A.C.I.T.-1, Agra V. M/s Manjeet Singh Surjeet Singh & Co., Agra

ITA 25/AGR/2012

• Counselvise Citation: 2520314 RSA 2012
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-10-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 16-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KK MISHRA
• Keywords: Search and seizure; Document seized
• Section: 143(3)

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.25/AGR/2012 ASSESSMENT YEAR: 1994-95 ASSTT. COMMISSIONER OF INCOME TAX-1, VS. M/S. MANJE ET SINGH SURJEET AGRA. SINGH & CO., 3/9A, M.G. ROAD, AGRA. (PAN: NOT MENTIONED). ITA NO.06/AGR/2012 ASSESSMENT YEAR: 1994-95 M/S. MANJEET SINGH SURJEET VS. ASSTT. COMMISS IONER OF INCOME TAX-1, SINGH & CO., CIRCLE-1, AGRA. 3/9A, M.G. ROAD, AGRA. (PAN: NOT MENTIONED). (APPELLANTS) (RESPONDENTS) APPELLANT BY : SHRI RAJENDRA SHARMA, ADVOC ATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 22.10.2012 DATE OF PRONOUNCEMENT OF ORDER : 23.11.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS FILED BY THE REVENUE AND AS SESSEE AGAINST THE ORDER DATED 23.06.2011 PASSED BY THE LD. CIT(A)-I, AGRA F OR THE ASSESSMENT YEAR 1994- 95. ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE CIT(A)-1, AGRA HAS ERRED IN DIRECTING THE AO TO ADOPT SALES ESTIMATED BY THE AO AT THE TIME OF ORIGINAL A SSESSMENT AND APPLYING NET PROFIT RATE OF 4.5% ON THE SALE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW & ON FACTS I N GRANTING RELIEF TO THE ASSESSEE IGNORING THE FACT THAT IN SI MILAR CASES OF THIS GROUP THE NET PROFIT WAS COMPUTED AT THE RATE OF 6. 5% OF LICENSE FEES. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR DELETE OR ALTER OR MODIFY ANY ONE OR MORE GROUND(S) DURING APPEAL DURI NG THE APPELLATE PROCEEDINGS. 4. THAT THE ORDER OF THE CIT(A)-1, AGRA BEING ERRON EOUS IN LAW AND ON FACTS BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE CIT(APPEALS) HAS BEEN ARBITRARY AND UN JUST WHILE SUSTAINING THE ADDITION AT RS.3365729/- BY ESTIMATING THE INCO ME OF THE APPELLANT AT RS.14855729/- AS AGAINST RS.11500000/- DISCLOSED BY HIM, ESTIMATION OF THE CIT(APPEALS), WHILE WORKING OUT THE INCOME IS HIGHL Y UNJUSTIFIED, NO ADDITION IS LIABLE TO BE SUSTAINED, ADDITION SUSTAI NED AT RS.3365729/- IS LIABLE TO BE DELETED. 2. THAT WHILE ESTIMATING THE INCOME BY APPLYING THE RATE OF NET PROFIT @ 4% ON THE SALE AS WORKED OUT BY THE AO AT RS.249624 500, THE CIT(APPEALS) HAS COMPLETELY IGNORED THAT THE PROFIT IN THE ASSES SEES LINE OF BUSINESS IS NOT MORE THAN 2% OF THE SALE WHICH HAS ALREADY BEEN DET ERMINED AND FINALIZED BY THE HONBLE ITAT IN SO MANY CASES. THE NET PROF IT APPLIED BY CIT(APPEALS) @ 4% ON THE SALES WORKED OUT BY THE AO IS HIGHLY UNJUSTIFIED, ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED . ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 3 3. THAT WHILE ESTIMATING THE INCOME, THE AO AND AS WELL AS BY THE CIT(APPEALS), HAVE COMPLETELY IGNORED AND NOT FOLLO WED THE DIRECTION AS GIVEN BY THE HONBLE ITAT, AGRA BENCH AGRA, WHEREIN THEY HAVE DIRECTED THE AO TO WORK OUT THE INCOME AFTER GOING THROUGH T HE DECISIONS REFERRED BEFORE HIM AND COMPARING THE SAME WITH THE FACTS OF APPELLANT WITH ALLOWING OF THE PROPER OPPORTUNITY TO THE APPELLANT, NO SUCH REASONS ARE GIVEN BY THE AO AS WELL AS BY CIT(APPEALS), WHILE APPLYING OF TH E NET PROFIT RATE AT 4% ON THE SALES, NO ADDITION IS CALLED FOR, INCOME DIS CLOSED BY THE ASSESSEE AT RS.1,15,00,000/- OR INCOME ALREADY ASSESSED BY THE CIT(APPEALS) VIDE THEIR ORDER DATED 27.12.97 AT RS.1,17,45,304/- IS LIABLE TO BE ACCEPTED, ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED. 4. THAT THE INCOME AS WORKED OUT BY CIT APPEAL AT R S.1,17,45,304/- I.E. 3.25% ON THE SALES WORKED OUT BY THE AO WAS COMPUTE D AFTER TAKING INTO CONSIDERATION THE RESULTS OF OTHERS TRADERS OF THE SAME LINE & ALSO TAKING INTO CONSIDERATION THE VARIOUS FACTORS, INCOME AS C OMPUTED BY CIT APPEALS VIDE THEIR ORDER DATED 27-12-1997 IS LIABLE TO BE A CCEPTED, ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED. 5. THAT THE APPELLANT ORDER DATED: 23.6.2011 IS BAD IN LAW. 4. THE CIT(A) APPLIED 4.5% RATE OF PROFIT, WHEREAS, IN THE GROUND OF APPEAL OF THE ASSESSEE, THE NET PROFIT RATE OF 4% HAS BEEN ME NTIONED WHICH IS APPEARS TO BE A TYPING MISTAKE. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGINA L ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T HEREINAFTER) VIDE ORDER DATED 19.03.1997 DETERMINING TOTAL INCOME OF RS.3,27,74,4 62/- AS AGAINST THE RETURNED INCOME OF RS.1,15,00,000/-. A SEARCH AND SEIZURE O PERATION WAS CARRIED OUT ON 17.01.1994. THE ASSESSEE FILED APPEAL BEFORE THE C IT(A) AGAINST THE ORIGINAL ORDER. THE CIT(A) REDUCED THE ASSESSED INCOME TO RS.1,17,4 5,300/-. THE DEPARTMENT ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 4 FILED APPEAL AGAINST THE ORDER OF CIT(A) BEFORE THE I.T.A.T. THE I.T.A.T. VIDE ITS ORDER IN ITA NO.242/AGR/1998 RESTORED THE MATTER TO THE FILE OF A.O. 6. IN COMPLIANCE TO THE DIRECTION OF THE I.T.A.T., THE A.O. EXAMINED THE ISSUE AFRESH AND AGREED WITH THE ASSESSEE THAT AFTER A.Y. 1991-92 THE PROFIT OF LIQUOR BUSINESS CANNOT BE ESTIMATED ON THE BASIS OF LICENS E FEES BECAUSE UPTO A.Y. 1991- 92 THERE WAS NORMALLY NIRGAM