Sh. Mohan singh & Co., Agra V. A.C.I.T., Central Circle, Agra

ITA 209/AGR/2011

• Counselvise Citation: 20920314 RSA 2011
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-04-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 07-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: MANUJ SHARMA S
• Keywords: Business income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.209/AGR/2011 ASSESSMENT YEAR : 1997-98 SHRI MOHAN SINGH & CO. VS. ASSTT. COMMISSIONER OF INCOME TAX, C3/9-A, M.G. ROAD, CENTRAL CIRCLE, AGRA. AGRA. (PAN: AATFM 4361 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA & SHRI MANUJ SHARMA, ADVOCATES RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 03.04.2012 DATE OF PRONOUNCEMENT : 13.04.2012. ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21.02.2011 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMEN T YEAR 1997-98. 2. THE EFFECTIVE GROUND RAISED IN THIS APPEAL IS IN RESPECT OF ADDITION OF ` 1,13,034/- MADE BY THE ASSESSING OFFICER WHICH HAS BEEN SUSTAINED BY THE CIT(A). ITA NO.209/AGR/2011 A.Y. 1997-98 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E ENGAGED IN BUSINESS OF LIQUOR TRADING. THE ASSESSEE FILED RETURN OF INCOME DECLA RING INCOME OF ` 1,23,73,436/-. THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143( 3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) AT INCOME OF ` 1,24,86,470/-. IN FIRST ROUND OF LITIGATION THE ASSESSEE CHALLENGED ORDER OF THE ASS ESSING OFFICER BEFORE THE CIT(A) WHO DELETED THE ADDITION MADE BY THE ASSESSING OFFI CER. THE DEPARTMENT PREFERRED APPEAL BEFORE THE I.T.A.T. THE I.T.A.T. VIDE ORDER DATED 15.12.2005 SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER WITH THE FOLLOWING DIRECTION AS NOTED FROM THE ORDER OF CIT(A) FROM PAGE NO.2 :- HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSEE HIMSE LF ADMITS THAT IT IS NOT POSSIBLE TO MAINTAIN SALE VOUCHERS THEREFORE TH E SALE IS NOT SUBJECT TO VERIFICATION AND PROVISIONS OF SEC.145(3) ARE AP PLICABLE. IN THE PECULIAR FACTS, IT IS APPROPRIATE TO RESTORE THE IS SUE OF APPLICATION OF GP RATE TO THE FILE OF ASSESSING OFFICER WITH THE D IRECTION THAT HE SHOULD APPLY THE GP RATE ON THE BASIS OF PAT HISTOR Y OR COMPARABLE CASE AFTER ALLOWING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. THE ISSUE AS SUCH IS RESTORED WITH THE ABOVE DIRECTION. 4. IN COMPLIANCE TO THE DIRECTION OF THE I.T.A.T., THE ASSESSING OFFICER REPEATED THE ADDITION REJECTING THE ASSESSEES CONTENTION TH AT THE RESULT DECLARED IN THE BOOKS OF ACCOUNT ARE ACCEPTABLE IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER NOTED THAT EARLIER ESTIMATE OF ENGLISH WINE ` 7,50,00,000/- MADE IN ORIGINAL ASSESSMENT WAS ACCEPTED AS CORRECT ESTIMATION BY THE I.T.A.T. THE ASSESSING OFFICER FURTHER ITA NO.209/AGR/2011 A.Y. 1997-98 3 HELD THAT THE ESTIMATION MADE IN ORIGINAL ASSESSMEN T IN RESPECT OF SALE AS WELL AS G.P. RATE AT 1.62% WAS REASONABLE AND IN ACCORDANCE WITH LAW AS AGAINST G.P. RATE OF 1.634% SHOWN BY THE ASSESSEE IN THE RETURN. ACC ORDING TO THE ASSESSING OFFICER, THE ORIGINAL ESTIMATION WAS CORRECT AND AC CORDINGLY REPEATED THE ADDITION OF ` 1,13,034/- ESTIMATED BY APPLYING PROFIT RATE