DCIT, Jaipur V. BIRBALRAM RAMCHANDRA & PARTY(LAXMANGARH GROUP), Jaipur

ITA 629/JPR/2000

• Counselvise Citation: 62923114 RSA 2000
• Duration Of Justice: 13 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 1997-1998
• Appeal Filed On: 10-12-2000
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA DRS
• Assessee Lawyers: G M MEHTA
• Keywords: Search and seizure; Opportunity of being heard; Revised return
• Section: 143(3); 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. 629/JP/00 ASSTT. YEAR : 1997-98 DEPUTY CIT, VS. M/S.BIRBALRAM RAMCHANDRA & PARTY CENTRAL CIRCLE-1, (LAXMANGARH GROUP), JAIPUR. JAIPURR. PAN NO. - - (APPELLANT) (RESPONDENT) REVENUE BY : SHRI D.C. SHARMA, DRS ASSESSEE BY : SHRI G.M. MEHTA, 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 10.10.2000 PASSED FOR AS SESSMENT YEAR 1997-98. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN SUSTAINING ADDITION OF RS.75,000 IN THE ACCOUNT OF COUNTRY LIQ UOR RETAIL TRADING AND RS.1,25,000 IN THE ACCOUNT OF IMFL/BEER RETAIL TRADING AS AGAINST AN ADDITION OF RS.7,04,800 AND RS.9,80,000 MADE BY THE ASSESSING OFFICER IN COUNTR Y LIQUOR ACCOUNT AND IMFL/BEER ACCOUNT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN AOP CONSTITUTED BY NINE MEMBERS. IT HAD OBTAINED LICENSE FROM EXCISE DEPART MENT FOR LAXMANGARH AREA. IT HAD 21 RETAIL OUTLETS FOR COUNTRY LIQUOR ( 5 IN URBAN A REA AND 16 IN RURAL AREA), FOR IMFL, IT HAD FOUR OUTLETS WHICH ARE IN URBAN AREA. THE ASSESSEE WAS REQUIRED TO PAY MINIMUM 2 GUARANTEE AMOUNT OF RS.1,86,38,965. IT HAS FILED IT S RETURN OF INCOME ON 31.10.1997 DECLARING INCOME OF RS.2,63,480. LEARNED ASSESSING OFFICER HAS ANALYZED THE RECORD BUT WAS NOT SATISFIED WITH THE BOOK RESULTS OF THE ASSE SSEE. HE HAS PASSED AN ASSESSMENT ORDER UNDER SEC. 143(3) ON 14.3.2000 AND DETERMINED THE T AXABLE INCOME OF THE ASSESSEE AT RS.16,60,510. HE MADE ESTIMATED ADDITION OF RS.7,04 ,800 IN COUNTRY LIQUOR ACCOUNT & RS.9,00,80,000 IN IMFL/BEER ACCOUNT. ON APPEAL, LEA RNED CIT(APPEALS) HAS RESTRICTED THIS ADDITION TO RS.75,000 IN COUNTRY LIQUOR ACCOUN T AND RS.1,25,000 IN IMFL/BEER A/C. 3. DISSATISFIED WITH THE ORDER OF LEARNED CIT(APPEA LS), ASSESSEE AS WELL AS REVENUE COME UP IN APPEAL BEFORE THE ITAT. THE ITAT HAS DIS MISSED BOTH THE APPEALS VIDE ORDER DATED 20.10.2004. DISSATISFIED WITH THE ORDER OF TH E ITAT, REVENUE WENT IN APPEAL BEFORE THE HON'BLE HIGH COURT. HON'BLE HIGH COURT HAS REMI TTED THIS ISSUE TO THE ITAT FOR READJUDICATION. IT IS ONE OF THE APPEAL AMONGST 83 APPEALS REMITTED BY THE HON'BLE HIGH COURT VIDE ITS JUDGMENT RENDERED IN THE CASE OF CIT VS. RAM SINGH & ORS. REPORTED IN 363 ITR 417. 