOWER STREET KADIAPULANKA EAST GODAVARI DISTRICT. 2. / THE RESPONDENT ITO WARD-3 RAJAHMUNDRY 3. ) / THE CIT RAJAHMUNDRY 4. ) ( ) / THE CIT(A) RAJAHMUNDRY 5. ! ! / DR ITAT VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 (SR.PRIVATE SECRETARY) ! / ITAT VISAKHAPATNAM