INCOME TAX OFFICER WARD 6(1), JAIPUR, JAIPUR V. BABUDEEN & PARTY, JAIPUR

ITA 322/JPR/2025

AI Insights

The case involves M/s. Babudeen and Party, who were engaged in the liquor business in Jaisalmer, and the Income Tax Officer (ITO), Ward 6(1), Jaipur. The dispute centered on the assessment of income for the year 2000-2001, where the CIT(A) had partly allowed the assessee's appeal by adjusting the gross profit rate applied to their turnover. Both parties appealed against the CIT(A)'s decision to the Income Tax Appellate Tribunal. The Tribunal's decision was based on the absence of participation from the assessee in the reassessment proceedings and the reliance on a survey conducted by the ITO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775104 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 28-02-2025
• Other Referred Cases: Trilok Chand Girdharilal & Party vs. Income-tax Officer, Ward -1, Sawaimadhopur
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: G.M. MEHTA
• Keywords: Set aside; Opportunity of being heard; Business expenditure; Onus to prove; CHAPTER IV
• Section: 144; 143(3); 142(1); 68; 145; 37; 260A

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, ‘’A” JAIPUR Jh xxu Xkks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 128/JPR/2025 fu/kZkj.ko\"kZ@AssessmentYear : 2000-2001 M/s. Babudeen and Party C/o G. Mehta and Co. Paras, 127, Hari Marg, Civil Lines Jaipur – 302 006 cuke Vs. The ITO Ward 6(1) Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAAB 1827D vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 322/JPR/2025 fu/kZkj.ko\"kZ@AssessmentYear : 2000-2001 The ITO Ward 6(1) Jaipur cuke Vs. M/s. Babudeen and Party C/o G. Mehta and Co. Paras, 127, Hari Marg, Civil Lines Jaipur – 302 006 LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAAB 1827D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri G.M. Mehta, CA. jktLo dh vksj ls@ Revenue by: Smt. Anita Rinesh, JCIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 27 /08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 02/09/2025 PER: NARINDER KUMAR, JUDICIAL MEMBER Both the above captioned appeals, filed by the assesssee and the department, respectively, are being disposed off vide this common order, as the same arise out Printed from counselvise.com 2 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR of the same impugned order i.e. dated 3-12-2024 passed by ld. CITA(A)/ NFAC, Delhi, relating to the assessment year 2000-2001. 2. Vide impugned order, ld. CIT(A) partly allowed the appeal filed by the assessee, as regards Ground No. 2, being of the view that GP Rate of 15%, after deduction of short license fee on a turnover of Rs.7,91,57,687/- would meet the ends of justice, and he, thereby restricted, the addition to Rs.32,03,430/-. As regards Ground No. 1 raised by the assessee, ld. CIT(A) dismissed the same by observing that the assessee had failed to submit any material in the proceedings. 3. The AO had framed assessment on 24-12-2018, computing the income of the assesee at Rs.3,10,44,301/-, taking into consideration net profit of retail sale liquor as Rs.3,07,18,709/- and whole sale liquor as Rs.3,25,592/-. 4. Since the assessee and the Department felt aggrieved by the impugned order passed by ld. CIT(A), both of them are in appeal before Tribunal by way of their separate appeal. 5. Arguments heard. File perused. 6. Admittedly, the assessee is having status of AOP was engaged in the business of entering into liquor contract, on retail and whole sale basis, in Jaisalmer area. Printed from counselvise.com 3 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR During assessment proceedings u/s 143(3) of the Act, made on 28-03-2003, total income of the assessee was computed at Rs.3,79,39,455/- by calculating net profit of Rs.3,10,44,301/- in retail and whole sale trading of liquor and a sum of Rs.68,95,154/- on account of unexplained deposits. In first round of litigation, the assessee challenged the assessment made on 28-03-2003,by filing an appeal before ld. CIT(A). In that round, ld. CIT(A) was of the view that applicability of GP Rate @ 60% in country liquor and 35% in IMFL/Beer was not justified, and that accordingly, a lump sum addition of Rs.5.00 lacs , in the trading account of country liquor, IMFL and Beer account was going to meet the ends of justice. However, ld. CIT(A) deleted other addition of Rs.68,95,154/- which was made u/s 68 of the Act, on account of unverifiable investment. As is available from the record, when the