4. LEARNED DR WHILE IMPUGNING THE ORDER OF LEARNED CIT(APPEALS) CONTENDED THAT ASSESSING OFFICER HAS REJECTED THE BOOK RESULTS OF THE ASSESSEE. THIS REJECTION HAD MET WITH THE CONCURRENCE OF THE LEARNED CIT(APPEALS). L EARNED ASSESSING OFFICER WHILE ESTIMATING THE NET PROFIT AT 10% HAS CONSIDERED THE CIRCUMSTANCES OF THE ASSESSEES BUSINESS. HE TOOK US THROUGH PARAGRAPH NO.5.3 OF TH E ASSESSMENT ORDERS AND POINTED OUT THAT CALCULATION MADE BY THE ASSESSING OFFICER ARE LOGICAL. HE, THEREFORE, RELIED UPON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LEAR NED COUNSEL FOR THE ASSESSEE RELIED 3 UPON THE ORDER OF THE LEARNED CIT(APPEALS). HE POIN TED OUT THAT LEARNED FIRST APPELLATE AUTHORITY HAS CONSIDERED THE RESULTS SHOWN BY SIMIL ARLY SITUATED OTHER ASSESSEES WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT. LEARNED COUNS EL FOR THE ASSESSEE IN THIS WAY RELIED UPON THE ORDER OF LEARNED CIT(APPEALS). 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORDS CAREFULLY. SECTION 145 HAS A DIRECT BEARING ON THE CONTROVERSY , THEREFORE, IT IS SALUTARY UPON US TO TAKE NOTE OF THIS PROVISION. '145(1) INCOME CHARGEABLE UNDER THE HEAD PROFITS A ND GAINS OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOURCES SHALL, S UBJECT TO THE PROVISIONS OF SUB-SECTION (2), BE COMPUTED IN ACCORDANCE WITH EIT HER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSE SSEE. (2) THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICI AL GAZETTE FROM TIME TO TIME ACCOUNTING STANDARDS TO BE FOLLOWED BY ANY CLASS OF ASSESSEES OR IN RESPECT OF ANY CLASS OF INCOME. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WH ERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECTION (1) OR ACCOUNTIN G STANDARDS AS NOTIFIED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLL OWED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MAN NER PROVIDED IN SECTION 144.' 6. FROM THE BARE READING OF THIS SECTION, IT WOULD RE VEAL THAT IT PROVIDES THE MECHANISM HOW TO COMPUTE THE INCOME OF THE ASSESSEE . ACCORDING TO SUB- CLAUSE ( I ), THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AN D GAINS OF THE BUSINESS OR PROFESSIONS OR INCOME FROM OTHER SOURCE S' SHALL BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTANCY EMPLOYED BY AN ASSESSEE REGULARLY 4 SUBJECT TO THE SUB-SECTION (2) OF SECTION 145 OF TH E ACT. SUB-SECTION (2) PROVIDES THAT THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFIC IAL GAZETTE FROM TIME TO TIME THE ACCOUNTING STANDARD REQUIRED TO BE FOLLOWED BY ANY CLASS OF ASSESSEE IN RESPECT OF ANY CLASS OF