DCIT, Jaipur V. RAMPRAKASH & PARTY, BHARATPUR

ITA 327/JPR/1999

• Counselvise Citation: 32723114 RSA 1999
• Duration Of Justice: 15 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 1997-1998
• Appeal Filed On: 09-05-1999
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S P SINGHAL
• Keywords: Opportunity of being heard; Revised return
• Section: 145; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : JAIPUR BEFORE SHRI RAJPAL YADAV AND SHRI R.C. SHARMA ITA NO. 327/JP/1999 ASSTT. YEAR : 1997-98 DEPUTY CIT, VS. M/S. RAMPRAKASH & PARTY (NIMBAHE DA CIRCLE-2, GROUP), JAIPUR. BHARATPUR. PAN NO. - - (APPELLANT) (RESPONDENT) REVENUE BY : SHRI D.C. SHARMA, DR ASSESSEE BY : SHRI SP SINGHAL, AR DATE OF HEARING : 26.05.2014 DATE OF PRONOUNCEMENT : 30.05.2014 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 30.03.1999 PASSED FOR AS SESSMENT YEAR 1997-98. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.7,68,418 OUT OF TRADING ADDITION OF RS.9,18,418. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN AOP AND A LIQUOR CONTRACTOR. IT HAD OBTAINED A LICENSE FOR SELLING COUNTRY LIQUOR A ND IMFL AND BEER FOR NIMBAHEDA AREA BY WAY OF SUCCESSFUL BIDDING IN THE AUCTION/TENDER FLOATED BY THE EXCISE DEPARTMENT. IT HAS FILED ITS RETURN OF INCOME ON 31.10.1997 DECLAR ING A LOSS OF RS.2,30,779. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND A NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON IT. ON AN ANALYSIS O F THE ACCOUNTS, LEARNED ASSESSING OFFICER WAS NOT SATISFIED WITH THE BOOKS OF ACCOUNT S MADE BY THE ASSESSEE. HE WAS OF THE 2 OPINION THAT TRUE INCOME CANNOT BE DEDUCED FROM THE BOOKS BECAUSE SALES MADE BY THE ASSESSEE ARE NOT VERIFIABLE. HE, THEREFORE, REJECTE D THE BOOK RESULTS AND MADE AN AD HOC TRADING ADDITION OF RS.9,18,418. 3. ON APPEAL, LEARNED CIT(APPEALS) HAS RESTRICTED T HE AD HOC ADDITION TO RS.1,50,000. 4. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. 5. ADMITTEDLY, THE BOOKS OF THE ASSESSEE ARE NOT RE LIABLE, THEY ARE REJECTED. THIS ACTION OF THE ASSESSING OFFICER HAS BEEN UPHELD BY THE LEARNED CIT(APPEALS). THE ASSESSEE DID NOT CHALLENGE REJECTION OF BOOK RESULT S BEFORE THE ITAT AND THE DISPUTE TRAVELLED TO THE HON'BLE HIGH COURT WAS WITH REGAR D TO ESTIMATION OF INCOME AFTER REJECTION OF BOOKS. THUS, THE NEXT QUESTION CASE AR ISES, IS THAT WHAT SHOULD BE THE ESTIMATED ADDITION REQUIRED TO BE MADE BY THE ASSES SING OFFICER TO THE INCOME OF THE ASSESSEE. FOR THIS PURPOSE, SUB-SECTION (3) OF SECT ION 145 CONTEMPLATES THAT ASSESSING OFFICER MAKES AN ASSESSMENT IN THE MANNER PROVIDED IN SEC. 144 OF THE INCOME-TAX ACT, 1961. THIS SECTION READS AS UNDER: SECTION 144. (1) IF ANY PERSON (A) FAILS TO MAKE THE RETURN REQUIRED [UNDER SUB-SECTIO N (1) OF SECTION 139] AND HAS NOT MADE A RETURN OR A REVISED RETURN UNDER SUB -SECTION (4) OR SUB-SECTION (5) OF THAT SECTION, OR 3 (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSU ED UNDER SUB-SECTION(1) OF SEC. 142 [OR FAILS TO COMPLY WITH A DIRECTION ISSUE D UNDER SUB-SECTION (2A) OF THAT SECTION ] OR (C) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB-SECTION (2) OF SECTION 143, THE [ASSESSING OFFICER], AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE ASSESSING OFFICER HAS GATHERED, [SHALL, AFTER GIVIN G THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE ASSESSMENT] OF THE TOTAL INCO ME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE SUM PAYABLE BY THE ASSES SEE ON THE BASIS OF SUCH ASSESSMENT. PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY TH E ASSESSING OFFICER BY SERVING A NOTICE CALLING UPON THE ASSESSEE TO SHOW S\CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY THE ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT : PROVIDED FURTHER THAT IT SHALL NOT BE NECESSARY TO GIVE SUCH OPPORTUNITY IN A CASE WHERE A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 HAS BEEN ISSUED PRIOR TO THE MAKING OF AN ASSESSMENT UNDER THIS SECTION.] (2) THE PROVISIONS OF THIS SECTION AS THEY STOOD IM MEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1 987 94 OF 1988), SHALL APPLY TO AND IN RELATION TO ANY ASSESSMENT FOR THE ASSESSMENT YEAR COMMENCING ON THE IST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSME NT YEAR AND REFERENCES IN THIS SECTION TO THE OTHER PROVISIONS OF THIS ACT SHALL B E CONSTRUED AS REFERENCES TO THOSE PROVISIONS AS FOR THE TIME BEING IN FORCE AND APPLI CABLE TO THE RELEVANT ASSESSMENT YEAR.} 6. A BARE PERUSAL OF THIS SECTION WOULD SUGGEST THA T IN ORDER TO ESTIMATE INCOME, LEARNED ASSESSING OFFICER HAS TO EXERCISE HIS DISC RETION WHICH SHOULD BE IN CONSONANCE WITH BEST OF HIS JUDGMENT. HON'BLE HIGH COURT WHILE REMANDING THIS APPEAL TO THE ITAT HAS CONSIDERED THIS ASPECT IN PARAGRAPH NO. 24 AND OBSERVED AS UNDER: 4 IT IS WELL SETTLED THAT IN A BEST JUDGMENT ASSESSM ENT, THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. THE AUTHORITIES CONCERNED SHO ULD MAKE A HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN THE BEST JUDGMENT AS SESSMENT AND SHOULD NOT ACT ARBITRARILY. IT IS EQUALLY TRUE THAT ASSESSEE HIMSE LF TO BE BLAMED AS HE DID NOT SUBMIT PROPER ACCOUNTS. 7. APART FROM THE ABOVE PROPOSITION, WE ARE CONSCI OUS OF THE FACT THAT IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS, IT HAS BEEN PROPOUNDE D THAT IN MAKING A BEST JUDGMENT ASSESSMENT, THE ASSESSING OFFICER MUST NOT ACT DISH ONESTLY OR VINDICTIVELY OR CAPRICIOUSLY. HE MUST MAKE WHAT HE HONESTLY BELIEVE TO BE A FAIR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT AND FOR THIS PURPOSE HE MUST B E ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE, REPUTATION OF THE ASSESSEE ABOUT HIS BUS INESS, THE PREVIOUS HISTORY OF THE ASSESSEE OR THE SIMILARLY SITUATED ASSESSEE. IT IS ALSO PERTINENT TO MENTION THAT JUDGMENT IS A FACULTY TO DECIDE MATTER WITH WISDOM, TRULY AND L EGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY, CAPRICE OF AN ADJUDICATOR, BUT ON SETTLED AND INVARIABLY PRINCIPLES OF JUSTICE. THUS, IN A BEST JUDGMENT, EVEN IF, THERE I S AN ELEMENT OF GUESS WORK, IT SHOULD NOT BE A WILD ONE, BUT SHALL HAVE REASONABLE NEXUS TO T HE AVAILABLE MATERIAL AND CIRCUMSTANCES OF EACH ASSESSEE. APPRAISING OURSELVE S WITH THESE FUNDAMENTALS, LET US CONSIDER THE FACTORS DISCUSSED BY THE ASSESSING OFF ICER IN THE ASSESSMENT WHILE MAKING THE LUMP SUM ADDITION. HIS BRIEF FINDING READS AS U NDER: 4. THE EXPLANATION OF THE ASSESSEE HAS BEEN CAREFU LLY CONSIDERED BUT THE SAME IS NOT FOUND TO BE ACCEPTABLE IN TOTO. IN ABSE NCE OF PRIMARY RECORD OF SALES, THE TRADING RESULTS ARE REJECTED AND PROVISIONS OF SEC. 145 ARE HELD APPLICABLE. THE SALES ARE ESTIMATED AT RS.3,43,55,049 ON WHICH GROS S PROFIT RATE OF 45% IS APPLIED. THIS WILL GIVE A PROFIT OF RS.1,54,59,772. AFTER DE DUCTING DECLARED PROFIT OF RS.1,45,41,354, TRADING ADDITION OF RS.9,18,418 IS MADE. 5 8. ON PERUSAL OF THE ABOVE, IT HAS BEEN REVEALED TH AT LEARNED ASSESSING OFFICER HAS NOT MADE REFERENCE TO ANY MATERIAL OR ANY SIMILARLY SITUATED CASE WHILE ESTIMATING THE G.P. AT 45% ON THE ESTIMATED SALES. THE ASSESSEE HAD SHO WN TURNOVER OF RS.3,34,36,631. IT HAD PAID SHORT LICENSE FEE OF RS.1,27,72,256. IT SUGGES TS THAT ALMOST 40% OF THE TURNOVER WAS TO BE PAID AS A STATUTORY LEVY IN THE SHAPE OF SHOR T LICENSE FEE. IN SUCH SITUATION, THERE CANNOT BE ANY PROFIT TO THE ASSESSEE. LEARNED FIRST APPELLATE AUTHORITY HAS EXAMINED THIS ASPECT AND THEREAFTER RESTRICTED THE ADDITION TO RS .1,50,000 AS AGAINST LOSSES SHOWN BY THE ASSESSEE. TAKING INTO CONSIDERATION ALL THESE ASPEC TS, WE DO NOT FIND ANY MERIT IN THIS APPEAL, IT IS DISMISSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30/ 5/2014. SD/- SD/- ( R.C. SHARMA ) ( RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/05/2014 *MOHAN LAL* COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. CIT(APPEALS) 5. THE DR