matter came up before ITAT Jaipur Bench, vide order dated 22-12-2004, addition of Rs.70.00 lacs was confirmed. When the matter reached our own Hon’ble High Court, matter was remanded to the ITAT, Jaipur Bench for decision afresh. ITAT, Jaipur Bench confirmed the addition of Rs.90.00 lacs having estimated the sale by the assessee at Rs.9.00 Crores and applying GP Rate @ 10%. The matter again reached our own Hon’ble High Court. Printed from counselvise.com 4 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR Vide order dated 21-08-2017, Hon’ble High Court set aside the issue regarding net profit estimation and remitted the matter, to the AO while observing in the manner as: ‘’….In view of the subsequent development of law and evidence, it is appropriate to remit back the matter to the Assessing Officer. All parties will appear before the Assessing Officer in first week of November, 2017. All the parties will produce all documents before the authority on which they want to rely upon and the Assessing Officer will hear both the sides and after giving reasonable opportunity of being heard and if any statement is to be relied upon, will also grant opportunity to cross examine. We make it clear that in view of the order of High Court, the Tribunal has not considered the same, therefore, we are remitting back the matter to the authority since both the sides have preferred the appeal against the order of Tribunal. To give effect to the order, the authority will heard the parties afresh without being influence by the order of CIT(A) or of this Court. With the above observations, the appeals stand disposed of.’’ Fresh Assessment is made 7. That is how, the AO initiated assessment proceedings and served notice u/s 142(1) of the Act, but despite service, none appeared on behalf of the assessee in the proceedings. Again, a notice dated 6-12-2018 was issued, but the assessee did not participate in the proceedings. 8. Ultimately, the AO passed assessment order on 24-12-2018, taking into consideration the net profit and made lumpsum addition as mentioned above, and assessed total income of the assessee at Rs.3,10,44,301/-. Printed from counselvise.com 5 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR Matter comes up before Ld. CIT(A) for the second time Feeling aggrieved by the above said assessment order, the assessee challenged the same before ld. CIT(A). As noticed above, ld. CIT(A) has partly allowed the appeal restricting the G.P. Rate 15% , after deduction of License Fee, on turnover of Rs.7,91,57,678/-. For ready reference, it may be mentioned here that other addition made by the AO stand deleted. Department challenges the CIT(A) order 9. So far as the appeal filed by the Department, challenging the impugned order passed by ld. CIT(A) is concerned, ld. DR for the appellant has submitted that ld. CIT(A) erred in restricting the addition only to Rs.32,03,430/- even though the assessee did not furnish any reply or documents when called upon to do so by the AO in compliance with the directions issued by Hon’ble High Court, and, that rather in the given situation, ld. CIT(A) should have sustained the assessment order as regards this addition. As per grounds of appeal submitted by the department, its case reads as under: “Department's appeal (Appeal No. ITA 322/JPR/2025) Being highest bidder liquor contract for Jaisalmer and Jaisalmer District, Assessee AOP was awarded license to trade IMFL/Beer and Country liquor by State Excise Department for F.Y. 1999-2000 (A.Y. 2000-01) and not thereafter, whose office was Printed from counselvise.com 6 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR situated in Jaipur. On completion of contract, all the AOP members left Jaipur in search of other jobs. At the local address: 596/2, Malviya Nagar, Jaipur none stayed. Khushi Mohammed, the main member of AOP, died of road accident in the year 2017. Ld. AO treated the liquor contract business run by assessee AOP like other regular trade and business dealing in general goods and merchandise. The statutory notices, if any, sent by Id. AO were never delivered to any of the erstwhile members of the assessee AOP nor Id. AQ admitted service of notice on any particular person. For this very reason, Id. AO, after completion of the assessment, started sending penalty and other notices at the address of undersigned (P.B. pages 34 to 36). However. Considering this fact, AO could have sent statutory notices earlier also and undersigned in capacity as A/R. would have attended