OF 1.6 2% ON ` 7,50,00,000/- AND ADDED TO THE INCOME DECLARED BY THE ASSESSEE AT ` 1,23,73,440/-. TOTAL ASSESSED INCOME DETERMINED AT ` 1,24,86,465/- (SOME DIFFERENCE IN CALCULATION OF AM OUNT). THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER BEFORE THE CIT(A) SUBMITTING THAT THE ONLY ISSUE WHICH HAS BEEN SET A SIDE BY THE I.T.A.T. WAS IN RESPECT OF G.P. RATE AND NOT IN RESPECT OF ESTIMATI ON OF SALE. THE CIT(A) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE ON THE GROUN D THAT THE ESTIMATION OF SALES AT ` 7,50,00,000/- WAS ALREADY ACCEPTED. THAT NO DIRECT ION FROM THE TRIBUNAL THAT THE SAME SHOULD BE DISTURBED. 5. THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTEN TION ON THE ORDER OF FIRST ROUND OF LITIGATION IN ITA NO.109/AGR/2001 AND POIN TED OUT FROM PARAGRAPH NO.8 WHICH HAS BEEN REPRODUCED ABOVE THAT THE I.T.A.T. H AS SENT BACK THE MATTER ONLY IN RESPECT OF RATE OF G.P. LD. AUTHORISED REPRESENTAT IVE HAS ALSO DREW OUR ATTENTION TO PAGE NO.3 OF I.T.A.T. ORDER WHEREIN THE I.T.A.T. HAS REPRODUCED THE FINDING OF CIT(A) WHERE ESTIMATION OF TURNOVER OF ` 7,50,00,000/- HAS BEEN DELETED. THE ITA NO.209/AGR/2011 A.Y. 1997-98 4 RELEVANT FINDING OF CIT(A) IN THE FIRST ROUND OF LI TIGATION REPRODUCED BY THE I.T.A.T. AT PAGE NO.3 IS AS UNDER :- (4) THE FACTS AND CIRCUMSTANCES RELATING TO THE CA SE HAVE BEEN CONSIDERED. IT IS NOTICED THAT THE APPELLANT HAS M ADE TOTAL SALES OF ` 39,36,20,134/- DURING THE YEAR. IT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT WHICH HAVE BEEN AUDITED AND THE AUDIT REPOR T HAS BEEN SUBMITTED B4FORE THE A.O. THE ARGUMENT OF THE LEAR NED COUNSEL THAT AS THE COST OF INDIVIDUAL BOTTLE OF INDIAN MADE FOR EIGN LIQUOR, WAS IN THE RANGE OF ` 100/- TO ` 400/- AND ALL SALES WERE IN CASH TO INDIVIDUAL PURCHASERS, THE VOLUME OF CASH MEMOS CAN BE EASILY VISUALIZED AGAINST TOTAL SALES SHOWN. THE APPELLANT HIMSELF H AS SHOWN AN INCOME OF ` 1,23,73,436/-. NOTWITHSTANDING THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING THE SALES BEING NOT FULLY VERIFIABLE, IN RESPECT OF SALES OF INDIAN MADE FOREIGN LIQUOR, IT MAY BE SAID THAT WHEN THE PRICE OF THE INDIVIDUAL ITEM DEALT BY THE ASSESSEE WAS MORE OR LESS SAME AND IT HAS ALREADY S HOWN AN INCOME OF ` 1,23,73,436/-, THERE DOES NOT SEEM TO BE ANY APPARE NT REASON FOR SUPPRESSING SALES AS ESTIMATED BY THE ASSESSING OFF ICER, WITHOUT ANY COGENT BASIS, WHICH COULD HAVE RESULTED INTO SUPPRE SSION OF INCOME BY ` 1,13,030/-. IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICERS VIEW NOT TO ACCEPT THE SALES SHOWN BY THE APPELLANT AND TO ESTIMATE THEM AT ` 7,50,00,000/- AGAINST ` 6,74,30,260/- SHOWN CANNOT BE SUSTAINED. IN THE CIRCUMSTANCES OF THE CASE AS DIS CUSSED, THE ADDITION OF ` 1,13,030/- IS DELETED (RELIEF ` 1,13,030/-). 6. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HA ND, RELIED UPON THE ORDER OF CIT(A). 