Katakam Srinivas, Hyderabad, Hyderabad v. ITO, Ward-4(2), Hyderabad, Hyderabad

ITA 517/HYD/2017 | 2013-2014
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 51722514 RSA 2017
Assessee PAN AHBPK1847M
Bench Hyderabad
Appeal Number ITA 517/HYD/2017
Duration Of Justice 8 month(s) 10 day(s)
Appellant Katakam Srinivas, Hyderabad, Hyderabad
Respondent ITO, Ward-4(2), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Last Hearing Date 16-11-2017
First Hearing Date 16-11-2017
Assessment Year 2013-2014
Appeal Filed On 20-03-2017
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B-SMC HYDERABAD SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 517/HYD/2017 ASSESSMENT YEAR: 2013-14 SRI KATAKAM SRINIVAS HYDERABAD. PAN AHBPK1847M VS. THE INCOME TAX OFFICER WARD-4(2) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SRI K.A. SAI PRASAD REVENUE B BY : SRI K.J. RAO DATE OF HEARING : 16-11-2017 DATE OF PRONOUNCEMENT : 30-11-2017 ORDER PER SHRI B. RAMAKOTAIAH: THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A)-1 HYDERABAD DATED 02-12-2016. ASSESSEE HAS RAISED THE FOLLOWING THREE GROUNDS: 1. THE LD. CIT(A)-1 IS NOT JUSTIFIED IN CONFIRMING ACTION OF A.O IN TREATING THE ENTIRE UNACCOUNTED SALES OF RS. 14 55 072/-. 2. THE LD. CIT(A)-1 IS NOT JUSTIFIED IN REJECTING THE CLAIM THAT ONLY PROFIT ELEMENT RETURNED AT RS. 3 62 548/- IN THE UNACCOUNTED SALES OF RS. 14 55 072/- IS REQUIRED TO BE BROUGHT TO TAX. 3. THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN UPHOLDING THE TREATMENT OF ENTIRE UNACCOUNTED SALES AS INCOME ESPECIALLY WHEN THE SAID UNACCOUNTED SALES ITSELF IS QUANTIFIED BEFORE THE END OF THE PREVIOUS YEAR RELEVANT FOR THE ASST. YEAR UNDER CONSIDERATION. GROUND NO. 4 IS GENERAL IN NATURE. 2 ITA NO. 517/HYD/2017 SRI KATAKAM SRINIVAS HYD. 2. BRIEFLY STATED ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF READYMADE DRESSES UNDER THE TRADE NAME OF M/S. SVS EMPORIUM FOR THE LAST SEVERAL YEARS. ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE A.Y 2013-14 ON 29-09-2013 BY DECLARING TOTAL INCOME OF RS. 16 53 670/- ON A TURNOVER OF RS. 35 86 367/-. THE TOTAL INCOME INCLUDES NET PROFIT OF RS. 15 92 029/- WHICH INCLUDES EXCESS STOCK ADMITTED DURING THE COURSE OF SURVEY UNDER 133A OF IT ACT TO AN EXTENT OF RS. 9 08 591/- AND ALSO GROSS PROFIT OF RS. 3 62 458/- @ 24.91 % ON UNACCOUNTED SALES OF RS. 14 55 072/- FOUND DURING THE COURSE OF SURVEY ITSELF. HOWEVER A.O WAS OF THE OPINION THAT ENTIRE UNACCOUNTED SALES SHOULD HAVE BEEN OFFERED AN INCOME RATHER THAN PROFIT AT 24.91%. A.O ADDED THE UNACCOUNTED SALES OF RS. 14 55 072/- TO THE INCOME RETURNED AT RS. 16 53 670/- AFTER REDUCING THE GP MARGIN. ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT ASSESSEE ALREADY OFFERED THE GROSS PROFIT ON UNACCOUNTED SALES AND THEREFORE THERE IS NO NEED TO ADD THE ENTIRE AMOUNT OF UNACCOUNTED SALES. IT WAS FURTHER SUBMITTED THAT IN THE CASES OF UNACCOUNTED SALES ONLY GP MARGIN HAS BEEN 3 ITA NO. 517/HYD/2017 SRI KATAKAM SRINIVAS HYD. ADDED WHICH THE ASSESSEE ALSO DISCLOSED IN THE COURSE OF SURVEY. 3. LD. CIT(A) HOWEVER DISMISSED THE ASSESSEES CONTENTION ON THE REASON THAT ASSESSEE COULD NOT FURNISH THE CORRESPONDING PURCHASES TO EXCLUDE THEM AND CONFIRMED THE A.OS ACTION. THE RELIANCE ON CERTAIN CASES BY THE ASSESSEE IN THE COURSE OF APPELLATE PROCEEDINGS WAS ALSO REJECTED BY THE LD. CIT(A) HENCE THE PRESENT APPEAL. 4. IT WAS THE SUBMISSION OF THE LD. COUNSEL THAT IN THE COUSE OF SURVEY A.O NOT ONLY FOUND CERTAIN UNACCOUNTED SALES BUT ALSO EXCESS STOCK ON THE DATE OF SURVEY. ASSESSEE HAS OFFERED GROSS PROFIT WHICH WAS NOT UNDER DISPUTE. IT WAS SUBMITTED THAT MAKING AN ADDITION OF ENTIRE UNACCOUNTED SALES WAS NOT WARRANTED AS ASSESSEE ALSO OFFERED EXCESS STOCK DURING THE COURSE OF SURVEY AND THEREFORE A SEPARATE ADDITION OF UNACCOUNTED SALES AGAIN IS NOT WARRANTED. IT WAS FURTHER SUBMITTED THAT ONLY PROFIT MARGIN CAN BE BROUGHT TO TAX WHICH THE ASSESSEE ALREADY OFFERED AND RELIED ON THE FOLLOWING CASE LAWS: 1. ITO VS. M/S KARTHIK POULTRY FARM ITAT BANGALORE DT. 06.11.2015. 4 ITA NO. 517/HYD/2017 SRI KATAKAM SRINIVAS HYD. 2. CIT VS. SHARDA REAL ESTATE (P) LTD 099 DTR 0100 (MPHC) 3. ACIT CIRCLE. 1 VS M/S. ARCHANA TRADING CO ITAT COCHIN DT. 28.02.2013. 4. ACIT VS. M/S PAHAL FOODS (P) LTD ITAT HYDERABAD DT. 30.09.2009 5. LD. DR HOWEVER RELIED ON THE ORDERS OF THE CIT(A) TO SUBMIT THAT IN THE COURSE OF SURVEY ITSELF IN THE STATEMENT UNDER SEC. 131 OF THE IT ACT THE ASSESSEE HAS ACCEPTED THAT TAXES WILL BE PAID ON THE ENTIRE AMOUNT. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS AND CASE LAW RELIED UPON. IT IS A FACT THAT DURING THE COURSE OF SURVEY A.O FIND OUT CERTAIN UNACCOUNTED SALES WHICH MIGHT HAVE RESULTED IN HAVING EXCESS PROFITS AND ALSO EXCESS STOCK. ASSESSEE HAD OFFERED BOTH EXCESS STOCK AS WELL AS PROFIT ON UNACCOUNTED SALES. ON THE TURNOVER OF RS. 35 86 367/- THE RETURNED INCOME WAS TO THE TUNE OF RS. 16 53 670/-. IN OFFERING THE GP ON UNACCOUNTED SALES ASSESSEE NOT ONLY ADMITTED TO THE STATEMENT GIVEN DURING THE COURSE OF SURVEY BUT ALSO FOLLOWED IT UP BY FILING THE RETURN OF INCOME. I