VALUE OF WHICH CALCULA TION COMES TO 40% WHICH HAS BEEN INCLUDED IN LICENSE FEE AFTER 1991-92. THE A. O. ALSO AGREED WITH THE ASSESSEE THAT THE ORDER OF I.T.A.T., ALLAHABAD BENCH IN THE CASE OF M/S. GOVIND PRASAD CHHOTEY LAL, KANPUR AND JUDGEMENT OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF BADRI PRASAD BHAGWAN DAS & CO. VS. CIT, 82 TAXMAN 109 ARE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERA TION. HOWEVER, THE A.O. FOLLOWED A GROUP CASE OF MOHAN SINGH & CO. WHEREIN PROFIT HAS BEEN ESTIMATED AT 6.5% OF THE LICENSE FEE IN A.Y. 1997-98 IN RESPECT OF COUNTRY LIQUOR. THE A.O. APPLIED 3.25% NET PROFIT RATE IN RESPECT OF FOREIGN LIQUOR. THUS, THE A.O. ASSESSED THE TOTAL INCOME AT RS.1,59,77,580/- (1,23,45,257/- IN RESPECT OF COUNTRY LIQUOR AND RS.36,32,326/- IN RESPECT OF FOREIGN LIQUOR). THE CIT(A) DETERMINED THE TOTAL TURNOVER AS UNDER :- (PAGE NO.15) THEREFORE, IN THE CASE OF THE APPELLANT, IN MY CON SIDERATE OPINION, I FIND FORCE IN THE ARGUMENT OF THE LD. AR THAT THERE IS NO NEED TO ESTIMATE SALES ON THE BASIS OF LICENSE FEE IN CASE OF THE APPELLANT AND HENCE, THE FIGURE OF SALE SHOULD BE T AKEN AT ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 5 RS.24,96,24,500/- IN THE CASE OF COUNTRY LIQUOR AND RS.11,17,73,125/- IN THE CASE OF INDIAN MADE FOREIGN LIQUOR AS WORKED OUT BY THE AO HIMSELF IN THE ORDER DATED 19.03.97 (ORIGINAL ORDER ) ON THE BASIS OF SEIZED DOCUMENT. THE AO IS DIRECTED TO ADOPT THIS SALE FIGURES WHILE COMPUTING THE ESTIMATED INCOME OF THE APPELLANT. 7. IN RESPECT OF FOREIGN LIQUOR, THE CIT(A) CONFIRM ED THE ORDER OF A.O. AS UNDER:- (PARAGRAPH NO.6, PAGE NOS.15 & 16) :- 6. AFTER DECIDING TO ADOPT THE SALE FIGURE OF COUN TRY LIQUOR AT RS.24,96,24,500/- AND INDIAN MADE FOREIGN LIQUOR AT RS.11,17,77,325/, NOW THE NEXT QUESTION TO BE DECIDED IS ABOUT THE RE ASONABLE PROFIT RATE TO BE APPLIED ON THESE TWO FIGURES OF SALES. AS FA R AS THE RATE OF PROFIT TO BE APPLIED ON THE SALE FIGURE OF INDIAN MADE FOR EIGN LIQUOR IS CONCERNED, I FIND THAT THE AO HAS ADOPTED THE SAME FIGURE OF 3.25% WHICH WAS DECIDED BY THE EARLIER CIT(A) IN THE ORDE R DATED 24.12.97. THE LD. AR HAS ALSO AGREED WITH THE SAME RATE OF PR OFIT IN HIS WRITTEN SUBMISSION DATED 29.12.2010 BUT WHILE GIVING HIS CO MPUTATION OF INCOME IN THE SUBMISSION DATED 14.06.2011, HE ADOPT ED A RATE OF 2% RELYING ON AN ORDER OF HONBLE ITAT, AGRA IN THE CA SE OF SHRI RAM KUMAR SHIV HARE ITA NO.75/AGR/01 PASSED VIDE ORDER DATED 10.11.2005 FOR AY 97-98. I HAVE GONE THROUGH THIS CASE LAW AND I FIND THAT FACTS OF THIS CASE ARE TOTALLY DISTINGUIS HABLE FROM THE FACTS OF THE