ITO, Jaipur V. TARA CHAND & PARTY, Jaipur

ITA 399/JPR/2003

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78063 (ITAT-JAIPUR)
• Duration Of Justice: 11 year(s) 13 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: 17-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA; D C SHARMA
• Section: 143(3); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI RAJ PAL YADAV AND SHRI R.C. SHARMA) ITA NO. 399/JP/2003 ASSESSMENT YEAR : 1997-98 THE ITO VS. M/S. TARA CHAND & PARTY WARD- 2(4) 124/461, MANSAROVAR JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI SUBHASH CHANDRA & SHRI D.C. S HARMA ASSESSEE BY : SHRI RAJEEV SOGANI DATE OF HEARING: 22-05-2014 DATE OF PRONOUNCEMENT: 30-05-2014 ORDER PER R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST ORD ER OF THE LD. CIT(A) DATED 17-03-2003 FOR THE ASSESSMENT YEAR 1997-98, I N THE MATTER OF ORDER PASSED U/S 143(3) READ WITH SECTION 148 OF THE I.T. ACT, 1961. 2.1 AT THE OUTSET, IT IS BEING BROUGHT ON RECORD TH AT THIS APPEAL WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 08-11- 2004. AGAINST THE ORDER OF THE TRIBUNAL, REVENUE APPROACHED THE HON'BLE HIG H COURT, AND THE HON'BLE HIGH COURT VIDE ITS ORDER DATED 21-01-2014 SET ASIDE THE ORDER OF THE TRIBUNAL FOR DECIDING AFRESH AND DENOVO THE ISSUE O F TRADING ADDITION MADE AFTER INVOKING THE PROVISION OF SECTION 145(3) OF T HE ACT IN ACCORDANCE WITH 2 LAW. THE HON'BLE HIGH COURT HAS ALSO DIRECTED ITAT TO DECIDE THESE APPEALS EXPEDITIOUSLY NOT LATER THAN 06 MONTHS FROM THE DAT E PARTIES ARE CALLED TO PUT THEIR APPEARANCE BEFORE ITAT. IN ACCORDANCE WITH DI RECTION OF HON'BLE HIGH COURT, THIS APPEAL WAS AGAIN FIXED AND HEARD ON MER IT AND ARE DECIDED AFRESH IN THE FOLLOWING MANNER. 2.2 THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECOR DS PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE AOP WAS OPERATING A SHOP OF RETAIL SALES OF IMFL/BEER AT MANSAROVAR UNDER CONTRACT FROM THE STA TE EXCISE DEPARTMENT. THE ASSESSEE HAD DECLARED A TURNOVER OF RS. 48.20 LACS AND GROSS PROFIT OF 15.49% THEREON. THE BOOKS WERE REJECTED AND THE AO ESTIMATED THE SALE AT RS. 60.00 LACS AND ALSO ESTIMATED THE GROSS PROFIT AT 26%. THIS RESULTED INTO ESTIMATING THE GROSS PROFIT AT RS. 15.60 LACS. IT W AS STATED THAT 100% PURCHASES ARE VOUCHED WHICH ARE VERIFIABLE. SO FAR AS THE SALE BILLS ARE CONCERNED, THE NATURE OF BUSINESS IS SUCH THAT NO S ALE BILLS ARE PREPARED. IT WAS SUBMITTED THAT WHATEVER DAILY SALES ARE EFFECTE D ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT. DUE TO RUSH OF CUSTOMERS DURING PEAK HOURS OF SALES IN THE EVENING, IT IS NEITHER PRACTICABLE NOR POSSIBLE TO ISSUE SALE BILLS. HOWEVER, THE ASSESSEE HAD EMPLOYED INTERNAL CHECKS AND CONTR OL IN EACH RETAIL SHOP IN SUCH A WAY THAT NO LEAKAGE OF ANY SALES OR AMOUNT O F SALES WAS POSSIBLE. THE ONLY DEFECT POINTED OUT BY THE AO WAS CONCERNING NO N-MAINTENANCE OF PROPER ACCOUNT DUE TO NON-ISSUE OF SALE VOUCHERS W HICH WAS STATED TO BE NOT 3 PRACTICABLE