The ACIT, 1(2), Bhopal V. M/s Avinash Chalana & Co., Bhopal

ITA 39/IND/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5876 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.39/IND/2013 A.Y. : 2009-10. ACIT, 1(2) M/S.AVINASH CHALANA & CO., BHOPAL VS. BHOPAL ASSESSEE RESPONDENT PAN NO.AALFA4929P ASSESSEE BY : SHRI R.R.MEENA, DR RESPONDENT BY : SHRI SUMIT NEMA, ADV. O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL DATED 29.11.2012 FOR THE ASSESS MENT YEAR 2009-10. 2. THE FOLLOWING GROUND HAS BEEN TAKEN BY THE REVENUE :- DATE OF HEARING : 03.11. 2015. DATE OF PRONOUNCEMENT : 05 . 01 .201 6 ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 2 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN : DELETING THE ADDITION IN NET PROFIT MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISION OF SECTION 145(3) AND DIRECTED THE AO TO ACCEPT THE INCOME DECLARED BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF RETAIL SALE OF COUNTRY L IQUOR, INDIAN MADE FOREIGN LIQUOR (IMFL) AND BEER IN THE SHOPS ALLOTTE D IN THE DISTRICT OF BALAGHAT, BHOPAL AND RAISEN DURING THE YEAR UNDER C ONSIDERATION. THE ASSESSEE FURNISHED ITS RETURN OF INCOME FOR A. Y. 2009-10 ON 30.09.2009 SHOWING TOTAL INCOME AT RS. 56,68,504/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) AND ASSESSMENT U/S 143(3) WAS COMPLETED ON 29.12.2011 DETERMINING TAXA BLE INCOME AT RS. 1,44,0 1,130/-. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE FIRM HAD SHOWN TOTAL SALES AT RS. 31,80,50,201/- AND NET PROFIT AFTER ALLOWING SALARY TO PARTNERS WAS SHOWN AT RS.55,89,1 34/- WHICH GIVES A NET PROFIT RATE OF 1.76%. THE ASSESSEE HAD ALSO S HOWN INTEREST ON FDR AT RS. 5,67,611/-. DURING THE YEAR UNDER CONSID ERATION, THE ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 3 3 ASSESSEE WAS ALLOTTED LICENSES FOR RUNNING SHOPS FO R RETAIL SALE OF LIQUOR AND THE LICENSE FEE FOR THE YEAR PAID WAS RS .19,00, 18,760/-. THE ASSESSING OFFICER NOTICED THAT THE NET PROFIT R ATE OF 1.76% SHOWN BY THE ASSESSEE WAS ON A VERY LOW SIDE. THE ASSESSI NG OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAD SHOWN ALL THE SALES MADE IN CASH AND CASH MEMOS WERE NOT MAINTAINED. THE ASSESSEE STATED BEFORE THE ASSESSING OFFICER THAT ITS BUSINESS WAS TOTALLY CON TROLLED AND GOVERNED BY EXCISE RULES AND THE EXCISE DEPARTMENT HAD DAY TO DAY CONTROL ON THE BUSINESS OF THE ASSESSEE. THE CONTRA CTOR HAD TO DISPLAY THE SIGN BOARD IN HINDI INDICATING THE SELLING PRIC E OF THE LIQUOR. THE ASSESSEE SOLD LIQUOR AT THOSE RATES. IT WAS FURTHER SUBMITTED THAT THE EXCISE OFFICERS KEEP ON VISITING INSPECTING THE LIQ UOR SHOP TO ENSURE THAT THE CONTRACTOR DOES NOT CHARGE PRICE MORE THAN THE DISPLAYED. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE S UBMISSION OF THE ASSESSEE OBSERVING THAT MERE DISPLAY OF THE SIGN BO ARD DOES NOT INDICATE THAT THE SALES WERE MADE AT THE DISPLAYED PRICES. THERE IS NO PROVISION IN THE STATE EXCISE ACT OR RULES REQUIRIN G THE EXCISE AUTHORITIES TO CONTROL THE SALE PRICE OF THE LIQUOR . A LIQUOR CONTRACTOR IS TO DETERMINE THE SALE PRICE OF THE LIQUOR AT HIS OWN FREE WILL. THE ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 4 4 ASSESSING OFFICER CONCLUDED THAT SINCE CASH MEMOS W ERE NOT ISSUED FOR THE LIQUOR SALE, THE RATE CHARGED BY THE ASSESS EE FROM ITS CUSTOMERS CANNOT BE VERIFIED WITH THE RATES ACCOUNT ED FOR BY IT IN ITS BOOKS OF ACCOUNT MAINTAINED. THUS, THE SALES OF LIQ UOR ARE NOT VERIFIABLE AND, THEREFORE, PROVISIONS OF SECTION 14 5(3) ARE CLEARLY ATTRACTED IN THIS CASE. ACCORDINGLY, THE ASSESSING OFFICER REJECTED THE BOOKS OF' ACCOUNT OF THE ASSESSEE AND ESTIMATED THE SALE OF LIQUOR AT TWO TIMES OF LICENSE FEE OF RS.19,00,18,760/-, WOR KING OUT TO RS.38,00,37,520/- AS AGAINST SALE OF RS.31,80,50,201/- SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. HE APPLIED NET PR OFIT RATE AT % ON THE ESTIMATED SALES OF RS. 38,00,37,520/- WORKING O UT NET PROFIT AT RS.1,14,01,125/- AND ACCORDINGLY, ASSESSED THE INCO ME OF THE ASSESSEE AT RS. 1,14,01,130/-. THE ASSESSING OFFICE R HAS ALSO REFERRED TO THE DECISIONS IN THE CASES OF SHRI BADR IPRASAD BHAGWANDAS & CO. VS. CIT, (1995) 82 TAXMAN 109 111 (MP) AND ACIT VS. GENDALAL HAZARILAL AND CO., (2003) 31 ITC 310 (MP). 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) PARTLY ALLOWED THE APPEALS BY OBSERVING AS UNDER :- ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 5 5 3.4 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS OF THE APPELLANT. FOR THE SAKE OF BREVITY, IT MAY MENT IONED THAT THE FACTS AND THE REASONS MENTIONED IN THE ASSESSME NT ORDER FOR A.Y. 2009-10 UNDER CONSIDERATION BY THE ASSESSI NG OFFICER FOR REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING THE NET PROFIT AT 3% ON ESTIMATED TURNOVER AT TWO TIMES OF THE LIC ENSE FEE PAID ARE IDENTICAL TO THE FACTS AND REASONS GIVEN IN EAR LIER ASSESSMENT YEARS 2006-07 & 2007-08. THE ASSESSMENT ORDER OF A. Y. 2009-10 IS VERBATIM THE SAME AS WERE OF A. Y. 2006-07 & 2007-08 EXCEPT THE CHANGE IN FIGURES. AS POINTED OUT BY THE AR OF THE APPELLANT, THE ISSUE INVOLVED IN THESE GR OUNDS OF APPEAL WAS CONSIDERED BY THE HON'BLE ITAT IN ASSESS EE'S OWN CASE FOR A.Y. 2006-07 & A.Y. 2007- 08. THE HON'BLE ITAT IN ASSESSEE'S OWN CASE FOR A. Y. 2006-07 IN ITA NO. 78 /IND/2010 ORDER DATED 15.06.2011 HELD AS UNDER: 4 THUS, WE DIRECT THE AO TO COMPUTE BUSINESS INCOME BY APPLYING NET PROFIT RATE OF 1.77 % ON THE DISCLOSED TURNOVER OF THE ASSESSEE. SIMILARLY, THE HON'BLE ITAT IN A.Y. 2007-08 IN ITA ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 6 6 NO.116/LND/2011 IN ORDER