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT IN THE FIRS T ROUND OF LITIGATION, I.T.A.T. NOTED ITA NO.209/AGR/2011 A.Y. 1997-98 5 THAT THE ASSESSEE HIMSELF ADMITTED THAT IT WAS NOT POSSIBLE TO MAINTAIN THE SALE VOUCHERS. THEREFORE, THE SALE IS NOT SUBJECT TO VE RIFICATION AND PROVISIONS OF SECTION 145(3) ARE APPLICABLE. THIS ISSUE RELATING TO REJECTION OF BOOKS OF ACCOUNT BECAME FINAL AS THE I.T.A.T. HAS HELD IN FIRST ROUN D OF LITIGATION VIDE ORDER DATED 15.12.2005 AS ABOVE THAT SECTION 145(3) IS APPLICAB LE. HOWEVER, ON MERIT IT HAS BEEN NOTICED THAT THE REVENUE AND ASSESSEE BOTH ARE NOT CORRECT IN READING THE ORDER OF I.T.A.T. THE ASSESSING OFFICER HAS RECORD ED THE FACT THAT THE I.T.A.T. HAS ACCEPTED THE ESTIMATION OF SALE OF ` 7,50,00,000/- AS CORRECT AND DID NOT DISTURB THAT FIGURE. THE CONTENTION OF THE ASSESSEE WAS THAT TH E MATTER HAS BEEN SENT BACK ONLY FOR THE PURPOSE OF G.P. RATE. IN FIRST ROUND OF LI TIGATION THE I.T.A.T. HAS ALLOWED THE REVENUES APPEAL FOR STATISTICAL PURPOSES AFTER REC ORDING THE RELEVANT FACTS FROM WHICH IT IS CLEAR THAT AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) THE ONLY QUESTION REMAINED TO BE DECIDED BY THE ASSESSI NG OFFICER IN COMPLIANCE TO THE ORDER OF I.T.A.T. IS ESTIMATION OF PROFIT. THE REVENUE AND THE ASSESSEE BOTH WENT ON TECHNICAL ISSUE AS DISCUSSED ABOVE. WHEN T HE I.T.A.T. HAS SENT BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER IN FIRS T ROUND OF LITIGATION THE ASSESSING OFFICER IS NOT CORRECT IN REPEATING THE ORIGINAL AD DITION. THE ASSESSING OFFICER DID NOT BRING ON RECORD ANY COMPARABLE CASE NOR HAS REC ORDED THE PAST HISTORY OF THE ASSESSEE. THE ASSESSING OFFICER DID NOT CARRY OUT THE COMPLETE DIRECTION OF THE I.T.A.T. IN THE LIGHT OF THE FACTS, THE ORDER OF T HE ASSESSING OFFICER SUSTAINED BY THE CIT(A) CANNOT BE SUSTAINED AT THIS STAGE. SIMI LARLY, THE CONTENTION OF THE ITA NO.209/AGR/2011 A.Y. 1997-98 6 ASSESSEE CANNOT ALSO BE ACCEPTED THAT THE MATTER WA S SENT ONLY FOR THE G.P. RATE PURPOSE. HOWEVER, AFTER CONSIDERING THE FACTS OF T HE CASE AND CONSIDERING SECOND ROUND OF LITIGATION, WE FIND THAT PROVISIONS OF SEC TION 145(3) IS APPLICABLE AS STATED ABOVE. THE QUESTION REMAINED TO BE DECIDED IS ESTI MATION OF PROFIT FOR THE YEAR UNDER CONSIDERATION. THE MAJOR DEFECT POINTED OUT IN THE BOOKS OF ACCOUNT AND ADMITTED BY THE ASSESSEE THAT CONSIDERING THE NATUR E OF TRADING OF THE BUSINESS, IT IS NOT POSSIBLE TO MAINTAIN SALE VOUCHERS. TO COVER U P THIS DEFICIENCY, WE FIND IT REASONABLE TO SUSTAIN THE ADDITION TO THE EXTENT OF ` 50,000/- AND RELIEF OF BALANCE AMOUNT OF ` 63,034/- IS ALLOWED. THE AMOUNT OF ADDITION CALCUL ATED BY THE ASSESSING OFFICER IS AS UNDER :- INCOME FROM COUNTRY LIQUOR ` 1,55,92,005/- INCOME FROM IMFL ` 12,15,000/- ------------------ ` 1,68,07,005/- LESS: SALARY & INTEREST TO PARTNER ` 43,20,540/- ------------------ ` 1,24,86,465/- THUS, THE ASSESSING OFFICER DETERMINED TOTAL INCOME OF THE ASSESSEE AT ` 1,24,86,466/- AS AGAINST ` 1,23,73,476/- DECLARED BY THE ASSESSEE THEREBY MAKING ADDITION OF ` 1,13,030/-. ITA NO.209/AGR/2011 A.Y. 1997-98 7 8. THE ASSESSING OFFICER IS DIRECTED TO RECALCULAT E THE INCOME OF FOREIGN LIQUOR AS DISCUSSED ABOVE AND FINALLY ASSESS FOREIGN LIQUO R INCOME AS CALCULATED ABOVE IN PLACE OF ` 12,15,000/- 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 13.04.2012) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 13 TH APRIL, 2012 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY