DCIT, Jaipur V. RAJENDRA SINGH BHANEARI KISHAN SHARMA 7 PARTY, BHARATPUR

ITA 778/JPR/1998

• Counselvise Citation: 77823114 RSA 1998
• Duration Of Justice: 15 year(s) 5 month(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: 17-12-1998
• 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. 778/JP/1998 ASSTT. YEAR : 1997-98 DEPUTY CIT, VS. M/S. RAJENDRA SINGH BHANDARI KIS HAN CIRCLE-2, SHARMA & PARTY, (DHOLPUR, BARI JAIPUR. & BASI GROUP), 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 08.10.1998 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.10,35,599 OUT OF AD HOC TRADING ADDI TION OF RS.12,35,599. 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 DHOLPUR BARI & BASI AREA BY WAY OF SUCCESSFUL BIDDING IN THE AUCTI ON/TENDER FLOATED BY THE EXCISE DEPARTMENT. IT HAS FILED ITS RETURN OF INCOME ON 31 .10.1997 DECLARING AN INCOME OF RS.3,38,048. THE BOOKS OF ACCOUNTS WERE REJECTED B Y THE ASSESSING OFFICER AND HE ESTIMATED THE INCOME. HE MADE AN AD HOC TRADING ADD ITION OF RS.12,35,599. 2 3. ON APPEAL, LEARNED CIT(APPEALS) HAS RESTRICTED T HE TRADING ADDITION TO RS.2,00,000. 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 (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, 3 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: 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. 4 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 ASSESSEE HAS DRAWN UP ONLY ONE TRADING ACCO UNT FOR COUNTRY LIQUOR AND IMFL & BEER. THE SALES OF THE ASSESSEE AMOUNTED TO RS.7,23,46,032 WITH GROSS PROFIT OF RS.2,56,28,696 GIVING G.P. RATE OF 35.41% . AS THE ASSESSEE HAS NOT PRODUCED ANY RECORD IN RESPECT OF SALES, I.E. SALE VOUCHERS OR SALES REGISTER, THE CORRECTNESS OR OTHERWISE, THE TRADING RESULTS COULD NOT BE VERIFIED AND IT CANNOT BE SAID WHETHER ALL THE PURCHASES HAVE BEEN ACCOUNTED FOR IN SALES AND PROFITS HAVE BEEN PROPERLY ACCOUNTED FOR. THE ASSESSEE WAS ACCOR DINGLY CALLED UPON TO JUSTIFY THE CORRECTNESS OF THE G.P. RATE. THE ASSESSEE COUL D NOT GIVE ANY REPLY. IN THE CIRCUMSTANCES OF THE CASE, THE PROVISIONSOF SEC. 14 5 ARE CLEARLY ATTRACTED. THE SALES ARE ESWTIMATED AT RS.7,35,81,631 AND G.P. RAT E OF 36.50% IS APPLIED. THIS 5 WILL GIVE A PROFIT OF RS.2,68,57,295. AFTER DEDUCTI NG THE DECLARED PROFIT OF RS.12,35,599 IS MADE. 8. WHILE ESTIMATING THE G.P., LEARNED ASSESSING OF FICER HAS TOTALLY IGNORED THE STATUTORY PAYMENT OF SHORT LICENSE FEE. THE ASSESSE E COULD NOT LIFT THE MINIMUM QUANTITY PRESCRIBED UNDER THE CONTRACT FROM THE EXCISE DEPAR TMENT, THEREFORE, IT HAS TO PAY A SHORT LICENSE FEE OF RS.2,15,26,443. WHEN WE COMPARE THIS AMOUNT TO THE TURNOVER, THEN, IN TERMS OF PERCENTAGE, IT IS ALMOST 25% OF THE TURNOV ER. IF THIS AMOUNT IS ADDED TO THE G.P. DECLARED BY THE ASSESSEE, THEN, THE G.P. WOULD SWEL L TO MORE THAN 60% OF THE TURNOVER, WHICH IS A REASONABLE ONE. LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD A NOTE WHEREIN HE HAS TABULATED THE TURNOVER ACHIEVED BY T HE ASSESSEE, G.P. DECLARED BY IT, HOW THE TURNOVER HAS BEEN ESTIMATED BY THE ASSESSING OF FICER. AFTER LOOKING INTO THESE DETAILS, VIS--VIS, THE ORDER OF THE LEARNED CIT(APPEALS), W E ARE OF THE VIEW THAT TRADING RESULTS OF THE ASSESSEE WAS NOT SO BAD WHICH REQUIRES A HIG HER ESTIMATION AS DONE BY THE ASSESSING OFFICER. IF THE LEARNED ASSESSING OFFICE R HAS INCLUDED THE SHORT LICENSE FEE IN THE G.P., THEN, IT WOULD APPEAR TO BE A NORMAL ONE, THEREFORE, LOOKING TO THE FACTS AND CIRCUMSTANCES, WE DO NOT SEE ANY REASON TO INTERFER E WITH THE ORDER OF THE LEARNED CIT(APPEALS). THE APPEAL OF THE REVENUE IS DISMISSE D. 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* 6 COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. CIT(APPEALS) 5. THE DR