CASE OF THE APPELLANT. IN THE CASE OF RAM KUMA R SHIVHARE, PROPER BOOKS OF ACCOUNT WERE MAINTAINED, WHICH WAS DULY AU DITED BY THE CA. IT HAS ALSO BEEN FOUND IN THE ABOVE CITED CASE THAT DAY TO DAY STOCK REGISTER WERE MAINTAINED, PURCHASE WERE FULLY VERIF IABLE FROM PURCHASE DOCUMENTS, CASH BOOK, LEDGER, STOCK REGIST ER ETC. WERE MAINTAINED ON DAY TO DAY BASIS, SALES WERE VERIFIAB LE FROM SALES MAN, SERVANT ETC. THROUGH WHOM SALES WERE MADE AT THE RA TE PREVAILING AT THAT TIME, QUANTITATIVE TALLIES WERE PROPERLY MAINT AINED ETC. THUS, THE HONBLE TRIBUNAL FOUND THAT THE BOOKS OF ACCOUNT WE RE PROPERLY MAINTAINED FROM YEAR TO YEAR BY THE ASSESSEE AND IN THE IMMEDIATELY PRECEDING YEAR I.E. AY 96-97, THE RATE OF PROFIT OF THE ASSESSEE WAS 2% AND AFTER CONSIDERING THESE FACTS AND CIRCUMSTANCES , IT WAS HELD BY THE HONBLE ITAT AGRA THAT THE BEST COMPARISON WHICH CA N BE MADE IS ASSESSEES OWN PAST HISTORY AND THEREFORE, IT WAS D IRECTED BY THE ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 6 HONBLE ITAT, AGRA TO APPLY THE NET PROFIT RATE OF 2%. CONTRARY TO THE ABOVE FACTS OF THE CASE OF SHRI RAM KUMAR SHIVH ARE, RELIED UPON BY THE LD. AR, I FIND THAT IN THE CASE OF THE APPEL LANT, NO BOOKS OF ACCOUNT ARE AVAILABLE AND HENCE, IT WAS NOT POSSIBL E TO DETERMINE THE RATE OF PROFIT EARNED BY THE APPELLANT. THE PAST H ISTORY OF THE APPELLANT WAS ALSO NOT REFERRED BY THE LD. AR BECAU SE NO BOOKS OF ACCOUNT WERE AVAILABLE AND HENCE, IT WAS NOT POSSIB LE TO FIND OUT THE EARNING OF RATE OF PROFIT ON THE BASIS OF THE PAST HISTORY OF THE APPELLANT. THEREFORE, FRESH CONTENTION OF THE LD. AR TAKEN IN HIS SUBMISSION DATED 14.06.2011 FOR APPLYING 2% RATE ON SALES OF COUNTRY LIQUOR AS WELL AS INDIAN MADE FOREIGN LIQUOR CANNOT BE ACCEPTED, WHEN HE HIMSELF HAS AGREED IN HIS EARLIER SUBMISSIO N DATED 29.12.2010 FOR APPLYING 3.25% OF NET PROFIT AS PER THE EARLIER DECISION OF THE THEN LD. CIT(A). THEREFORE, I CONFIRM THE C OMPUTATION OF NET PROFIT ON SALE OF INDIAN MADE FOREIGN LIQUOR BY APP LYING 3.25% OF NET PROFIT ON SALES OF RS.11,17,73,125/-, WHICH COMES T O RS.36,32,326/- AS PER THE COMPUTATION MADE BY THE AO. THE AO HAS COM PUTED THE PROFIT AS RS.36,32,326/-, HOWEVER, THE CORRECT FIGURE SHOU LD BE TAKEN AS RS.36,32,626/-. IN VIEW OF MY THIS DECISION, GROUN D NO.3 TAKEN BY THE APPELLANT IS DISMISSED. 8. IN RESPECT OF COUNTRY LIQUOR, THE CIT(A) DIRECTE D TO APPLY 4.5% RATE OF PROFIT AS UNDER :- (PARAGRAPH NO.7, PAGE NOS.16 & 17) 7. AS REGARDS TO DETERMINATION OF THE REASONABLE R ATE OF PROFIT TO BE APPLIED ON COUNTRY LIQUOR, I FIND THAT RATE OF 6 .5% APPLIED BY THE AO ON LICENSE FEE IS ON HIGHER SIDE, CONSIDERING TH E TWO CASE LAWS OF ALLAHABAD BENCH OF TRIBUNAL & MP HIGH COURT DISCUSS ED IN PARA NO.3.3. IN THE CASE DECIDED BY ALLAHABAD BENCH OF TRIBUNAL, THE NET PROFIT RATE OF 4% WAS APPLIED AND IN THE CASE DECID ED BY MP HIGH COURT, THE NET PROFIT RATE OF 5% WAS APPLIED. IN THESE CASES ALSO, BOOKS OF ACCOUNT WERE NOT MAINTAINED BY THE ASSESSE E, ACCOUNTS WERE NOT AUDITED BY CA, PURCHASES WERE NOT VERIFIABLE, S ALES WERE NOT VOUCHED, QUANTITATIVE TALLIES WERE NOT MADE AND IN BOTH THESE CASES, THE SALES OF ONLY COUNTRY LIQUOR WAS INVOLVED. THU S, THE FACTS OF THE ABOVE MENTIONED TWO CASE LAWS ARE QUITE SIMILAR TO THE CASE OF THE APPELLANT, EXCEPT THE FACT THAT IN THE ABOVE TWO CA SE LAWS, THE SALES WERE ESTIMATED ON THE BASIS OF LICENSE FEES TAKING 2.5 TIMES OF LICENSE FEE BECAUSE NO DOCUMENT RELATING TO SALES WERE AVAI LABLE, HOWEVER, IN ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 7 CASE OF THE APPELLANT, THE AO WAS ABLE TO ESTIMATE FIGURE OF SALE ON THE BASIS OF THE DOCUMENT SEIZED DURING THE SEARCH OPER ATION. THEREFORE, NO ESTIMATE OF SALE IS REQUIRED TO BE MADE IN THE C ASE OF THE APPELLANT, FOLLOWING THE PRINCIPLE ADOPTED IN THE ABOVE MENTIO NED TWO CASE LAWS TAKING THE SALE AS 2.5 TIMES OF LICENSE FEE. HOWEV ER, AS FAR AS RATE OF PROFIT IS CONCERNED, IN MY CONSIDERED OPINION, THE RATE ADOPTED IN THESE TWO CASE LAWS CAN BE CONSIDERED BECAUSE OF TH E SIMILARITY OF ALL THE FACTS OF NON MAINTENANCE OF BOOKS OF ACCOUNT, N ON AUDIT OF BOOKS OF ACCOUNT, SALES OF COUNTRY LIQUOR BEING INVOLVED ETC. THE RATE OF PROFIT IN ONE CASE, I.E. DECIDED BY THE HONBLE ITA T, ALLAHABAD BENCH, IS 4% AND IN OTHER CASE, I.E. DECIDED BY MADHYA PRA DESH HIGH COURT, IS 5% AND HENCE, RELYING ON BOTH THE CASE LAWS, I D ECIDE TO TAKE AVERAGE OF THESE TWO RATE OF PROFIT I.E. 4.5%. THE REFORE, THE AO IS DIRECTED TO TAKE RATE OF PROFIT AS 4.5% ON THE TOTA L SALES OF RS.24,96,24,500/- PERTAINING TO COUNTRY LIQUOR, WHI CH COMES TO RS.1,12,33,102.5/-. THEREFORE, THE AO IS DIRECTED TO TAKE THE NET PROFIT EARNED BY THE APPELLANT ON SALE F COUNTRY LIQUOR AT RS.1,12,33,102.5/- INSTEAD OF RS.1,23,45,257/- COMPUTED IN THE ASSESSM ENT ORDER. ACCORDINGLY, GROUND NO.1 IS PARTLY ALLOWED. 9. THE CIT(A) FINALLY HELD AS UNDER :- (PARAGRAPH N O.8, PAGE 17)) 8. CONSIDERING MY DECISION IN ABOVE TWO PARAS I.E. 6 & 7, THE TOTAL INCOME OF THE APPELLANT WOULD BE COMPUTED AS UNDER :- 1. NET PROFIT ON SALE OF CANARY LIQUOR RS.1,12,33, 102.5 2. NET PROFIT EARNED ON SALE OF RS. 36,32,626. 