DATED 13.04.2012 HELD AS U NDER:- 'IF THE TOTALITY OF FACTS IS ANALYZED, WE FIND THA T SINCE FOR THE ASSESSMENT YEAR 2006-07 THE NET PROFIT RATE WAS DIRECTED TO BE DIRECTED TO BE APPLIED AT THE RATE OF 1.77% ON THE DISCLOSED TURNOVER OF THE ASSESSEE. THEREFOR E, UNLESS AND UNTIL DIFFERENT FACTS ARE BROUGHT ON REC ORD, THERE IS NO REASON TO DEVIATE FROM THAT NET PROFIT RATE. IN THE IMPUGNED ORDER THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DIRECTED THE AO TO ADOPT THE NET PROF IT RATE OF 1.43%, THEREFORE, THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS MODIFIED TO THIS EXTENT RES ULTING INTO PARTLY ALLOWING THE APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWE D. FROM THE ABOVE DECISIONS OF THE HON'BLE I.T.A.T., I T IS CLEAR THAT THE HON'BLE I.T.A.T. HAS DIRECTED TO APPLY NET PROF IT RATE OF 1.77% OF THE DISCLOSED TURNOVER OF THE ASSESSEE AND TO SE PARATELY ADD THE INTEREST INCOME SHOWN BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. FACTS OF THIS YEAR ARE S AME AS ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 7 7 WERE IN A. Y. 2006-07 AND A. Y. 2007-08. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE ITAT IN ASSESSEE'S OWN CASE IN EARLIER ASSESSMENT YEARS 200 6-07 & 2007-08, THE AO IS DIRECTED TO COMPUTE BUSINESS INC OME BY APPLYING NET PROFIT RATE OF 1.77% OF THE DISCLOSED TURNOVER OF THE ASSESSEE AND ASSESS THE INTEREST INCOME OF RS. 5,67,611/- SHOWN BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. ACCORDINGLY, THESE GROUNDS ARE PARTLY ALLOWED. 5. LD. DR RELIED UPON THE ORDER OF AO. 6. LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E RESULTS SHOWN IN THE BOOKS OF ACCOUNT. LD. AUTHORIZED REPRESENTATIVE FURTHER POINTED OUT THAT THE IDENTICAL ADDITION WAS MADE BY THE ASS ESSING OFFICER IN ASSESSEE'S CASE FOR A. Y. 2006-07 & A.Y. 2007-08. THE HON'BLE ITAT IN THESE YEARS HELD THAT THE SALE TURNOVER CANNOT B E ESTIMATED HIGHER THAN SHOWN BY THE ASSESSEE AND DIRECTED TO ADOPT NET PROFIT RATE AT 1.77% ON THE DISCLOSED TURNOVER. IN VIEW OF THE DEC ISIONS OF THE ITAT. IT WAS PRAYED THAT THE TOTAL TURNOVER AS SHOWN BY T HE ASSESSEE AT RS. ACIT, BHOPAL VS. M/S.AVINASH CHALANA CO., BHOPAL I.T.A.NO. 39/IND/2013 A.Y.2009-10 8 8 31,80,50,201/- MAY PLEASE BE ACCEPTED AND THE NET P ROFIT SHOWN BY THE ASSESSEE MAY ALSO BE ACCEPTED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. WE HAVE ALSO GONE THROUGH THE ORDER PASSED BY THE I.T. A.T. INDORE BENCH ON IDENTICAL FACTS IN THE CASE OF THE ASSESSE E FOR A.Y. 2007-08 IN ITA NO.116/LND/2011 IN ORDER DATED 13.04.2012. W E UPHOLD THE ACTION OF THE LD. CIT(A). OUR INTERFERENCE IS NOT C ALLED FOR. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 5 TH JANUARY, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 5 TH JANUARY, 2016. CPU* 4.11