ACIT, Jaipur V. SHIV KUMAR & PARTY, BHARATPUR

ITA 803/JPR/1998

• Counselvise Citation: 80323114 RSA 1998
• Duration Of Justice: 15 year(s) 5 month(s) 16 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: 14-12-1998
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S P SINGHAL
• Section: 143(3); 145; 144; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI RAJ PAL YADAV AND SHRI R.C. SHARMA) ITA NO. 803/JP/1998 ASSESSMENT YEAR : 1997-98 THE DCIT VS. M/S. SHIV KUMAR & PARTY CENTRAL CIRCLE- 2 (BEAWAR GROUP) JAIPUR BHARATPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.C. SHARMA ASSESSEE BY : SHRI S.P. SINGHAL DATE OF HEARING: 27-05-2014 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 14-10-1998 FOR THE ASSESSMENT YEAR 1997-98, I N 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 TH AT THIS APPEAL WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 20-10- 2004. AGAINST THE ORDER OF THE TRIBUNAL, REVENUE APPROACHED TO 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 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 HAD OPTED LICENSE FO R SELLING COUNTRY LIQUOR, IMFL/BEER ETC. BY WAY OF AUCTION/ TENDER FROM THE EXCISE DEPARTMENT. THE PURCHASE OF LIQUOR IS FROM SPECIFIED MILLS AND IS F ULLY ACCOUNTED FOR. HOWEVER, THE SALE PRICE OF LIQUOR WAS NOT FIXED BY THE EXCISE DEPARTMENT AND THE ASSESSEE WAS NOT FIXED BY THE EXCISE DEPART MENT AND THE ASSESSEE WAS NOT MAINTAINING ANY SALE VOUCHERS THOUGH THE AG GREGATE OF CASH SALES WAS ENTERED INTO THE CASH BOOK. THE PRIMARY RECORDS OF SALES IN RESPECT OF EACH SALE WERE NOT MAINTAINED. THE AO WAS OF THE VI EW THAT IN ABSENCE OF THE PRIMARY RECORD OF SALE, THE CORRECTNESS OF THE TRADING RESULTS WAS UNVERIFIABLE. THE PROVISIONS OF SECTION 145 WERE I NVOKED AND ESTIMATION OF SALES AND GROSS PROFIT RATE MADE, WHICH RESULTED IN TO TRADING ADDITION OF RS. 7,23,541/-. 2.3 BY THE IMPUGNED ORDER, THE LD. CIT(A) RESTRICTE D THE ADDITION TO RS. 1.00 LAC AFTER HAVING FOLLOWING OBSERVATIONS. 3 2.2 THE FACTS AND CIRCUMSTANCES OF THE CASE HAVE BEEN CONSIDERED . IN SIMILAR CASES OF LIQUOR CONTRACTORS , THE ITAT AND CIT (APPEALS) HAVE BEEN CONSTANTLY UPHOLDING THE IN VOKING OF PROVISIONS OF SECTION 15 FOR WANT OF PRIMARY SALE R ECORD. HOWEVER, THE ESTIMATION OF SALES AND GROSS PROFIT R ATE APPLIED BY THE AO IS NOT BASED UPON ANY RATIONAL MATERIAL A ND APPEARS TO BE ARBITRARY. I HAVE GONE THROUGH VARIOUS ORDERS OF THE ITAT AND CIT (APPEALS) IN RESPECT OF SIMILAR CASES OF T HE LIQUOR CONTRACTORS AND IT IS NOTED THAT GENERALLY A LUMP-S UM ADDITION FOR ANY POSSIBLE LEAKAGE OF REVENUE HAD BEE MADE. I N MY VIEW, A LUMP SUM ADDITION OF RS. 1 LAKH WILL BE SUFFICIEN T AND REASONABLE. THE APPELLANT WILL GET A RELIEF OF RS. 23,541/-. 2.4 AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 2.5 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND FROM THE RECORD THAT THE ASSESSEE IS A RETAIL TRADE OF COUNTRY LIQU OR, IMFL/BEER IN BEAWAR. THIS IS THE IST YEAR OF ASSESSEE'S BUSINESS. THE GR OSS PROFIT RATE DECLARED BY THE ASSESSEE IS AS UNDER:- KIND OF LIQUOR TURNOVER GROSS PROFIT GROSS PROFI T RATE COUNTRY LIQUOR , IMFL/BEER 83610726 23733396 28.38% THE AO REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT FOR THE REASONS MENTIONED AT PAGE 2 PARA 3 OF THE ASSESSMENT ORDER THAT SALE IS NOT VERIFIABLE AND THEREFORE, MADE TRADING ADDITION OF RS. 7,23,54 1/-BY APPLYING A HIGHER GROSS PROFIT RATE AS UNDER:- 4 KIND OF LIQUOR SALE ESTIMATED GROSS PROFIT RATE APPLIED GROSS PROFIT ESTIMATED GROSS PROFIT DECLARED ADDITION MADE