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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Smt. P. Madhavi Devi & Shri S.Rifaur RahmanShri Sridhar Ramagiri
Per Smt. P. Madhavi Devi, J.M.
This is assessee’s appeal for the A.Y 2014-15 against
the order of the learned CIT (A)-5, Hyderabad, dated 27.09.2017.
Brief facts of the case are that the assessee, an
individual, carrying on retail trading in IMFL, filed his return of
income for the A.Y 2014-15 on 24.11.2014 admitting income of
Rs.9,98,180. During the assessment proceedings u/s 143(3) of
the Act, the AO observed that the assessee is not maintaining
proper books of account and therefore, failed to produce the same
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ITA No 1924 of 2017 Sridhar Ramagiri Hyderabad.
before him when called for. Therefore, he proceeded to estimate
the net profit in retail of wines @ 5% of the purchases or stock put
to sale during the year. Aggrieved, the assessee preferred an
appeal before the CIT (A), who confirmed the order of the AO and
the assessee is in second appeal before us.
The learned Counsel for the assessee submitted that
similar issue had come up for consideration before this Tribunal
in a number of cases particularly in the case of M/s.
Secunderabad Wines vs. ITO in ITA No.181/Hyd/2016 and this
Tribunal vide orders dated 20.07.2016, has held 3% of the cost of
goods put to sale, to be reasonable estimation of income. He
prayed for similar direction in the case of the assessee as well.
The learned DR, however, supported the orders of the
authorities below.
Having regard to the rival contentions and the material
on record, we find that this Tribunal, in the case of Secunderabad
Wines (Supra) vide orders dated 20.07.2016 (to which both of us
are signatories) have held 3% of the cost of goods put to sale to be
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ITA No 1924 of 2017 Sridhar Ramagiri Hyderabad.
reasonable estimation of income. For the sake of clarity and ready
reference, relevant paragraphs are reproduced hereunder:
“2. Brief facts of the case are that the assessee-firm which is in the business of wholesale and retail sale of liquor, filed its return of income for the A.Y. 2011-2012 on 28.09.2011 admitting income of Rs.52,25,566. The assessment proceedings under section 143(3) read with section 147 of the Act were initiated and during the said assessment proceedings after verification of various details filed by the assessee, the A.O. found that the assessee has offered low gross profit of 11.01% as against the gross profit margin of retail at 24% as per the G.O.Ms. issued by the Government of A.P. The assessee submitted that the gross profit margin of 24% as per G.O. of Government of A.P. is absolutely on the higher side. The Ld. A.R. contended that in majority of the similar liquor cases, the ITAT, Hyderabad Bench has been taking the totality of the facts into consideration and holding that the total income of the assessee shall be 3 to 5% of the goods put to sale and that the same has been upheld by the Hon'ble High Court of A.P. The A.O. however, observed that the Hon'ble A.P. High Court in the case of CIT vs. Kamlekar Shankar Lal in ITTA.No.21 of 2013 dated 23.07.2013 has estimated the net profit at 5% of the purchase or stock put to sale. He therefore, estimated the income at 5% of the goods put to sale and brought it to tax. Similarly, he also made an addition of miscellaneous receipts of Rs.3,39,064. Aggrieved, assessee preferred an appeal before the CIT(A) who confirmed the order of the A.O. and the assessee is in second appeal before us. 3. At the time of hearing, Ld. Counsel for the assessee submitted that this issue is covered in favour of the assessee by the decision of 'A' Bench of this Tribunal in the case of Sri Venkateswara Wines in ITA.No.1206/Hyd/2015 dated 27.11.2015 for the A.Y. 2011-2012 wherein after taking into consideration similar circumstances the Tribunal has upheld the estimation of income at 3% of the cost of the goods sold. Respectfully following the same, to which both of us are signatories, we direct the A.O. to adopt 3% of the cost of goods sold as the income of the assessee. The Ld. Counsel for the assessee did not argue ground Nos. 4 and 5 and therefore, the same are rejected as not pressed”.
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ITA No 1924 of 2017 Sridhar Ramagiri Hyderabad.
Respectfully following the same, we direct the AO to
consider 3% of the goods put to sale as the income of the assessee
for the relevant A.Y.
In the result, assessee’s appeal is allowed.
Order pronounced in the Open Court on 23rd May, 2018.
Sd/- Sd/- (S.Rifaur Rahman) (P. Madhavi Devi) Accountant Member Judicial Member
Hyderabad, dated 23rd May 2018. Vinodan/sps
Copy to:
1 C/o Ch. Parthasarathy & Co. 1-1-298/2/B/3, 1st Floor, Sowbhagya Avenue, Street No.1 Ashoknagar, Hyderabad 500020 2 ITO Ward 11(2) D Block, IT Towers, AC Guards, Hyderabad 3 CIT (A)-5 Hyderabad 4 Pr. CIT – 5 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File
By Order
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