Rajasthan High Court - Jodhpur
C.I.T.Bikaner vs M/S Jaimal Ram Kasturi Lal & Partners on 15 January, 2013
Bench: Dinesh Maheshwari, Arun Bhansali
D.B. INCOME TAX APPEAL NO.89/2009
Commissioner of Income Tax, Bikaner
vs.
M/s. Ashok Behi Bharat Sethi & Party
1
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JODHPUR
JUDGMENT
D.B. INCOME TAX APPEAL NO.89/2009
Commissioner of Income Tax, Bikaner
vs.
M/s. Ashok Behi Bharat Sethi & Party
Date of Judgment : 15.01.2013
PRESENT
HON'BLE MR. JUSTICE DINESH MAHESHWARI
HON'BLE MR. JUSTICE ARUN BHANSALI
Mr. K.K. Bissa, for the appellant.
BY THE COURT (PER HON'BLE BHANSALI, J.):
The Revenue has preferred this appeal under Section 260-A of the Income Tax Act, 1961 ('the Act') against the judgment and order dated 30.10.2007 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ('the Tribunal') in ITA No.158/JDPR/1998 and CO No.54/05 for the assessment year 1994-1995, whereby the Tribunal has dismissed the appeal of the Revenue and has allowed the cross-objection of the assessee; and in the result, has deleted in toto the impugned additions towards country liquor business and Indian Made Foreign Liquor (IMFL) business of the assessee, as made by the Assessing Officer ('the AO') in the assessment order dated 14.3.1997, and as partly retained by the Commissioner of Income Tax (Appeals), Jodhpur ('the CIT(A)') in the order dated 28.01.1998 as passed in the assessee's appeal.
D.B. INCOME TAX APPEAL NO.89/2009 Commissioner of Income Tax, Bikaner vs. M/s. Ashok Behi Bharat Sethi & Party 2 The appeal has been admitted on the following question of law:-
"Whether the best judgment assessment made by the A.O. was based on cogent material and relevant criteria and the CIT(A) was unjustified in displacing the certain of comparable cases than that of past history and the Tribunal had erred in affirming the order passed by the CIT(A)".
The facts relevant for determination of the question involved in this appeal are that the assessee is engaged in liquor business and during the period relevant to assessment year 1994-1995, the profit of the assessee from country liquor business was assessed at Rs.1,48,55,541/- as against the declared profit of Rs.1,11,74,756/- by adopting a net profit rate of 18% towards the total outgoings (total payment made to Government for lifting goods) as against the declared rate of 13.54% and the gross profit of the assessee from the IMFL business was assessed at Rs.2,68,33,377/- as against declared gross profit of Rs.2,46,55,317/- by adopting a net profit rate of 26% towards the total outgoings as against the declared gross profit rate of 24.40% after rejecting the books of accounts of the assessee, under Section 145 of the Act. The profit rate was adopted by the AO by taking into account the past history of the assessee and comparable case of one M/s. Ramesh Kumar Trilok Singh & Party, Anoopgarh.
Feeling aggrieved, the assessee preferred an appeal before the CIT(A), which was partly allowed by the order dated 28.01.1998. The CIT(A) though upheld the order of the AO for D.B. INCOME TAX APPEAL NO.89/2009 Commissioner of Income Tax, Bikaner vs. M/s. Ashok Behi Bharat Sethi & Party 3 applying the provisions of Section 145(2) as the sales of the assessee were not supported by vouchers but, came to the conclusion that the addition made by the AO was in fact excessive, keeping in view the past results of the assessee. While observing that when books of accounts are rejected, past history of the case becomes relevant and the same could be a guide for reasonable profit, the learned CIT(A) restricted the addition made by the AO to Rs.8,25,308/- for country liquor business and Rs.6,06,162/- for IMFL business.
Aggrieved by the aforesaid order dated 28.01.1998, the Revenue preferred an appeal before the Tribunal and the assessee took cross-objections therein.
