GALI RAMA CHANDRA REDDY,NANDYAL vs. INCOME TAX OFFICER, WARD-1, NANDYAL

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ITA 561/HYD/2019Status: DisposedITAT Hyderabad07 November 2019AY 2013-144 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in appeal before both the CIT(A) and the ITAT. It directed the AO to estimate the net profit at 3% of the cost of goods sold, considering similar past rulings.

What were the facts?

The assessee, engaged in retail liquor business, declared a net profit of 2.37% of the cost of goods sold. The AO estimated the income at 5% of the cost of goods sold. The CIT(A) refused to condone the delay in the assessee's appeal, thus not deciding on merits.

What were the issues?

The primary issue was whether the delay in filing the appeal before the CIT(A) should be condoned. A secondary issue was the estimation of net profit for a retail liquor business.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD ‘SMC’ BENCH : Hyderabad

Before: Smt. P. Madhavi Devi

Hearing: 31/10/19Pronounced: 07/11/19

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘SMC’ BENCH : Hyderabad Before Smt. P. Madhavi Devi, Judicial Member ITA No. 561/Hyd./2019 Assessment Year: 2013-14 Sh. Gali Rama Chandra Reddy vs. ITO, Ward 1 C/o M/s Sekhar & Co. Nandyal 133/4, Rashtrapathi Road Secunderabad 500 003 PAN: ALSPG9337P (Appellant) (Respondent)

For Assesse: Sh. K.C.Devdas, A.R. For Revenue: Smt. Matta Padma, D.R.

Date of Hearing : 31/10/19 Date of Pronouncement : 07/11/19

O R D E R This is assessee’s appeal for A.Y. 2013-14 against the order of the Ld.CIT(A), Kurnool dated 22.10.2018.

2.

Brief facts of the case are that the assessee, an individual, doing retail business in liquor, had declared gross profit of 11.79% and net profit of 2.37% of cost of goods sold. The A.O. however estimated income at 5% of the cost of goods sold. Aggrieved, assessee preferred an appeal before the CIT(A) with a delay of 797 days. The CIT(A) refused the condonation of delay and therefore did not decide assessee’s appeal on merits. Against this order of CIT(A), the assessee is in second appeal before me. 3. The Ld.Counsel for the assessee submitted that the assessee is not knowing the nuances of law and was unaware of the statutory provisions.

ITA No. 561/Hyd/2019 AY 2013-14 Sh. Gali Rama Chandra Reddy, Nadyal vs. ITO, Ward 1, Nandyal

Even before the Tribunal, the assessee filed the appeal with a delay of 99 days. Ld.Counsel for the assessee has taken the same argument before this Tribunal also. He submitted that in case of retail liquor business, this Tribunal has been directing the AO to estimate Net Profit @ 3% of the cost of goods put to sale and that the assessee offered Net income at 2.37% of the goods sold whereas the AO estimated it at 5%. Therefore, he prayed for condonation of delay both before ITAT and before the CIT(A) and to estimate income at 3% as the matter is covered in favour of the assessee. 4. Ld.DR however, opposed grant of any relief to asseeee. 5. Having regard to rival contentions and material placed on record, I find that in similar cases this Tribunal has been directing the AO to estimate the profit at 3% of the cost of goods put to sale, as reasonable net profit. In view of the same, I am of the opinion that the issue is covered in favour of the assessee on merits itself. Therefore, I condone the delay both before the CIT(A) as well as before the Tribunal, and direct the AO to estimate net profit at 3% of the cost of goods put to sale. 6. In the result, assessee’s appeal is allowed. Order pronounced in Open Court on 07th November, 2019.

(P MADHAVI DEVI) JUDICIAL MEMBER Dated: the 07th November, 2019. *GMV

ITA No. 561/Hyd/2019 AY 2013-14 Sh. Gali Rama Chandra Reddy, Nadyal vs. ITO, Ward 1, Nandyal

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