SHORT LICENCE FEE COUNTRY LIQUOR , IMFL/BEER 84334267 29% 24456937 23733396 723541 21405009 WITHOUT GIVING ANY VALID REASON, THE AO HAS MADE TR ADING ADDITION OF RS. 7,23,541/- BY INCREASING ABNORMAL QUANTITY OF SALE AS WELL AS ABNORMAL INCREASE IN GROSS PROFIT RATE. THE AO HAS NEITHER TAKEN INTO ACCOUNT THE PAST HISTORY OF THE ASSESSEE NOR THE RATES SHOWN BY OTHE R LIQUOR TRADERS. THERE IS NO DISPUTE THAT ONCE THE BOOKS OF ACCOUNT ARE REJE CTED, THE ASSESSMENT IS TO BE FRAMED U/S 144 OF THE ACT. AS PER OUR CONSIDERED VIEW, BEST JUDGMENT ASSESSMENT IS NOT A PROVISION TO PENALIZE THE ASS ESSEE, BUT IS A MACHINERY PROVISION TO ENABLE THE REVENUE TO ASSESS A PERSON WHEN SITUATION WARRANTS SUCH AN ASSESSMENT. THE ORDER U/S.144 IS TO BE MAD E TO THE BEST OF THE JUDGMENT OF THE ASSESSING OFFICER WHICH MEANS, THE ORDER HAS TO BE RATIONAL AND IS TO BE BEST ON AN HONEST GUESS WORK FOR WHICH SOME VALID BASIS IS AVAILABLE TO THE ASSESSING OFFICER. THE ORDER INV OLVES EXERCISE OF JUDGMENT BY THE OFFICER. A FAIR ESTIMATION OF I NCOME HAS TO BE MADE, THE ASSESSING OFFICER SHOULD TAKE INTO CONSIDERATION TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN ADDITION TO PROPER EV ALUATION OF THE MATERIAL FURNISHED BY THE ASSESSEE AND COLLECTED BY HIM BY H IS OWN EFFORTS. WHERE 5 BEST JUDGMENT ASSESSMENT POWER HAS BEEN CONFERRE D, THE LIMITS OF THE POWER ARE IMPLICIT IN THE EXPRESSION BEST OF HIS JUDGMENT ASSESSMENT . THE JUDGMENT IS VITAL TO DECIDE THE MATTER WITH W ISDOM, TRULY AND LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY CAPRICI OUS OF THE ASSESSING OFFICER, BUT ON SETTLED AND INVARIABLE PRINCIPLE OF JUSTICE. THOUGH THERE IS AN ELEMENT OF GUESS WORK IN BEST JUDGMENT ASSESSMENT , IT SHALL NOT BE WILD ONE, BUT SHALL HAVE REASONABLE NEXUS TO THE AVAILAB LE MATERIAL AND CIRCUMSTANCES OF EACH CASE. WHILE ESTIMATING THE G ROSS PROFIT, THE ASSESSING OFFICER SHOULD BE FAIR & REASONABLE AND S HOULD KEEP INTO ACCOUNT THE TURNOVER AND THE GROSS PROFIT OF EARLIER YEARS ALONGWITH ALL THE FACTS AND CIRCUMSTANCES OF THE CASE. BY REJECTING BOOK RESU LT, THE ASSESSING OFFICER DOES NOT GET ABSOLUTE AND UNBRIDLED POWERS TO ESTIM ATE WHATEVER PROFIT HE WANTS, AS PER HIS SWEET-WILL. 2.6 THE HON'BLE SUPREME COURT IN BRIJ BHUSAN LAL PR ADUMAN KUMAR, ETC. VS. CIT (115 ITR 524), CATEGORICALLY OBSERVED THA T WHILE MAKING BEST JUDGMENT ASSESSMENT , THE ASSESSING OFFICER SHOULD KEEP IN MIND WHAT HONESTLY HE BELIEVES TO BE FAIR ESTIMATED OR THE PR OPER FIGURE OF ASSESSMENT. FURTHERMORE, HONBLE CALCUTTA HIGH COURT IN THE CAS E OF CIT VS. POPULAR ELECTRIC CO.PVT.LTD. REPORTED IN 203 ITR 630 WHERE IN IT WAS OBSERVED THAT WHILE MAKING BEST JUDGMENT , THE ASSESSING OFFICE R SHOULD MAKE INDEPENDENT AND WELL GROUNDED ESTIMATE AND SUCH EST IMATE MAY BE BASED ON 6 ADEQUATE AND RELEVANT MATERIALS. IN THE INSTANT C ASE, WE FOUND THAT THE ASSESSEE HAS SHOWN BETTER GROSS PROFIT RATE OF 28.3 1%. BY KEEPING IN VIEW THE FAILURE OF THE ASSESSEE TO MAINTAIN SALES BILLS , THE LD. CIT(A) AFTER RECORDING THE DETAILED FINDINGS SUSTAINED THE ADDIT ION TO RS. 1.00 LAC WHICH IS VERY REASONABLE. THE DETAILED FINDINGS RECORDED BY THE LD. CIT(A) AT PARA 2.2 OF HIS APPELLATE ORDER HAS NOT BEEN CONTROVERTED. A CCORDINGLY, WE FIND NO REASON TO INTERFERE IN THE ORDER 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 DCIT, CENTRAL CIRCLE- 2, JAIPUR BY ORDER 2. M/S.SHIV KUMAR & PARTY (BEAWAR GROUP), BHARATPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR 5..THE LD. DR 6.THE GUARD FILE (IT NO.803/JP/1998) AR ITAT, JAI PUR 7