the proceedings after remand by Hon'ble High Court to the file of Id.AO. With the above brief facts, the ground of appeal of the Department are discussed hereunder. Grounds of appeal of the Department: Ground No. (1) The Ld. CIT(A) erred in restricting the additions to Rs. 32,03,430/- without appreciating the fact that the assessee, despite issuance of notice u/s. 142(1) on 10/10/2018 and 06/12/2018 did not furnish any reply/documents during the assessment proceedings, thought the Hon'ble High Court in DBIT Appeal No. 06/2016 and DBIT Appeal No. 42/2016 dated 21/08/2017 had directed the assessee to produce all documents before the authority on which they want to rely. As submitted hereinabove, no statutory notice was received by any of the erstwhile AOP members as the liquor contract was closed on 31.03.2000 and at the give office address of the Assessee AOP, no members were available, nor any of the AOP member had any knowledge for a common order in DBIT Appeal No. 06/2016 and DBIT Appeal No. 42/2016 dated 21/08/2017 passed by Hon'ble Rajasthan High Court. For this very reason, after passing the ex-parte order by Id. AO, he started sending statutory notices at the address of undersigned. Ground No. (2) The Ld. CIT(A) erred in restricting the additions to Rs. 32,03,430/- ignoring the fact that the assessment was completed u/s. 144 of the Act as the assessee remained non-responsive during entire assessment proceedings in complete violation of the direction of the Hon'ble High Court to produce all documents on which it wanted to rely before the A.Ο. Printed from counselvise.com 7 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR Reply submitted in response to ground No. (1) of Department. Ground No. (3) The Ld. CIT(A) failed to appreciate the facts the assessee was in violation of the directions of the Hon'ble High Court given in DBIT Appeal No. 06/2016 and DBIT Appeal No. 42/2016 dated 21/08/2017 whose concluding paragraph is reproduced below: \"All the parties will produce all documents before the authority on which they want to rely upon and the assessing Officer will hear both the sides and after giving reasonable opportunity of being heard and if any statements is to be relied upon, will also grant opportunity to cross examine. We make it clear that in view of the order of High Court, the Tribunal has not considered the same, therefore we are remitting back the matter to the authority since both the sides have preferred the appeal against the order of Tribunal. To give effect to the order the authority will hear the parties afresh without being influence by the order of CIT(A) or this Court'. Response submitted hereinabove (ground No. (1) of Deptt's. Ground No. (4) The Ld. CIT(A) erred in restricting the addition to Rs. 32,03,430/- without calling any remand report form the A.O.: There is no provision in Income tax Act requiring remand report, therefore, calling for remand report is internal matter of the Department which cannot be challenged through ground of appeal before this Hon'ble Tribunal Ground No. (5) The appellant craves leave or reserves right to amend, modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. The ground is general in nature not requiring any response from the assessee.” Printed from counselvise.com 8 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR Assessee also challenges the CIT(A) Order 10. Learned AR for the assessee has challenged the findings recorded by ld. CIT(A) even in restricting the addition and urged for setting of the impugned addition, mainly on the ground that the AO failed to provide reasonable opportunity of being heard to the asseessee, and took into consideration certain material at the back of the assessee-appellant. Therefore, ld.AR has urged that appeal filed by the assessee be allowed and appeal filed by the Department be dismissed. Case of the assessee, as per grounds of appeal, reads as under: “Brief facts of case: Assessee AOP, being highest bidder, was awarded liquor contract for Jaisalmer and Jaisalmer District. The contract area was facing very drought in this third consecutive year of drought. As against return income of Rs.6.87,900/-, the assessed was Rs.3.79.39,455/- as per order dt. 28.03.2003 บ/ร. 143(3) of Act (including addition of Rs.68.95,154/- under sec. 68 of Ac). For making additions, Id. AO applied selling rates charged by Jaipur city retail shops, found in survey on 21.03.2003. In appeal before Id. CIT(A), lump sum trading addition of Rs.5,00,000/- was sustained