DCIT, Jaipur V. BANNA ALI GIRDHARI SINGH & PARTY(NAWALGARH GROUP), Jaipur

ITA 541/JPR/2001

• Counselvise Citation: 54123114 RSA 2001
• Duration Of Justice: 12 year(s) 5 month(s) 2 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: 1998-1999
• Appeal Filed On: 28-12-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• 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. 541/JP/2001 ASSTT. YEAR : 1998-99 THE INCOME TAX OFFICER, VS. M/S BANNA ALI GIRDHARI SINGH WARD- 4(2), JAIPUR. & PARTY, (NAWALGARH GROUP) C-23, VIJAY VIHAR COLONY, NAYA KHERA, JAIPUR. PAN NO. - - (APPELLANT) (RESPONDENT) REVENUE BY : SHRI D.C. SHARMA, DR ASSESSEE BY : SHRI P.C. PARWAL. AR DATE OF HEARING : 22.05.2014 DATE OF PRONOUNCEMENT : 30.05.2014 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), JAIPUR DATED 17/10/200 1 PASSED FOR ASSESSMENT YEAR 1998-99. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 11,16,480/- OUT OF COUNTRY LIQUOR ACCOUNT AND RS. 4,92,827/- OUT OF IMFL/BEER ACCOUNT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN AOP AND A LIQUOR CONTRACTOR. IT HAD OBTAINED LICENSE FOR SELLING COU NTRY LIQUOR, IMFL/BEER BY 2 WAY OF A SUCCESSFUL BIDDING IN THE AUCTION CONDUCTE D BY THE EXCISE DEPARTMENT OF THE RAJASTHAN GOVERNMENT. IT HAD FILE D ITS RETURN OF INCOME ON 30/10/1998 DECLARING AN INCOME OF RS. 6,36,470/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S 143(2) OF THE I.T. ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSES SEE. ON AN ANALYSIS OF THE ACCOUNTS, THE LD. ASSESSING OFFICER WAS NOT SAT ISFIED WITH THE CORRECTNESS OF THE BOOK RESULT, THEREFORE, HE REJECTED BOOK RES ULT AND MADE A TRADING ADDITION OF RS. 11,16,480/- IN COUNTRY LIQUOR ACCO UNT AND RS. 4,92,827/- IN IMFL/BEER ACCOUNT. ON APPEAL, THE LD. CIT(A) HAS DE LETED THE ADDITION. 4. DISSATISFIED WITH THE ORDER OF THE LD. CIT(A), T HE REVENUE CAME UP IN APPEAL BEFORE THE TRIBUNAL, WHICH WAS DISMISSED. TH E REVENUE TOOK THE MATTER BEFORE THE HONBLE HIGH COURT AND THE HONBL E HIGH COURT HAS REMITTED THE ISSUE WITH REGARD TO TRADING ADDITION BACK TO THE TRIBUNAL VIDE ITS JUDGMENT DATED 21/1/2014 PASSED IN THE CASE OF CIT VS. RAM SINGH & ORS. REPORTED IN 363 ITR PAGE 417. IN THIS WAY, THI S IS THE APPEAL AMONGST 83 APPEALS REMITTED BACK BY THE HONBLE HIGH COURT TO THE TRIBUNAL FOR READJUDICATION. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. ADMITTEDLY, THE BOOKS OF THE ASSESSEE ARE NOT RELIABLE, THEY ARE REJECTED. THIS ACTION OF THE ASSESSING OFF ICER HAS BEEN UPHELD BY THE LEARNED CIT(APPEALS). THE ASSESSEE DID NOT CHAL LENGE REJECTION OF BOOK RESULTS BEFORE THE ITAT AND THE DISPUTE TRAVELLED T O THE HON'BLE HIGH COURT 3 WAS WITH REGARD TO ESTIMATION OF INCOME AFTER REJEC TION OF BOOKS. THUS, THE NEXT QUESTION ARISES, IS WHAT SHOULD BE THE ESTIMAT ED ADDITION REQUIRED TO BE MADE BY THE ASSESSING OFFICER TO THE INCOME OF THE ASSESSEE. FOR THIS PURPOSE, SUB-SECTION (3) OF SECTION 145 CONTEMPLATE S 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 (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 D IRECTION ISSUED 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, A FTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE AS SESSMENT] OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AN D DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BASIS OF SUCH ASSESS MENT. PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY TH E ASSESSING OFFICER BY SERVING A NOTICE CALLING UPON THE ASSESSEE TO SH OW S\CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY TH E ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT : 4 PROVIDED FURTHER THAT IT SHALL NOT BE NECESSARY TO GIVE SUCH OPPORTUNITY IN A CASE WHERE A NOTICE UNDER SUB-SECTION (1) OF S ECTION 142 HAS BEEN ISSUED PRIOR TO THE MAKING OF AN ASSESSMENT UNDER T HIS SECTION.] (2) THE PROVISIONS OF THIS SECTION AS THEY STOOD IM MEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 94 OF 1988), SHALL APPLY TO AND IN RELATION TO ANY ASS ESSMENT FOR THE ASSESSMENT YEAR COMMENCING ON THE IST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR AND REFERENCES IN THIS SECT ION TO THE OTHER PROVISIONS OF THIS ACT SHALL BE CONSTRUED AS REFERE NCES 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 H IS DISCRETION WHICH SHOULD BE IN CONSONANCE WITH BEST OF HIS JUDGMENT. HON'BLE HIGH COURT WHILE REMANDING THIS APPEAL TO THE ITAT HAS CONSIDE RED THIS ASPECT IN PARAGRAPH NO. 24 AND OBSERVED AS UNDER: IT IS WELL SETTLED THAT IN A BEST JUDGMENT ASSESSM ENT, THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. THE AUTHORITIES CONCE RNED SHOULD MAKE A HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN TH E BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT ARBITRARILY. IT IS EQ UALLY TRUE THAT ASSESSEE HIMSELF 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 P ROPOUNDED THAT IN MAKING A BEST JUDGMENT ASSESSMENT, THE ASSESSING OF FICER MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY. HE MUS T MAKE WHAT HE HONESTLY 5 BELIEVE TO BE A FAIR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT AND FOR THIS PURPOSE HE MUST BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE, REPUTATION OF THE ASSESSEE ABOUT HIS BUSINESS, 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 LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY, CAPRIC E OF AN ADJUDICATOR, BUT ON SETTLED AND INVARIABLY PRINCIPLES OF JUSTICE. TH US, IN A BEST JUDGMENT, EVEN IF, THERE IS AN ELEMENT OF GUESS WORK, IT SHOULD NO T BE A WILD ONE, BUT SHALL HAVE REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND CIRCUMSTANCES OF EACH ASSESSEE. APPRAISING OURSELVES WITH THESE FUNDAMENT ALS, LET US CONSIDER THE FACTORS DISCUSSED BY THE ASSESSING OFFICER IN THE A SSESSMENT WHILE MAKING THE LUMP SUM ADDITION. 8. PERUSAL OF THE ASSESSMENT ORDER WOULD SUGGEST TH AT THE LD. A.O. HAS APPLIED G.P. RATE OF 56% IN THE COUNTRY LIQUOR ACCO UNT AS AGAINST 54.18% SHOWN BY THE ASSESSEE. HE REFERRED CASES OF 27 LIQU OR CONTRACTORS WHOSE G.P. WAS STATED TO BE HIGHER. LD. COUNSEL FOR THE ASSESS EE POINTED OUT THAT FROM THIS LIST, G.P. IN 14 CASES IS LOWER THAN THE G.P. DECLARED BY THE ASSESSEE. SIMILARLY IN IMFL, THE A.O. HAS APPLIED G.P. RATE O F 25%. IN THE ANNEXURE, 18 LIQUOR CONTRACTOR HAVE SHOWN G.P. IN IMFL/BEER A CCOUNT LOWER THAN THE ASSESSEE. THE G.P. BEFORE PAYMENT OF SHORT LICENSE FEES IN COMPARABLE CASES VARIES IN CASE OF OTHER LIQUOR CONTRACTORS 0.34% TO 19.78%, WHEREAS IN THE CASE OF ASSESSEE IT IS 23.20%. 6 9. WE HAVE GONE THROUGH ALL THESE DETAILS AND PERUS ED THE ORDER OF THE LD. CIT(A), IN OUR OPINION, THE LD. CIT(A) HAS APPR ECIATED THE CONTROVERSY IN RIGHT PERSPECTIVE AND NO INTERFERENCE IS CALL FO R BECAUSE THE A.O. HAS ADOPTED THE HIGHEST G.P. SHOWN IN THE COMPARABLE CA SES INSTEAD OF TAKING AVERAGE. 10. IN VIEW OF THE ABOVE DISCUSSIONS, THIS APPEAL O F THE REVENUE IS DISMISSED. 11. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30/5/ 2014. SD/- SD/- ( R.C. SHARMA ) ( RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/05/2014 *RANJAN COPY FORWARDED TO: 1. THE APPELLANT- THE INCOME TAX OFFICER, WARD-4(2 ), JAIPUR. 2. THE RESPONDENT- M/S BANNA ALI GIRDHARI SINGH & PARTY, JAIPUR. 3. THE CIT 4. CIT(APPEALS) 5. THE DR 6. GUARD FILE (ITA NO. 541/JP/2001) BY ORDER A.R., JAIPUR.