M/S.PRKASH AUTOMOBILES V. THE COMMISSIONER OF INCOME TAX, KANNUR

ITA/1753/2009

AI Insights

The case involves M/s. Prakash Automobiles, an automobile dealer from Kasaragod, who appealed against the income tax assessments made for the years 1994-95 to 1997-98. The assessments were based on estimations as the assessee did not maintain books of accounts, a requirement under the KGST Act for businesses dealing in goods like automobiles. The Income Tax Officer (ITO) used a turnover figure from 1988-89, adjusted annually, as the basis for these assessments. The CIT (Appeals) and the Tribunal both reduced the turnover figure but upheld the estimation method. The assessee argued that the business had become unviable due to changes in the automobile market, which led to a fall in turnover, but did not provide any books of accounts to substantiate this claim. The High Court found no merit in the appeal, emphasizing the assessee's failure to maintain proper records and the legal provision allowing estimations in such cases.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 763355 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-11-2009
• Assessment Year: misc
• Laws Referred To: KGST Act, I.T. Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: C NAIR; S RAJ
• Keywords: Assessment years; Automobile Dealer; Books of Accounts; Estimation Basis; Income tax appeal
• Section: 144

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 5TH NOVEMBER 2009 / 14TH KARTHIKA 1931 ITA.No. 1753 of 2009() ---------------------- ITA.213/COCH/2001 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: -------------------- M/S.PRAKASH AUTOMOBILES, KASARAGOD. BY ADV. SRI.C.KOCHUNNY NAIR SRI.S.ARUN RAJ RESPONDENT(S): --------------- THE COMMISSIONER OF INCOME TAX, KANNUR. BY ADV. SRI. JOSE JOSEPH, SC FOR IT DEPT. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05/11/2009 ALONG WITH ITA 1754 TO 1756, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- I. T. A. No. 1753 to 1756 OF 2009 -------------------------------------------- Dated this the 5th day of November, 2009 JUDGMENT Ramachandran Nair, J. Heard counsel for the appellant and standing counsel for the respondent. We do not find any of the questions raised is a question of law, much less any substantial question of law. Assessments involved are for the assessment years 1994-95 to 1997-98. Even though assessee is an automobile dealer and obviously registered under the KGST Act, the assessee maintained the stand for several years that it is not in the habit of keeping books of accounts. Income tax returns were filed for all these years on estimation basis by the assessee. Since the assessee has no case that it had maintained books of accounts, it had no right to challenge the assessment based on estimation basis. In the absence of books of accounts, the assessing officer is free to conduct enquiry and estimate income on a rational basis under Section 144 of the I.T. Act. In this case, instead of collecting information, the assessing officer adopted the turnover fixed for the year 1988-89 at Rs. 2 16 lakhs, which has become final, as the basis for completion of assessments. He made a progressive addition to the turnover at the rate of Rs. 2 lakhs each for every year and estimated the income at 8% of the turnover. CIT (Appeals) was very considerate because he reduced the addition from Rs. 2 lakhs every year to Rs. 1 lakh for every year. On further appeal, the Tribunal still showed leniency and fixed the turnover at Rs. 15 lakhs for all the years, which is less by Rs. 1 lakh from the turnover finally assessed for 1988-89. Even though counsel for the appellant contended that the assessee's business was in automobile and new generation of vehicles have rendered his business unviable and there was fall in turnover, we are surprised to note that still the assessee did not choose to maintain books of accounts probably because it suits them. In our view, it would be virtually impossible for a dearler under the KGST Act to carry on business in automobile spares without registration and without maintaining books of accounts because goods are brought from outside Keraka, and transported across the State for sale . We see no reason why the assessee could not produce books of accounts maintained before the income tax 3 authorities. We therefore do not find any justification to interfere with the orders of the Tribunal. Even though counsel for the appellant submitted that for sales tax verification certain books of accounts are maintained and the same should have been relied on, we do not think there is any merit in this claim because accounts are one and the same, whether it be for sales tax or income tax of the assessee. The assessee admittedly does not maintain proper books of accounts. We therefore reject these appeals. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 4 "