INCOME. THUS, IT INDICATES THAT INCOME HAS TO BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTAN CY FOLLOWED BY AN ASSESSEE, I.E., CASH OR MERCANTILE. SUCH METHOD HAS TO BE FOLLOWED KEEPING IN VIEW THE ACCOUNTING STANDARD NOTIFIED BY THE CENTRA L GOVERNMENT FROM TIME TO TIME. SUB-CLAUSE (3) PROVIDES A SITUATION, I.E., IF THE ASSESSING OFFICER IS UNABLE TO DEDUCE THE TRUE INCOME ON THE BASIS OF METHOD OF AC COUNTANCY FOLLOWED BY AN ASSESSEE THEN HE CAN REJECT THE BOOK RESULTS AND AS SESS THE INCOME ACCORDING TO HIS ESTIMATE OR ACCORDING TO HIS BEST JUDGMENT. THE ASSESSING OFFICER IN THAT CASE IS REQUIRED TO POINT OUT THE DEFECTS IN THE AC COUNTS OF ASSESSEE AND REQUIRE TO SEEK EXPLANATION OF THE ASSESSEE QUA THOSE DEFECTS. IF THE ASSESSEE FAILED TO EXPLAIN THE DEFECTS THEN ON THE BASIS OF THE BOOK R ESULTS, INCOME CANNOT BE DETERMINED AND ASSESSING OFFICER WOULD COMPUTE THE INCOME ACCORDING TO HIS ESTIMATION KEEPING IN VIEW THE GUIDING FACTOR FOR E STIMATING SUCH INCOME. WHERE A STOCK ACCOUNT IS NOT MAINTAINED AND RECONCILIATIO N IS NOT POSSIBLE IN BETWEEN THE AGGREGATE OF STOCK ON OPENING DATE AND STOCKS P URCHASED WITH THE AGGREGATE OF STOCK SOLD AND AVAILABLE IN CLOSING STOCK OR SAL ES ARE NOT VERIFIABLE THEN, IN SUCH CASES, IF THE GROSS PROFIT IS LOW IN COMPARIS ON WITH PAST YEARS OR IN COMPETITIVE BUSINESS, THEN ASSESSING OFFICER CAN RE JECT THE BOOK RESULTS AND ESTIMATE THE INCOME. 5 7. 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 (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 : 6 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.} 8. 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: 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. 9. 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 7 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: 5.2 IN THE LIGHT OF ABOVE FACTS, IT CAN REASONABLY BE PRESUMED THAT THE RATIO OF NET PROFIT SHOWN BY THE ASSESSEE FROM COUNTRY LIQUO R BUSINESS TO THE TOTAL PAYMENT MADE BY THE ASSESSEE BY WAY OF PURCHASE PRICE/ISSUE PRICE, PERMIT FEES, WASHING & BARDANA (BOTTLES) CHARGES, GUARANTEE SHORTFALL AM OUNT HAS TO BE COMPARED. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS SHOWN IN CONSOLIDATED PROFIT AND LOSS ACCOUNT NET PROFIT NET PROFIT OF RS.2,97,7 19 (AFTER CLAIMING SHORTFALL LICENSE FEES, COMPOSITE FEES, 1% LICENSE FEE PAID T O THE GOVT., INTEREST PAID TO EXCISE DEPTT., SALARY, SHOPS RENT, RAID EXPENSES ET C.) ON FOLLOWING OUTGOINGS:- AMOUNTS (RS. ) I) ISSUE - 2929174 II) PERMIT FEES - 1205555 III) WASHING CHARGES & BARDANA (BOTTLES) - 561577 IV) LICENSE FEES - 56975 V) COMPOSITE FEES - 130192 VI) INTEREST ON COMPOSITE FEES - 20948 VII) OCTROI PAYMENT - 36327 VIII) SHORTFALL LICENSE FEES - 1433318 IX) INTEREST ON SHORTFALL - 33822 TOTAL (OUTGOINGS) -RS.6406888 8 IT IS EXPECTED THAT THE ASSESSEE WILL INCUR EXPENDI TURE OF 10% ON THE ABOVE OUTGOINGS. THUS, THE TOTAL OUTGOINGS IN THE ASS ESSEES CASE AMOUNT TO RS.7047576 (6406888+640688). 