AND POSSIBLE IN THIS LINE OF TRADE. IT WAS ARGUED THAT THIS CANNOT BE TERMED AS A DEFECT IN THE BOOKS OF ACCOUNT BECAUSE THE INCOME ON THE BASIS OF BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE CAN BE DETERMINED AND ASSESSED WITHOUT APPLYING THE PROVISION OF SECTION 145(3) OF THE ACT. 2.3 THE LD. CIT(A) HAS RESTRICTED THE TRADING ADDIT ION BY APPLYING NET PROFIT RATE OF 1%. THE PRECISE OBSERVATION OF THE L D. CIT(A) WAS AS UNDER:- 8. I HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. I FIND THAT THE CASE OF THE APPELLANT IS A PECULIAR O NE. THE APPELLANT AOP DID NOT HAVE ANY EXPERIENCE IN THIS L INE OF BUSINESS AND THE CONTRACT ONE SHOP ONLY IN MANSAROV AR AREA OF JAIPUR INVOLVED LOT OF COMPETITION WITHIN THE SAME CITY. IN OTHER CASES WHERE THE MONOPOLY RIGHT OF THE WHOLE DISTRIC T IS AVAILABLE TO THE ASSESSEE THEN THE BETTER PRICE OF THE COMMODITY CAN BE FETCHED. IN SPITE OF PECULIAR BUSINESS CONDI TIONS OF THE APPELLANT, THE RATE OF PROFIT DECLARED AT 15.49% IS QUITE REASONABLE. BUT SINCE THE BOOKS OF ACCOUNT ARE NOT COMPLETE, THE POSSIBILITY OF ESCAPEMENT OF PART OF THE PURCHASES CANNOT BE RULED OUT. REJECTION OF BOOKS OF ACCOUNT HAS ALREAD Y BEEN JUSTIFIED IN DECIDING GROUND NO. 2 OF APPEAL. THE A PPELLANT HAS DECLARED LOSS OF RS. 1,45,226/-. I FEEL THAT IT WIL L BE APPROPRIATE IF A NET PROFIT RATE OF 1% IS APPLIED ON THE ESTIMA TED SALES OF RS. 50 LAKHS WHICH RESULTS INTO NET PROFIT OF RS. 50,00 0/-. LD. AO IS DIRECTED TO COMPUTE THE INCOME OF THE APPELLANT ACC ORDINGLY. 2.4 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND THAT THE ASSESSEE HAS DECLARED TURNOVER OF RS. 48.20 LACS AND GROSS PROFIT RATE 15.49% THEREON. THE BOOKS WERE REJECTED AND THE AO ESTIMAT ED THE SALES AT RS. 60.00 LACS AND ALSO ESTIMATED THE GROSS PROFIT RATE AT 26% WHICH RESULTED INTO GROSS PROFIT ADDITION AT RS. 15.60 LACS. NO VALID R EASONING WAS GIVEN BY THE 4 AO FOR ESTIMATION OF HIGHER SALES. AFTER CONSIDERIN G THE ASSESSEE'S CONTENTIONS REGARDING 100% PURCHASES BEING VOUCHED AND VERIFIABLE, THIS WAS THE FIRST YEAR OF THE ASSESSEE AND THE ASSESSEE HAD NO PAST EXPERIENCE OF THIS BUSINESS AND THE FACT THAT ASSESSEE COULD NOT LIFT FULL QUOTA OF LIQUOR AND THE ASSESSEE WAS REQUIRED TO PAY SHORT LICENSE FEE OF RS. 4,73,991/-, THE LD. CIT(A) HAS APPLIED THE NET PROFIT RATE WHICH WORKS OUT TO BE 5.23% BEFORE SHORT LICENSE FEE, THE SAME APPEARS TO BE QUITE REA SONABLE CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE DIS CUSSED ABOVE. FURTHERMORE, THE FINDINGS OF THE LD. CIT(A) HAS NOT BEEN CONTROV ETED. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED ORDER PRONOUNCED IN THE OPEN COURT ON 30-05-2014. SD/- SD/- (RAJ PAL YADAV) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED: 30 TH MAY, 2014 *MISHRA COPY FORWARDED TO:- 1. THE ITO, WARD- 2 (4) JAIPUR BY ORDER 2. M/S.TARA CHAND & PARTY, JAIPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR 5..THE LD. DR 6.THE GUARD FILE (IT NO.399/JP/2003) AR ITAT, JAI PUR 5