5 INDIAN MADE FOREIGN LIQUOR --------------------- -- RS.1,48,65,729/- IN VIEW OF THE DETERMINATION OF THE INCOME OF THE A PPELLANT FROM SALES OF COUNTRY LIQUOR AND INDIAN MADE FOREIGN LIQ UOR, THE AO IS DIRECTED TO TAKE THE INCOME OF THE APPELLANT AS 1,4 8,65,729/- INSTEAD OF RS.1,59,77,580/- COMPUTED IN THE ASSESSMENT ORDER A ND HENCE THE APPELLANT GETS A RELIEF OF RS.11,11,851/-. ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 8 10. THE REVENUE IS IN APPEAL AGAINST REDUCING THE G ROSS PROFIT RATE FROM 6.5% TO 4.5% IN RESPECT OF COUNTRY LIQUOR. THE ASSESSEE IS IN APPEAL AGAINST THE CONFIRMATION OF 3.25% RATE AND UPHOLDING 4.5% RATE AGAINST RS.1,15,00,000/- DECLARED BY THE ASSESSEE AND RS.1,17,45,304/- ACCEP TED BY THE CIT(A) VIDE ORDER DATED 27.12.1997 IN FIRST ROUND OF LITIGATION. 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH ERE IS NO DISPUTE AS REGARDS THE SALE/TURNOVER ESTIMATED AND DETERMINED BY THE CIT(A ). THE DISPUTE IS ONLY IN RESPECT OF RATE OF PROFIT. LD. AUTHORITIES REPRESE NTATIVE WHILE REFERRING TO VARIOUS COMPARABLE CASES SUBMITTED THAT THE I.T.A.T., AGRA BENCH IN CASE OF SHRI SURJEET SINGH IN ITA NO.1474/DEL/1996, ORDER DATED NOVEMBER 2003, ACCEPTED 1.61% RATE OF PROFIT ON TOTAL SALE. THE LD. AUTHORITIES REPRE HENSIVE REFERRED ANOTHER DECISION OF I.T.A.T., AGRA BENCH IN ITA NO. 75/AGR/2001, ORD ER DATED 10.11.2005 WHEREIN 2% NET PROFIT RATE HAS BEEN ACCEPTED. LD. AUTHORI TIES REPRESENTATIVE SUBMITTED THAT IN FIRST ROUND OF LITIGATION THE CIT(A) IN ASS ESSEES OWN CASE VIDE HIS ORDER DATED 27.12.1997 AFTER CONSIDERING THE COMPARABLE C ASE APPLIED 3.25% NET PROFIT RATE ON GROSS SALE TOTAL INCOME AT RS.1,17,45,304/- AGAINST INCOME AT 1.15 CRORE DECLARED BY THE ASSESSEE. ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 9 12. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELIED UPON THE ORDER OF A.O. AFTER CONSIDERING THE TOTALITY OF THE FACTS O F THE CASE, WE NOTICE THAT IN FIRST ROUND OF LITIGATION THE I.T.A.T. HAS SENT BACK THE MATTER TO THE FILE OF A.O. THE RELEVANT ABSTRACT OF THE ORDER OF I.T.A.T. IS REPRO DUCED AS UNDER :- THE COMPARABLE CASES CITED BY THE LEARNED CIT(APPE ALS) ARE RELATIVELY VERY SMALL CASES, INCLUDING THE CASE OF M/S DURGA WINE STORE. THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 1992 -93 IN THE CASE OF SHRI SURJEET SINGH IS ALSO DISTINGUISHABLE AS A FIR E HAD BROKE OUT IN THAT CASE IN THE ASSESSMENT YEAR BEFORE THE TRIBUNA L. THE LEARNED D.R. HAS ALSO RELIED UPON DECISION OF ITAT, ALLAHAB AD BENCH AND A JUDGEMENT OF HONBLE M.P. HIGH COURT WHEREIN ESTIMA TE OF TURNOVER @ 2.5 TIMES OF LICENSE FEE AND APPLICATION OF NET P ROFIT RATE OF 5% HAS BEEN