By the impugned order dated 30.10.2007, the Tribunal has allowed the cross-objections taken by the assessee and has dismissed the appeal preferred by the Revenue; and, in the result, has deleted the additions altogether while observing and holding as under :-
"4. ..........From the above charts, it is apparently evidenced that the gross profit rate declared in this year is better than the past year. The consistent view of this Bench, in this regard, is that even after rejection of books of accounts u/s 145(2), addition is not automatic unless there is some valid reasons for doing so. This Bench has been usually giving preference to the past history of the assessee. It is found to be comparable with the current year than no further trading addition is allowed to be made. In this case the results are far far better than the last year so no further addition is called for. We may refer to the case of Banna Lal Jat Vs. ACIT reported in XXVI Tax World November 2001 part 5 page No.447 in this regard, inter alia. We may also refer to the case of JCIT Vs. M/s Tak Sidhawat & Party in ITA No.615/JU/1998 order dated 07.07.2003 wherein it has held that "the Assessing Officer has not been able to point out any specific defect in the books of accounts of the assessee, the purchases and sales in quantity are fully vouched and D.B. INCOME TAX APPEAL NO.89/2009 Commissioner of Income Tax, Bikaner vs. M/s. Ashok Behi Bharat Sethi & Party 4 controlled by the Excise Department, in such like cases, we have been holding that unless some specific defects are pointed out by the department, only on account of non-issuance of sales bill no addition can be made. Since no specific defects have been found in this case also and the results of the year are better than the past year, we are of the considered opinion that no further addition can be made in the declared results of the assessee and the declared results have to be accepted. Therefore, in our considered opinion, the ld. CIT(A) even after accepting the above theory in principle, has sustained some addition which is paradoxical. The ld. CIT(A) has observed at page No.6 of his order that "admittedly the appellant has shown better profit in this year as compared to the last year". With the above observations, we dismiss the ground raised by the revenue and accept the ground raised by the assessee, in respect of country liquor account.
5. .........Apparently, the assessee has declared better gross profit rate at 24.04% as compared to 23.85% shown in the immediately preceding assessment year, in spite of the fact that the turnover of IMFL/Beer increased substantially. Since the trading results are better in this year as compared to the earlier year, no further addition is warranted. We therefore, delete the entire addition made in this account as well.
6. In the result, the appeal of the Revenue is dismissed and the cross objection is allowed."
This court while considering the appeal filed by the Revenue in the case of another liquor contractor being D.B. Income Tax Appeal No.145/2006 (Commissioner of Income Tax, Bikaner Vs. M/s. Jaimal Ram Kasturi and Partners) held as under:-
"In our view, ultimately, the matter had been of putting a estimate on the profit of the assessee while recording the findings on facts. The CIT(A) has given cogent reason for not endorsing the approach of the AO in making assessment with reference to the case of another assessee after finding it to be not a directly comparable case and hence, not a safe guide more particularly, when assessee's past history was available and there was no material difference in the facts pertaining to the relevant assessment year and the past history year. The CIT(A), even while accepting past history as the relevant basis for assessment, proceeded to retain a part of the addition to the tune of Rs.10,65,928/- without cogent and sufficient reason therefor. The Tribunal, therefore, while endorsing the basis adopted by the CIT(A), has found no reason to sustain any addition and hence, deleted the addition altogether.
D.B. INCOME TAX APPEAL NO.89/2009 Commissioner of Income Tax, Bikaner vs. M/s. Ashok Behi Bharat Sethi & Party 5 In the totality of circumstances, the Tribunal cannot be faulted in accepting the profit rate as declared by the assessee while not approving the rate as applied by the AO. The order as passed by the Tribunal does not appear suffering from any perversity or from the application of any wrong principle so as to call for interference.
Accordingly and in view of the above, the answer to the questions formulated in the present case is in the affirmative i.e. against the revenue and in favour of the assessee.
Consequently, the appeal fails and is hereby dismissed. No costs. "
The reasons forgoing, on all the relevant and material aspects, equally apply to the present appeal too, which is based on self same grounds. Thus, following the decision aforesaid and in the same terms, this appeal also stands dismissed. No costs. (ARUN BHANSALI)J. (DINESH MAHESHWARI)J. RM/