and the addition u/s. 68 of Act was totally deleted. In second appeal by both. assessee and department before this Hon'ble ITAT, the trading addition was enhanced to Rs.70,00,000/-. Against the order of Hon'ble ITAT, the assessee as well as the Department both preferred appeal under section 260A of Act before the Hon'ble Rajasthan High Court who, vide order dated 21.08.2017 in DBITA No. 28/21016 remitted back the matter of addition to the file of Id. AO. In fresh order dated 24.12.2018, Id.AO repeated the same trading income of Rs.3.10,44,301/-avoiding the fact that liquor policy in Rajasthan is being changed every year and new levies are imposed on liquor business. Ld. CIT(A) determined taxable income by applying 15% gross profit on declared turnover. GROUNDS OF APPEAL: Printed from counselvise.com 9 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR Ground No. (1) Ld. CIT(A), has erred in law and on facts in sustaining trading addition of Rs.32,03,430/- by determining tax on application of higher GP rate 15% on declared sales of Rs.1,18,73,652/- without considering the competition of neighboring liquor contractors so also the drought for third consecutive in the area and in the same period as against levy of tax on net profit after reducing day to day business expenses and short licence fees which are legally allowable deductions from gross profit under the provisions of section 36 & 37 of Income tax Act. In the relevant period, the fulfillment of liquor contract amount was based on purchase of liquor as under: S. No. Type of alcoholic drink Fulfilment of contract 1 Indian Made foreign liquor (IMFL) 675/- per bulk Litre 2 Beer. Strong Beer Ledger Beer Rs. 117 per bulk Litre Rs. 78/- per bulk Litre 3 Country Liquor 85% of issue price (\"Bulk Litre 12 bottles of 650 ML) Total contract amount is divided in 12 monthly installments and each monthly installment required to be fulfilled through purchase of IMFL/Beer/country liquor as per above fulfillment rates. The un-fulfillment part for inability to purchase liquor, because of low consequent sales, the monthly target is made good by payment to State Excise Department called 'Short License fee\". Application of taxable income by applying 15% of G.P. rate on declared is without considering the following issues: (1) Books of account are audited under section 44AB of Act and the auditors did not point out any adverse comment (P.B. pages 5 & 6) (2) Jaisalmer and Jaisalmer district were adversely affected because of drought for this third consecutive year (P.B. pages 7 to 10). Drought had substantially reduced the paying capacity of residents to purchase liquor, Printed from counselvise.com 10 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR (3) Had the assessee enhanced the retail rates of liquor, sale would have reduced resulting in low quantity of purchase and the smuggling of liquor sold by nearing liquor contract areas so also availability of liquor at much lower rates at Border areas (P.B. page 11). (4) The fulfillment of liquor contract price through purchases could only be made to the extent of quantity of liquor sold. For limited availability of as per monthly sale, to fulfill contract amount as per purchase of goods, unlimited purchased could not have been made. Moreover, at the close of contract period, to avoid confiscation of liquor by State Excise Deptt. the stock in trade was to be reduced to nil. (5) Tax could be charged on net income i.e. after deducting allowable business expenses as per provisions of 37 of IT Act. On the other hand, Id. CIT (A) has directed to levy tax on gross profit without following the provisions of chapter IV-D of Income tax Act. (6) No basis or comparable case was referred to by ld. CIT(A) to justify application of 15 per cent G.P rate of declares sales; (7) By following G.P. rate applied in original order dated 28.03.2003 (P.B pages 11 to 29) in order dated 24.12.2018, he allowed all the business expenses. Therefore taxable income cannot be determined on arrived at figures by applying G.P. rate. On the facts and considering the position of all, Id. CIT(A) was not justified in directing the tax G.P. of 15 per cent of the declared turnover including wholesale sale which is fully vouches. Ground No. (2) Without prejudice to ground No. (1) hereinabove, as per the accounting principles and the decisions of this Hon'ble ITAT, trading addition cannot exceed the amount of difference between the sales declared and sales estimated whereas in assessee's