UPHELD. AT THE SAME TIME THERE IS CONSIDERABL E JUSTIFICATION IN THE CONTENTION OF THE LEARNED AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE THAT THE ESTIMATES MADE BY THE ASSESSING OFFICER AR E AD-HOC AND BASED ON SCANT MATERIAL. IT IS TRUE THAT IN THE CASE OF M/S GOVIND PRASAD CHHOTEY LAL, KANPUR, THE ALLAHABAD BENCH OF THE TRI BUNAL HAVE ESTIMATED TURNOVER AT 2.5 TIMES OF THE LICENSE FEE AND NET PROFIT @ 4% AND IN ANOTHER CASE HONBLE MADHYA PRADESH HIGH COU RT HAVE UPHELD ESTIMATION OF TURNOVER @ 2.5 TIMES OF THE LI CENSE FEE AND APPLICATION OF NET PROFIT RATE OF 5%. HOWEVER, BEF ORE THESE THINGS ARE DETERMINED IN THE APPEALS BEFORE US, IT IS ANCESTRY TO HAVE PROPER COMPARISON MADE BETWEEN THE CASE OF THESE ASSESSEES AND ASSESSES REFERRED TO IN THE DECISIONS RELIED UPON BY THE LEA RNED DR. IT IS ALSO NECESSARY TO GIVE THESE ASSESSEES REASONABLE OPPORT UNITY OF BEING HEARD IN THE MATTER TO JUSTIFY THE LOW PROFIT MARGI N RATE DISCLOSED BY THEM. THE LEARNED ASSESSING OFFICER SHOULD ALSO MA KE NECESSARY ENQUIRIES. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LEARNED CIT(APPEALS) IN ALL THESE FIVE APPEALS IN SO FAR AS THE SAME RELATE TO ESTIMATION OF THE NET PROFIT OF THE ASSESSEE AND RE STORE THE MATTER TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR DECIS ION AFRESH IN THE LIGHT OF OUR ORDERS. 13. IN THE SECOND ROUND OF LITIGATION, THE AREA OF EXAMINATION IS LIMITED IN THE SENSE IN FIRST ROUND OF LITIGATION. REVENUE FILED APPEAL AGAINST ORDER OF CIT(A). IN ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 10 FIRST ROUND OF LIGATION BEFORE THE I.T.A.T., THE RE VENUE RELIED UPON THE DECISIONS IN THE CASES OF M/S. GOVIND PRASAD CHHOTEY LAL, KANPUR (SUPRA) AND BADRI PRASAD BHAGWAN DAS & CO. (SUPRA). THE I.T.A.T. WHILE SEND ING THE MATTER TO THE FILE OF A.O. OBSERVED THAT NECESSARY COMPARISON OF THE FACT S OF THOSE CASES AND FACTS OF ASSESSEES CASE ARE REQUIRED. THEREFORE, REASONABL E OPPORTUNITY OF HEARING WAS DIRECTED TO BE PROVIDED TO THE ASSESSEE. IT HAS AL SO BEEN DIRECTED TO THE A.O. TO MAKE NECESSARY ENQUIRIES. IN THE IMPUGNED ORDER, T HE A.O. HIMSELF ACCEPTED THE ASSESSEES CONTENTION THAT BOTH THE JUDGEMENTS CITE D BY THE LD. D.R. BEFORE THE I.T.A.T. ARE NOT APPLICABLE TO THE FACTS OF THE CAS E UNDER CONSIDERATION IN FIRST ROUND OF LITIGATION. THE RELEVANT FINDING OF THE A .O. IS REPRODUCED AS BELOW:- (PARAGRAPH NO.6 OF A.O.S ORDER IN HINDI) ESUS] FU/KKZFJRH DK MRRJ /;KUIWOZD I<+KA FJDKMZ LS ;G LIIV GS FD FU/KKZJ.K OIZ 1991&92 LS IGYS FU/KKZFJRH DKS FUXZE EWY; DK HK QXRKU YKBLSAL QHL DS VFRFJDR DJUK IM+RK FKKA FNUKAD 01&04&91 