DCIT, Jaipur V. BHULLAN SINGH & PARTY, BHARATPUR

ITA 796/JPR/1998

• Counselvise Citation: 79623114 RSA 1998
• Duration Of Justice: 15 year(s) 6 month(s) 7 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: 22-11-1998
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S P SINGHAL
• Section: 143(3); 145

Judgement Text

1 IN THE INCOME TAX APPELALTE TRIBUNAL: JAIPUR BENCH JAIPUR (BEFORE SHRI RAJ PAL YADAV AND SHRI R.C. SHARMA) ITA NO. 796/JP/1998 (A.Y. 1997-1998) DCIT, CENTRAL CIRCLE-2, VS. SHRI BHULLAN SINGH & P ARTY. JAIPUR. (GROUP KATHOOMER), BHARATPUR. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI D.C. SHARMA - D.R. ASSESSEE BY : SHRI S.P. SINGHAL. DATE OF HEARING : 27/05/2014. DATE OF PRONOUNCEMENT : 30/05/2014. O R D E R PER R.C. SHARMA, A.M THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 13/10/1998 FOR THE ASSESSMENT YEAR 199 7-98, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I.T. ACT, 1961. 2.1 AT THE OUTSET, IT IS BEING BROUGHT ON RECORD THAT T HIS APPEAL WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 20/10/ 2004. AGAINST THIS ORDER OF THE TRIBUNAL, BOTH THE ASSESSEE AND REVENU E APPROACHED THE HON'BLE HIGH COURT, AND THE HON'BLE HIGH COURT VIDE ITS ORDER DATED 21-01- 2014 SET ASIDE THE ORDER OF THE TRIBUNAL FOR DECIDI NG AFRESH AND DENOVO IN ACCORDANCE WITH LAW. THE HON'BLE HIGH COURT HAS ALS O DIRECTED ITAT TO 2 DECIDE THESE APPEALS EXPEDITIOUSLY NOT LATER THAN 0 6 MONTHS FROM THE DATE PARTIES ARE CALLED TO PUT THEIR APPEARANCE BEF ORE ITAT. IN ACCORDANCE WITH DIRECTION OF HON'BLE HIGH COURT, TH ESE APPEALS WERE AGAIN HEARD ON MERIT AND ARE DECIDED AFRESH IN THE FOLLOWING MANNER. 2.2 IN THIS APPEAL, THE REVENUE IS AGGRIEVED FOR DE LETION OF ADDITION MADE BY THE AO BY ESTIMATING THE SALES AT HIGHER FI GURE AS WELL AS BY ESTIMATING THE PROFIT RATE AT 14.5%. 2.3 THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECOR DS PERUSED. THE ASSESSEE IS ENGAGED IN LIQUOR BUSINESS. THE ASSESSE E HAD OPTED LICENSE FOR SELLING COUNTRY LIQUOR, IMFL AND BEER ETC. BY WAY O F AUCTION/TENDER FROM THE EXCISE DEPARTMENT. THE PURCHASE OF LIQUOR IS FR OM SPECIFIED ML AND IS FULLY ACCOUNTED FOR. HOWEVER, THE SALE PRICE LIQUOR WAS NOT FIXED BY THE EXCISE DEPARTMENT AND THE ASSESSEE WAS NOT MAINTAIN ING ANY SALE VOUCHERS THOUGH THE AGGREGATE OF THE CASH SALES WAS ENTERED INTO THE CASH BOOK. THE PRIMARY RECORDS OF SALES IN RESPECT OF EACH SALE WAS NOT MAINTAINED. THE A.O. WAS OF THE VIEW THAT IN ABSENC E OF THE PRIMARY RECORD OF THE SALE, THE CORRECTNESS OF THE TRADING RESULTS WAS UNVERIFIABLE. THE PROVISIONS OF SEC. 145 WERE INVOKED AND ESTIMAT ION OF SALES AND G.P. RATE MADE WHICH RESULTED INTO THE TRADING ADDITION OF RS. 5,86,651/-. 