5.3 IN THE COUNTRY LIQUOR BUSINESS , OTHER ASSESSEE S HAVE DISCLOSED HIGHER NET PROFIT AS PER ANN.A FORMING PART OF THIS ORDER. IT WILL NOT BE EXTRANEOUS TO MENTION HERE THAT I AM FREE TO APPLY A REASONABLE N.P. RATE IN COUNTRY LIQUOR ACCOUNT AS THE HONBLE ITAT HAS DECIDED THE NET PROFIT RATE IN IMF L ONLY AND NOT THE COUNTRY AS PER THE FACTS BROUGHT OUT BY ME IN THE NOTE APPENDE D TO ANNEXURE A. HOWEVER, KEEPING IN VIEW CAPITAL OF RS.5340027, EMPLOYED IN THE BUSINESS VIS--VIS CONTRACT AMOUNT OF RS.7334339, SHORT LICENSE FEES D EPOSITED AT RS.1433318, COMPARATIVELY MORE EXPERIENCED MEMBERS I.E. SVS. BHAGIRATH POONIA, BIRBALRAM, DAYARAM POONJU, HANSRAJ POONIA, AND SHAN KERLAL OUT OF 09 MEMBERS OF THE ASSESSEE AOP WITH A RURAL BACKGROUND, THE AR EA OF OPERATION BEING FAVOURABLE TO COUNTRY LIQUOR, IT WILL BE FAIR AND R EASONABLE TO APPLY NET PROFIT RATE OF 10% ON ABOVE OUTGOINGS OF RS.7047576 IN THE AS SESSEES CASE. THIS WILL MEAN NET PROFIT OF RS.704800 IN ROUND FIGURES IN CO UNTRY LIQUOR ACCOUNT. SINCE NET PROFIT HAS BEEN WORKED OUT NO DEDUCTION OF EXPENSES CLAIMED BY THE ASSESSEE WILL BE ALLOWED. TO SUPPORT MY ACTION OF REJECTION OF BOOKS OF ACCOU NTS AND ESTIMATION OF THE RAT OF PROFIT IN THE ASSESSEES CASE, RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISIONS: I) 63 ITR 411 (S.C):- AS PER DECISION OF THE HON'BLE S UPREME COURT IN THIS CASE, IT HAS BEEN HELD THAT WHERE ACCOUNTS ARE REJECTED, THE A.O. HAS POWER TO ESTIMATE TURNOVER AND APPLY PREVA ILING RATES OF PROFITS. II) 214 ITR 712 (RAJ.): IN THIS CASE THE HON'BLE HIGH C OURT OF RAJASTHAN HAD HELD REJECTION OF ACCOUNTS AND ESTIMA TE OF GROSS PROFIT JUSTIFIED. 6.1 IMFL AND BEER ACCOUNT : AS SET OUT IN THE CHART, THE ASSESSEE HAS DISCLOSED A G.P. RATE OF 9.62% IN IMFL AND BEER ACCOUNT ON SALES OF RS.12674 967. THE FACTS IN RESPECT OF 9 SALES, MAINTENANCE OF STOCK DETAILS IN THIS ACCOUNT , ARE SIMILAR AS IN THE CASE OF BUSINESS OF COUNTRY LIQUOR AS DISCUSSED ABOVE. THE ASSESSEE HAS NOT FURNISHED DETAILS AS TO SALE PRICE CHARGED IN RESPECT OF DIFF ERENT BRANDS OF IMFL AND BEER PURCHASED IN VARIOUS SIZES AND QUALITY EVEN WHEN AS KED FOR VIDE QUERY NO. 6(II) OF QUESTIONNAIRE. ADMITTEDLY, THE SALES ARE NOT VOUCHE D AT ALL. IN