DO NOT SEE ANY REASON TO INTERFERE WITH THE ASSESSEES RETURNED INCOME. WHEN ASSESSEE HIMSELF ADMITS GP AT 24.91% AS 5 ITA NO. 517/HYD/2017 SRI KATAKAM SRINIVAS HYD. AGAINST 8.95% EARNED ON REGULAR SALES. IT MAY BE TRUE THAT UNACCOUNTED SALES MAY HAVE BEEN SUPPORTED BY UNACCOUNTED PURCHASES WHICH THE A.O DID NOT IDENTIFY OR FIND OUT DURING THE COURSE OF SURVEY AS THOSE UNACCOUNTED SALES HAVE ALREADY HAPPENED BY THE TIME SURVEY WAS CONDUCTED. THE EXCESS STOCK ON THE DAY OF SURVEY DO INDICATE THAT THESE PROFITS EARNED ON UNACCOUNTED SALES MIGHT HAVE RESULTED IN EXCESS STOCK. THEREFORE ASSESSEES ACTION IN NOT ONLY ACCEPTING THE EXCESS STOCK ON THE DAY OF SURVEY BUT ALSO OFFERING THE EXCESS PROFITS ON UNACCOUNTED SALES ITSELF IS DOUBLE ADDITION. BE THAT AS IT MAY ASSESSEE HAS AGREED TO THE STATEMENT DURING THE COURSE OF SURVEY AND ADMITTED THE INCOMES OF REGULAR PROFIT EXCESS STOCK AND THE PROFIT ON UNACCOUNTED SALES AS WELL AT THE TIME OF FILING RETURN ITSELF. IT IS TRITE LAW THAT UNACCOUNTED SALES FOUND OUT DURING THE COURSE OF SURVEY OR SEARCH CANNOT BE ADDED AS SUCH AND ONLY PROFIT CAN BE BROUGHT TO TAX. WHAT IS TO BE TAXED IS ONLY UNACCOUNTED INCOME AND NOT UNACCOUNTED RECEIPTS UNLESS THE RECEIPTS ARE PROVED TO THE INCOME. HERE A.O HIMSELF QUANTIFIED THE UNACCOUNTED SALES IN SURVEY. ASSESSEE OFFERING OF PROFIT @ 24.91% CANNOT BE FAULTED ON THE FACTS OF THE CASE. VARIOUS CASE 6 ITA NO. 517/HYD/2017 SRI KATAKAM SRINIVAS HYD. LAW RELIED UPON BY ASSESSEE ALSO SUPPORT THE VIEW THAT ONLY PROFIT MARGIN CAN BE BROUGHT TO TAX BUT NOT ENTIRE SALES. IN VIEW OF THAT I AM OF THE OPINION THAT ACTION OF THE A.O IN BRINGING TO TAX ENTIRE UNACCOUNTED SALES ON THE REASON THAT PURCHASES ARE NOT PRODUCED CANNOT BE ACCEPTED. WHEN BOTH SALES AND PURCHASES ARE UNACCOUNTED A REASONABLE PROFIT CAN ONLY BE ESTIMATED. SINCE ASSESSEE HAS ALREADY INCLUDED THE EXCESS STOCK AS WELL AS THE PROFIT ON UNACCOUNTED SALES I AM OF THE VIEW THAT NO FURTHER ADDITION IS RECEIVED. THE ACTION OF THE A.O CANNOT BE SUPPORTED EITHER ON FACTS OR ON LAW. IN VIEW OF THAT I HAVE NO HESITATION TO DIRECTING THE A.O TO DELETE THE ADDITION SO MADE. ACCORDINGLY ASSESSEES GROUNDS ARE ALLOWED. 7. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2017. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD DATED: 30 TH NOVEMBER 2017 KRK 7 ITA NO. 517/HYD/2017 SRI KATAKAM SRINIVAS HYD. 1 SRI K SRINIVAS C/O 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- 4(2) HYDERABAD. 3 CIT(A)-1 HYDERABAD. 4 PR. CIT-1 HYDERABAD. 5 THE DR ITAT HYDERABAD 6 GUARD FILE