case, Id. CIT(A) had accepted the declared sales and therefore, there is no justification in additions on declared sales. In cases of I.T.C. Vs. Mahrishi Industries (2002) XXVII TAX WORLD 505 (JP) and Mangal Brothers Vs. ITO (2002) XXVIII Tax World 521 (JP) (P.B. pages 30 to 33) this Hon'ble Tribunal has already held as under: Printed from counselvise.com 11 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR \"Trading addition should in no case exceed the amount of difference between the sales declared and sales estimated\". The above finding of the Hon'ble Tribunal is for the reason that as per accounting , both sides of trading account (Debit and credit) are of equal sums. Therefore when Id. CIT(A) had accepted the declared sales, the addition cannot exceed the difference in declared and accepted sales.” 11. As noticed above, vide judgement dated 21-08-2017, our own Hon’ble High Court remitted the matter to the AO with the direction to all the concerned parties to produce all the documents there, so as to provide reasonable opportunity of being heard including the opportunity to cross examine in case any statement was relied upon. 12. As is available from the assessment , when the AO issued notices to the assessee u/s 142(1) on 10-10-2018, 6-12-2018 and 9-12-2018, none appeared on behalf of the assessee in the assessment proceedings. Significant to note that it has not been argued before us on behalf of the assessee that none of the notices issued by the AO was served upon the assessee. In view of the direction issued by our own Hon’ble High Court, when the AO called upon the assessee to participate in the proceedings, the assessee was required to fully cooperate and comply with the directions issued by the AO from Printed from counselvise.com 12 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR time to time, but none appeared on behalf of the assessee before the AO, and as such, he had no option but to proceed further. 13. One of the grounds raised by ld.AR for the appellant is that the AO did not rely on its books of accounts, even without rejecting the books of account or resorting to provisions of Section 145(3) of the Act. Same ground was raised on behalf of the assessee before ld. CIT(A). While dealing with this ground, ld. CIT(A) observed that there was non-appearance and non-compliance of the notices issued by AO and as such the assessee did not avail of fresh opportunity provided to bring on record any new material, and that in the situation, the AO had no option but to rely on material available. While referring to the previous assessment order, it was mentioned that sales were not vouched and as such remained unverifiable; that earlier plea put forth by the assessee regarding deposit of its stock register with DEO, was found to be false, when the said DEO denied that any stock register was kept by the assessee with the said department, and consequently, the books of account were rejected u/s 145(3) of the Act. Rejection of the books of account by passing the assessment order u/s 145 (3) was taken into consideration by the AO, while conducting assessment proceedings afresh on remand as per orders issued by Hon’ble High Court. Printed from counselvise.com 13 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR In view of the observations made by ld. CIT(A) in para 6.5 of the impugned order, we do not find any merit on the grounds raised by ld.AR for the appellant that this not a case of rejection of books, or that AO should have considered the books of accounts of the assessee. G.P. Rate 14. As regards the only other ground of dispute raised by both the sides relating to G.P. rate adopted by ld. CIT(A), ld.AR for the assessee has contended that ld. CIT(A) erred even in restricting the addition while applying higher G.P. rate @ 15%, as the factum of competition between other liquor contractors and assessee and its impact was not considered. At this stage, findings recorded by ld. CIT(A) while restricting the said addition need to be reproduced. For ready reference, the same are reproduced, and read as under:- ” 7.2 I have carefully considered the facts of the case, the submission of the appellant and evidences on record. The following are the figures achieved by the appellant AOP in this first year of liquor contract which was in Ajmer District. S.No. Particulars Amount 1. Turnover achieved: Country liquor IMFL*/Beer (retail sales) 7,91,57,687 Printed from counselvise.com 14 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR 2. Gross profit: Country liquor IMFL*/Beer 86,70,222 3. G.P. rate 10.95% 4. Short License fee 62,46,631 5. Profit before short License fee 1,49,16,853 6. GP rate (before Short License fee) 18.84% (* Indian Made Foreign liquor) 7.3 A Survey dated 21st March 2003 at retail shops of IMFL/Beer owned and run by M/s. Surjeet Wines (liquor contractor of Jaipur city in the F.Y. 2002-03) was carried out by Income tax Department, and on the basis of such survey, the retails sales rates charged by Jaipur city liquor contractor were applied in appellant's case who had liquor contract at Jaisalmer and Jaisalmer District. The appellant submitted that no opportunity of being heard was allowed to the appellant for such material which was collected behind the back of the appellant (information collected in survey on 21st March 2003 in Jaipur retail liquor shops) and was used for the purpose of assessment in respect of the margin of profit nor the AO compared the payment of Short License fee of Jaipur Liquor Contractor in F.Y. 2002-03 which was more than ten million. I find that in pursuant to the order of the Hon'ble Rajasthan High Court, the AO issued notice u/s 142(1) of the Act dated 10.10.2018 through affixture but there was no compliance. Therefore, the AO issued a notice again u/s 142(1) of the Act on 06.12.2018 but there was no compliance. Therefore, opportunity given to the appellant was not taken Up by the appellant. 7.4 I find that the same gross profit percentage as in Jaipur have been applied in the case of the appellant irrespective of the fact that there is vast difference in location, size and operating conditions of the area. The size of the contract and amount of short licence fees deposited have wide gap. The AO universally applied GP rate of 60% and 35% in country liquor and IMFL respectively in all cases irrespective of size of contract, lifting of quantity of wind and its landing cost vis-à-vis direct expenses etc.it is seen that as per newspaper report submitted by the appellant, in, order to achieve maximum sales, the Jaipur liquor contractor used to charge high retail rates on sales made in Jaipur city and nearing half of rates at Border areas. As per paper reporting, the retail rates of liquor contractor in Jaipur city and at Border areas were as under: Printed from counselvise.com 15 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR S.No . Type of liquor Rates in Jaipur City (Rs.) Rates at Border area (Rs.) 1. Beer 60/- 40/- 2. IMFL (Bottle) 200/- to 220/- 80/- to 120/- 3. Rum/ Jin 200/- 80/- to 100/- 7.5 Even, the public at large in Jaisalmer and Jaisalmer District are dependent on Agriculture, irrigated through rains and dependent on Monsoon conditions but on the other hand, a retail rate of liquor in Jaipur city is not dependent on Monsoon conditions. For country liquor, there is only one manufacturer and wholesale seller in Rajasthan which is M/s. Rajasthan State Ganganagar Sugar Mills Ltd. M/s. Rajasthan State Ganganagar Sugar Mills Ltd. is Government of Rajasthan enterprise. The purchase of country liquor could be made only after payment of substantial amount of permit fee and other charges to the state Excise Department and the issue price to M/s. Rajasthan State Ganganagar Sugar Mills Ltd. 7.6 The Hon'ble Jurisdictional High Court of Rajasthan in the case of Trilok Chand Girdharilal & Partyv Income-tax Officer, Ward -1, Sawaimadhopur, in DB IT APPEAL NO. 577 OF 2009 dated 21.01.2014 has held as under:- \"18. We have considered the arguments advanced by the learned counsel for the parties as also perused theimpugned orders and in our view when the sale vouchers have not been maintained or issued thencertainly provisions of Section 145(3) can be invoked by the Revenue. The assessee cannot contend thatwhen all other things are fully proved and only because sale vouchers are lacking then book results cannotbe rejected. Thus, in our view, the authorities have rightly rejected the trading results by invoking theprovisions of Section 145(3) of the Act. Now, when the trading results have been rejected, books ofaccounts have been rejected then a fair estimate is required to be made in the instant case. 19. While the Assessing Officer applied GP rate on the basis of certain comparable cases; the assessee alsocited cases where GP rate was applied Printed from counselvise.com 16 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR by the revenue and after appreciation of evidence on record, theCIT(A) applied an average Gross Profit rate as declared by the appellant and the other comparable casesrelied upon by the assessee as well as the Assessing Officer. Therefore, in our view, there was no otheralternate with the Assessing Officer in a case like this to have adopted an average gross profit rate, whichhas been upheld by the CIT(A) and ITAT.\" 7.7 In the present case, I find the sales were not vouched and hence unverifiable and that no quantitative tallies could be made regarding the stock in absence of sales data. The appellant submitted before the AO that the stock register were deposited with the State DEO but on enquiry, the State DEO denied that any registers were kept with the Department. Therefore, I am of the considered view that the AO rightly rejected books of accounts u/s 145(3) of the Act in the original order and the same has been relied on by the AO in the impugned order as no new material has been submitted by the appellant in the set aside assessment proceedings. Therefore, as the trading results have been rejected, books ofaccounts have been rejected then a fair estimate is required to be made in the case of the appellant. The AO had determined a total turnover of Rs 10,95,14,087 (Rs 2,93,95,937 in country liquor + Rs 8,01,18,150 in IMFL & beer) and net profit of Rs 3,10,44,301 was arrived at. During the appeal proceedings, the appellant submitted that the turnover achieved was only Rs 7,91,57,687 and has shown GP Rate of 18.84% before short license fee and a GP rate of 10.95% after deduction of short license fee. 7.8 In view of the above facts and discussion and considering the different geographical, social and economical conditions prevalent to the area of contract as discussed above and the fact that the AO universally applied GP rate of 60% and 35% in country liquor and IMFL respectively in all cases irrespective of size of contract, lifting of quantity of wind and its landing cost vis-à-vis direct expenses etc, I am of the considered view that a GP rate of 15% after deduction of short license fee on a turnover of Rs 7,91,57,678 would meet the end of justice. The addition is thus restricted to Rs 32,03.430 (Rs1,18,73,652 i.e 15% of Rs 7,91,57,678- Rs 86,70,222 i.e 10.94% GP declared by appellant). The appeal on Ground No 2 is thus treated as partly allowed. 8. Conclusion: In the result, appeal of the appellant is partly allowed.” 15. As noticed above, the assessee did not participate in the proceedings conducted by the AO after the matter was remitted to him for decision afresh. In this situation, when AO took into consideration the information collected in survey Printed from counselvise.com 17 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR of 31-03-2003, in retail liquor shops at Jaipur, it cannot be said that said was material was considered at the back of the assessee. The initial burden to prove, its own case, was on the assessee. When it failed to bring on record any convincing material, the AO had no option but to utilize material available with him. There is no merit in the contentions raised by ld. AR that in the given situation, even for relying the survey report, the assessee deserved to be provided an opportunity for cross examination. 16. Thus, we find that ld. CIT(A) restricted the addition by taking into considration G.P. rate @ 15% after deduction of short license fee, in the peculiar facts when the sales were not vouched and were not verifiable and in the absence of sales data, no qualitative tally could be made and even before the ld. CIT(A), no material was submitted in this regard. 17. No other argument has been advanced by Learned AR for the assessee or Learned DR for the department. 18. In view of the above discussion, we do not find any illegality or irregularity in the impugned order passed by Learned CIT(A). Printed from counselvise.com 18 ITANO. 128/JPR/2025 M/S BABUDEEN AND PARTY VS ITO WARD 6(1), JAIPUR Result 19. As a result, both the appeals are hereby dismissed. Files be consigned to the record room. Copy of the common order be placed on the file of the connected appeal. Order pronounced in open Court on 02 / 09/2025 Sd/- Sd/- (xxu Xkks;y) ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated 02 /09/2025 *Mishra, Sr. PS vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. Babudeen & Party,Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 6(1), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File ITA No.128 & 322/JPR/2025) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar Printed from counselvise.com "