3 2.4 BY THE IMPUGNED ORDER, THE LD. CIT(A) RESTRICTE D THE ADDITION TO RS. 50,000/- AFTER HAVING THE FOLLOWING OBSERVATIONS. THE FACTS AND CIRCUMSTANCES OF THE CASE HAVE BEEN C ONSIDERED. IN SIMILAR CASES OF LIQUOR CONTRACTORS, THE ITAT AND CI T(APPEALS) HAVE BEEN CONSTANTLY UPHOLDING THE INVOKING OF PROVISIONS OF SECTION 145 FOR WANT OF PRIMARY SALE RECORD. HOWEVER, THE ESTIMATION OF SALES AND G.P. RATE APPLIED BY THE A.O. IS NOT BASED UPON ANY RATIONAL MATERIAL AND APPEARS TO BE ARBITRARY. I HAVE GONE THROUGH THE VARIOUS ORD ERS OF THE ITAT AND CIT(APPEALS) IN RESPECT OF SIMILAR CASES OF THE LI QUOR CONTRACTORS AND IT IS NOTED THAT GENERALLY A LUMP SUM ADDITION FOR ANY P OSSIBLE LEAKAGE OF REVENUE HAD BEEN MADE. CONSIDERING THE FACTS AND CI RCUMSTANCES, IN MY VIEW, A LUMP SUM ADDITION OF RS. 50,000/- WILL BE SUF FICIENT AND REASONABLE. THE APPELLANT WILL GET A RELIEF OF RS. 5,30,657/-. 2.5. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 2.6 WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFU LLY, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ASSESSEE IS A RETAIL TRADE OF COUNTRY LIQUOR, IMFL & BEER IN KATHUMAR. THIS IS THE 1 ST YEAR OF ASSESSEE BUSINESS. THE G.P. RATE DECLARED BY THE ASSESSEE IS AS UNDER:- 4 KIND OF LIQUOR TURNOVER GROSS PROFIT G.P. RATE COUNTRY LIQUOR, IMFL & BEER 15557994/ - 3776783/ - 24.28% THE A.O. REJECTED THE BOOKS OF ACCOUNT U/S 145(3) FOR THE REASONS THAT SALE IS NOT VERIFIABLE AND THEREFORE, MADE TRADING ADDITION OF RS. 580651/- BY APPLYING A HIGHER G.P. RATE AS UNDER:- KIND OF LIQUOR SALE ESTIMATED G.PROFIT RATE APPLIED GROSS PROFIT ESTIMATED GROSS PROFIT DECLARED ADDITION MADE SHORT LICENSE FEE. C LIQUOR IMFL & BEER 16138645/ - 27% 4357434/ - 3776783/ - 580651/ - 2338830/ - THE LD. CIT(A) FOUND THAT THE ESTIMATION OF SALES A ND G.P. RATE APPLIED BY THE A.O. WAS NOT BASED UPON ANY RATIONAL MATERIAL. AFTER COMPARING THE FACTS OF THE ASSESSEES CASE WITH THE OTHER CASES D ECIDED BY THE TRIBUNAL WHEREIN THE ASSESSEE WAS HAVING SAME LINE OF ACTIVI TY I.E. LIQUOR CONTRACT BUSINESS, MODIFIED THE TRADING ADDITION MADE BY THE A.O. AND RESTRICTED THE SAME TO RS. 50,000/-. AS PER THE CONSIDERED VIE W WHILE ESTIMATING THE GROSS PROFIT, THE A.O. SHOULD BE FAIR AND REASO NABLE AND SHOULD TAKE INTO ACCOUNT THE TURN OVER AND THE GROSS PROFIT OF EARLIER YEARS ALONGWITH ALL THE FACTS AND CIRCUMSTANCES OF THE CASE. THOUGH , THERE IS AN ELEMENT OF GUESS WORK IN BEST JUDGMENT ASSESSMENT IT SHOU LD NOT BE WILD ONE, BUT SHOULD HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND CIRCUMSTANCES OF EACH CASE. IN THE INSTANT CASE BEF ORE US, THE A.O. NOT 5 POINTED OUT ANY VALID BASIS FOR ESTIMATING THE G.P. RATE AND MAKING ADDITION, HOWEVER, THE LD. CIT(A) AFTER RECORDING T HE FINDING AT PARA 2.2 OF HIS APPELLATE ORDER, WHICH HAS NOT BEEN CONTROVE RTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RE CORD, UPHELD A TRADING ADDITION OF RS. 50,000/-, WHICH APPEARS TO BE VERY REASONABLE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. CIT(A) FOR MODIFYING THE TRADING ADDITION MADE BY THE A.O. ON AD HOC BASIS THEREBY GIVING RELIEF OF RS. 5,30,657/-. 2.7 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/05/2014. SD/- SD/- (RAJ PAL YADAV) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/05/2014 *RANJAN COPY FORWARDED TO: 1. THE APPELLANT- DEPUTY CIT, CENTRAL CIRCLE-2, JA IPUR. 2. THE RESPONDENT- SHRI BHULLAN SINGH & PARTY, BHA RATPUR. 3. THE CIT 4. CIT(APPEALS) 5. THE DR 6. GUARD FILE (ITA NO. 796/JP/1998) BY ORDER A.R., JAIPUR.