VIEW OF THESE FACTS, PROVISIONS OF SEC. 145(3) ARE INVOKED IN THE ASSESS EES CASE AS PER JUDICIAL DECISIONS INCLUDING THE DECISIONS OF THE HONBLE IT AT, JAIPUR BENCH, JAIPUR AS CITED ABOVE. THE ONLY ALTERNATIVE LEFT BEFORE ME IS TO ESTIMATE NET PROFIT OF THE ASSESSEE. THE HONBLE ITAT, JAIPUR BENCH HAS UPHELD THE N.P. RATE OF 7% IN IMFL AND BEER ACCOUNT IN THE CASE OF M/S. JAIMAL RA M AND KASTOORILAL & PARTNERS, SRIGANGANAGAR FOR ASSESSMENT YEARS 1990-9 1 AND 1991-92 EVEN WHEN LOSS WAS DISCLOSED IN IMFL ACCOUNT. MOREOVER, OTHER S IN THE LINE HAVE DISCLOSED QUITE HIGHER N.P. RATE IN IMFL AND BEER ACCOUNT AS PER ANNEXURE-A FORMING PART OF THIS ORDER. FOR THE DETAILED FACTS DISCUSSED HER EINABOVE, AS ALSO THE FACT OF CONTRACT AMOUNT FOR IMFL BEING HIGHER BY 38.19% THA N THE COUNTRY LIQUOR A GOOD POINTER OF THE TERRITORY OF THE ASSESSEE BEING FAVO URABLE TO THE IMFL AND BEER TRADE, A NET PROFIT RATE OF 7% IS APPLIED ON ESTIMA TED SALES IN IMFL AND BEER ACCOUNT AT RS.1,40,00,000. THIS WILL MEAN NET PROFI T OF RS.9,80,000 IN ROUND FIGURES. 10. WE HAVE DIRECTED THE LEARNED COUNSEL FOR THE AS SESSEE TO COMPILE THE DETAILS IN TABULAR FORM AND PLACED ON THE RECORD. LEARNED COUNSEL FOR THE ASSESSEE HAS FILED FOLLOWING DETAILS: S.NO. ISSUES/DETAILS/QUERY 1 LIQUOR CONTRACT FOR THE AREA LAXMANGARH 2 PERIOD OF LIQUOR CONTRACT 01 - 04 - 1996 TO 31.03.1997 3 NET PROFIT AS PER PROFIT & LOSS A/C 297,719.00 4 RETURNED INCOME 263,480.00 10 5 ASSESSED INCOME 1,660,510.00 6 TURNOVER ACHIEVED COUNTRY LIQUOR 6,321,101.00 IMFL/BEER RETAIL 12,674,967.00 7 GROSS PROFIT (AMOUNT & %) % COUNTRY LIQUOR 1,613,707.00 25.53 IMFL/BEER RETAIL 1,194,986.00 9.43 8 SHORT LICENSE FEE COUNTRY LIQUOR (INCLUDING INTEREST) 1,467,140.00 IMFL/BEER RETAIL (INCLUDING INTEREST) 152,543.00 9 GP AFTER SHORT LICENSE FEE % COUNTRY LIQUOR 146,567.00 2.32 IMFL/BEER RETAIL 1,042,443.00 8.22 10 NET PROFIT (BEFORE S HORT LICENSE FEE) 1,917,402.00 10.09 11 NET PROFIT (AFTER SHORT LICENSE FEE) 297,719.00 1.57 12 TURNOVER/GP ADOPTED BY AO TURNOVER % COUNTRY LIQUOR 7,047,576.00 IMFL/BEER RETAIL 14,000,000.00 13 TRADING INCOME ESTIMATED BY LD. AO COUNTRY LIQUOR 704,800.00 IMFL/BEER RETAIL 980,000.00 1,421,320.00 1,684,800.00 (TRADING ADDITIONS MADE BY LD. AO) LESS : BY ASSESSEE 263,480.00 11 14 ADDITIONS SUSTAINED BY CIT(A) COUNTRY LIQUOR 75,000.00 IMFL/BEER RETAIL 125,000.00 11. ON DUE CONSIDERATION OF THESE DETAILS IN THE LI GHT OF FINDINGS RECORDED BY THE ASSESSING OFFICER, WE ARE OF THE VIEW THAT LEARNED FIRST APPELLATE AUTHORITY THOUGH DEVOTED 33 PAGES WHILE REDUCING THE G.P. BUT PRACTI CALLY FAILED TO CONSIDER THE CIRCUMSTANCES HIGHLIGHTED BY THE ASSESSING OFFICER WHILE CONSIDERING THE BACKGROUND OF ASSESSEES BUSINESS. THE ASSESSEE HAD MADE REFERENC E TO A LARGE NUMBER OF CASES BEFORE THE LEARNED CIT(APPEALS) AND POINTED OUT AS TO HOW ITAT/CIT(A) HAVE ACCEPTED THE RESULTS LOWER THAN THE ONE SHOWN BY THE ASSESSEE. W E FIND THAT MOST OF THESE CASES WERE TRAVELLED UP TO THE HON'BLE HIGH COURT AND THEY ARE REMITTED BACK TO THE ITAT FOR RECONSIDERATION. THE CASE OF ONE M/S. RAJARAM & PAR TY HAS BEEN REFERRED BY THE LEARNED CIT(APPEALS) ON PAGE 32. NUMBER OF APPEALS I.E. ITA NOS.312/JP/00, 779/JP/98 & 734/JP/05 HAVE BEEN REMITTED BACK TO THE ITAT. LEAR NED COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRATE THAT THE RESULTS REFLECTING IN THE TABLE ON PAGE NO.32 OF THE LEARNED CIT(APPEALS) WERE ULTIMATELY UPHELD OR NOT. ASSESSI NG OFFICER DID NOT GO ALONG WITH THE RESULTS SPECIFICALLY OF OTHER ASSESSEES. HE HAS HIG HLIGHTED THAT ASSESSEE HAD EXPERIENCED MEMBERS IN THE AOP. THEY HAVE CONTRIBUTED A CAPITAL OF RS.53,40,027. CONSIDERING THEIR FINANCIAL POSITIONS, THEIR EXPERIENCE AND AFTER CON SIDERING THE SHORT LICENSE FEE PAID BY THE ASSESSEE, LEARNED ASSESSING OFFICER HAS QUANTIFIED THE ESTIMATED ADDITION REQUIRED TO BE MADE. TO OUR MIND, THE G.P. SHOWN BY THE ASSESSEE I S ON A VERY LOWER SIDE. IT FAILED TO DEMONSTRATE ANY SPECIFIC REASONS FOR SUCH A LOW G.P . ONCE BOOKS ARE REJECTED, THEN, 12 ASSESSING OFFICER HAS TO ESTIMATE THE INCOME, WHILE DOING SO, LEARNED ASSESSING OFFICER HAS TO KEEP VARIOUS FACTORS IN MIND. FROM THE FINDI NGS, EXTRACTED SUPRA, IT IS DISCERNIBLE THAT HE HAS KEPT THOSE FACTORS IN MIND. FROM READIN G OF THIS ORDER, WE FEEL A LIVE LINK BETWEEN THE REALITY OF CONDUCTING THE BUSINESS, VIS --VIS, ESTIMATION OF INCOME. HE HAS NOT MADE THE ADDITION IN A SWEEPING WAY, NOR THE AD DITIONS ARE MADE ON HIGHER SIDE. LEARNED FIRST APPELLATE AUTHORITY IS TOTALLY UNJUST IFIED IN INTERFERING WITH THE DISCRETION OF THE ASSESSING OFFICER. LEARNED CIT(APPEALS) HAS JUST REPRODUCED THE SUBMISSIONS OF THE ASSESSEE AND THEREAFTER REDUCED THE QUANTUM OF ADDITIONS BY ADOPTING A LUMP SUM FIGURE. SHE HAS NOT DEALT WITH THE SPECIFIC CIRCUMS TANCES EXHIBITING THE COST OF DOING THE BUSINESS, CAPITAL EMPLOYED BY THE AOP MEMBERS, THEI R EXPERIENCE ETC. CONSIDERED BY THE ASSESSING OFFICER. THEREFORE, IN OUR OPINION, THE O RDER OF LEARNED CIT(APPEALS) IS NOT SUSTAINABLE. WE ALLOW THE APPEAL OF THE REVENUE AND RESTORE THE ADDITION MADE BY THE ASSESSING OFFICER. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 0 /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