LS MRRJ IZNSK LJDK J US LAKKS/KU DJDS YKBLSAL QHL ESA ,D FUFPR DKSVS DS FY, FUXZE EWY; DKS ETZ D J FN;K FKK RFKK FUFPR DKSVS LS VF/KD EKY DH [KJHN IJ FU/KKZFJRH DKS VFRFJDR CSF LD YKBLSAL QHL NSUH IM+RH FKHA ES0 XKSFOUN IZLKN NKSVSYKY DKUIQJ RFKK CNZH IZ LKN HKXOKU NKL ,.M DEIUH CUKE VK;DJ VK;QDR ( E/; IZNSK ) DS DSL FU/KKZJ.K OIZ 1991&92 LS IGYS DS GSA VR% BL FU.KZ;KSA DS V~ZSFMAX FJTYV~L LH/KS&LH/KS FU/KKZ FJRH DS DSL ESA IWJH RKSJ IJ YKXW UGHA GKSRSA 14. THE A.O. IN THE IMPUGNED ORDER HAS RELIED SIMPL Y UPON THE ORDER OF I.T.A.T. IN THE CASE OF MOHAN SINGH & CO. AND ESTIMATED THE PROFIT IN RESPECT OF FOREIGN LIQUOR AND COUNTRY LIQUOR. THE LD. AUTHORISED REPR ESENTATIVE HAS ALSO POINTED OUT VARIOUS DECISIONS OF I.T.A.T. OF WHICH COPIES HAVE BEEN PLACED IN THE PAPER BOOK AND ALSO DISCUSSED AS ABOVE. THUS, MERELY ON ONE O F THE ORDERS THE ESTIMATION ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 11 CANNOT BE MADE, PARTICULARLY WHEN IN FIRST ROUND OF LITIGATION THE CIT(A) BEFORE COMING TO THE CONCLUSION MADE COMPARISON OF VARIOUS CASES. THE ABSTRACT OF RELEVANT CASES ARE REPRODUCED FROM THE CIT(A)S ORD ER OF WHICH COPY HAS BEEN PLACED AT PAGE NOS.10 - 19 OF ASSESSEES PAPER BOOK . REVENUES OBJECTION BEFORE THE I.T.A.T. IN FIRST ROUND OF LITIGATION THAT OTHE R TWO JUDGEMENTS IN THE CASES OF M/S. GOVIND PRASAD CHHOTEY LAL, KANPUR (SUPRA) AND BADRI PRASAD BHAGWAN DAS & CO. (SUPRA) ARE APPLICABLE, WHEREAS, IN THE SECON D ROUND OF LITIGATION, THE A.O. HIMSELF ACCEPTED THAT THOSE CASES ARE NOT APPLICABL E TO THE FACTS UNDER CONSIDERATION. IT IS OF CASE OF ESTIMATION OF PROF IT AND IN THE CASE OF ESTIMATION SOME GUESS WORK IS BOUND TO BE MADE IN ESTIMATION O F PROFIT. IN SUCH CASES, THERE ARE NO OTHER REASONS AS THE DETAILED COMPARISON MAD E BY CIT(A) IN ORIGINAL ROUND OF LITIGATION AGAINST WHICH WHATEVER DEFECT POINTED OUT BY THE REVENUE HAS BEEN TAKEN CARE OF IN THE SECOND ROUND OF LITIGATION. T HE RATE APPLIED AT 3.25% ON GROSS TOTAL INCOME APPEARS TO BE FAIR AND REASONABLE. TH E ASSESSEE FURNISHED RETURN DECLARING INCOME OF RS.1.15 CRORES AND AS PER NET P ROFIT RATE OF 3.25% THE TOTAL INCOME COMES TO 1,17,45,304/-. WE FIND THAT THE AD DITION TO THE EXTENT OF RS.2,45,300/- IS SUFFICIENT TO COVER THE DEFICIENCI ES. IN THE LIGHT OF THE FACT, IT WILL BE FAIR AND REASONABLE IF THE INCOME IS ESTIMATED A T RS.1,17,45,304/- AS AGAINST THE INCOME DECLARED BY THE ASSESSEE AT RS.1.15 CRORES AND RS.1,59,77,580/- ESTIMATED BY THE A.O. THE A.O. IS DIRECTED ACCORDINGLY. ITA NOS.25 & 06/AGR/2012 A.Y. 1994-95. 12 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY