Shri Shankarlal Bhatewara, Ratlam V. The ITO, Ratlam

ITA 113/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47854 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AFQPB9655A I.T.A.NO.113/IND/2010 A.Y. : 2002-03 SHRI SHANKARLAL BHATEWARA, ITO, WARD 2, GRAM KHARDU, VS RATLAM DISTT. JHABUA APPELLANT RESPONDENT APPELLANT BY : SHRI MANJEET SACHDEVA, ADV. RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 16.12.2009 FOR THE ASSESSMENT YEAR 2002-03 IN THE MATTER OF ORDER PASSED U/S 143(3)/147. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO ESTIM ATION OF SALES AND PROFIT THEREON BY THE LOWER AUTHORITIE S AND THEREBY MAKING TRADING ADDITION. -: 2: - 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUS ED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A COU NTRY LIQUOR CONTRACTOR, WHO FILED ITS RETURN AT AN INCOME OF RS . 1,19,147/-. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO OB SERVED THAT THE ASSESSEE HAS DECLARED TOTAL SALES OF RS. 1 .05 CRORES WHERE ON GROSS PROFIT WORKS OUT TO BE AT RS. 9.15 L AKHS I.E. 8.63 %. THE NET PROFIT THEREON WORKS OUT TO BE 1.06 %. THE AO OBSERVED THAT THE ASSESSEE HAS MAINTAINED REGULAR B OOKS OF ACCOUNT IN THE SHAPE OF CASH BOOK, LEDGER UNDER COM PUTER SYSTEM AND SAME WAS DULY AUDITED U/S 44AB OF THE IN COME- TAX ACT, 1961. COPY OF AUDIT REPORT WITH TRADING & PROFIT AND LOSS ACCOUNT WITH THE BALANCE SHEET WAS ALSO FILED ALONGWITH THE RETURN OF INCOME. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE APPEARED ALONGWITH THE BOO KS OF ACCOUNT BEFORE THE AO AND THE SAME WERE EXAMINED. H OWEVER, DURING THE COURSE OF EXAMINATION OF BOOKS OF ACCOUN T, NO DEFECT WAS FOUND THEREIN. THE AO APPLIED THE PROPOS ITION LAID DOWN BY THE HON'BLE M.P. HIGH COURT IN THE CASE OF BADRI PRASAD BHAGWANDAS & CO., 82 TAXMAN 109, AND THE SAL E OF THE ASSESSEE WAS ESTIMATED AT 2.5 TIMES OF THE LICE NSE FEE AND -: 3: - 3 PROFIT THEREON WAS ESTIMATED AT 5 %. ACCORDINGLY, A N ADDITION OF RS. 8,01,916/- WAS MADE. THE ASSESSEE FILED APPE AL BEFORE THE CIT(A) AND IT WAS SUBMITTED THAT THIS CASE PERT AINED TO ASSESSMENT YEAR 1977-78 BUT ASSESSEES CASE IS PERT AINING TO ASSESSMENT YEAR 2002-03 AND THE SYSTEM OF LIQUOR CO NTRACT HAS BEEN CHANGED BY THE GOVERNMENT DRASTICALLY NOW. IT WAS PLEADED THAT BEFORE 31.3.1999 THERE WAS DISTRICT-WI SE BID AUCTION BUT AFTER 1.4.99, SHOP-WISE BID AUCTION IS HELD. FURTHER, EARLIER THE BID AMOUNT WAS FIXED AND VALUE OF GOODS UP TO BID AMOUNT WERE LIFTED WITHOUT PAYING ANY EXC ISE DUTY. THEREAFTER, GOODS ARE SUPPLIED TO SALE PRICE AND NO DUTY IS PAID. IN THE PRESENT SYSTEM ALTHOUGH THE BID AMOUNT IS FIXED BUT ONLY GOODS WORTH 92 % OF ITS VALUE ARE SUPPLIED AND 8 % IS ADJUSTED FOR EXPENSES. FOR EXCESS PURCHASES, BOTH P RICE AND DUTY IS CHARGED. EARLIER THE SALE PRICE WAS NOT FIX ED, HOWEVER, NOW THE MINIMUM SALE PRICE IS FIXED. HOWEVER, THE CIT(A) DID NOT ACCEPT THE ASSESSEES CONTENTION AND CONFIRMED THE ACTION OF THE AO FOR ESTIMATION OF SALES AND PROFIT THEREO N. THE ASSESSEE IS NOW BEFORE US. -: 4: - 4 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM RECORD THAT THE ASSESSEE WAS MAINTAINING REGULAR BO OKS OF ACCOUNT AND THE SAME WERE DULY AUDITED U/S 44AB. RE TURN OF INCOME WAS FILED ALONGWITH THE AUDITORS REPORT. TH ERE WAS NO ADVERSE OBSERVATION IN THE AUDITORS REPORT. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE HAS FURNISHED COMPLETE BOOKS OF ACCOUNT MAINTAINED BY IT, WHEREIN NOT A SI NGLE DEFECT WAS FOUND OUT BY THE ASSESSING OFFICER. AS NO DEFEC T WAS THERE, THE PROVISIONS OF SECTION 145(2) WERE NOT IN VOKED. HOWEVER, THE AO HAS SIMPLY APPLIED THE DECISION OF HON'BLE M.P. HIGH COURT IN THE CASE OF BADRI PRASAD BHAGWAN DAS & CO.( SUPRA) AND ESTIMATED SALES AND PROFIT OF THE A SSESSEE. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. WE DO NO T FIND ANY MERIT IN THE ORDERS OF THE LOWER AUTHORITIES, IN SO FAR AS CASE OF M/S. BADRI PRASAD BHAGWANDAS & COMPANY IS APPLICABL E, WHERE BOOKS OF ACCOUNT HAVE BEEN REJECTED U/S 145(2 ). EVEN AS PER THE PROPOSITION OF LAW U/S 144, WHENEVER THE RE IS A REJECTION OF BOOKS OF ACCOUNT, THE AO IS EMPOWERED TO ESTIMATE THE CORRECT INCOME OF THE ASSESSEE AS PER MATERIAL PLACED -: 5: - 5 BEFORE HIM. HOWEVER, WHERE THE BOOKS OF ACCOUNT ARE FOUND TO BE CORRECT AND NO DEFECT IS FOUND THEREIN, NO POWER HAS BEEN CONFERRED TO THE AO FOR ESTIMATING PROFIT BY DISREG ARDING THE BOOK RESULT SHOWN BY THE ASSESSEE. IN THE INSTANT C ASE BEFORE US, UNDISPUTEDLY THE BOOKS OF ACCOUNT, VOUCHERS ETC . AS MAINTAINED BY THE ASSESSEE AS PER THE REQUIREMENT O F LAW WAS FOUND TO BE CORRECT. NOT A SINGLE INSTANCE OF ANY M ISTAKE WAS FOUND BY THE ASSESSING OFFICER OR BY THE LD. CIT(A) , WHO HAS GOT CO-TERMINUS POWER WITH THAT OF THE AO. UNDER TH ESE CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR APPLYI NG THE PROPOSITIONS OF LAW AS LAID DOWN IN THE CASE OF BAD RI PRASAD BHAGWANDAS & CO.( SUPRA), WHEREIN HON'BLE HIGH COUR T HAS HELD THAT WHERE BOOKS OF ACCOUNT ARE REJECTED BY TH E ASSESSING OFFICER U/S 145(2), THE SALES AND PROFIT OF THE ASS ESSEE BEING A LIQUOR CONTRACTOR IS TO BE ESTIMATED IN A PARTICULA R MANNER. AS THE BOOKS OF ACCOUNT WERE NOT REJECTED IN THE INSTA NT ASSESSEE BEFORE US, THERE IS NO JUSTIFICATION FOR APPLYING T HE PROPOSITION OF LAW LAID BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF BADRI PRASAD BHAGWANDAS & CO.( SUPRA). ACCORDINGLY, WE ARE INCLINED TO REVERSE THE ORDER OF THE LOWER AUTHORIT IES AND DIRECT -: 6: - 6 THE AO TO DELETE THE ADDITION MADE BY HIM BY ESTIMA TING SALES AND PROFIT THEREON. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JUNE, 2011. CPU* 15