TaxTMI 
TaxTMI 
2005 (3) TMI 407
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....shwani Kumar Dixit deposited Rs. 2 lacs in cash on 21st April, 1999 by cash. The assessee filed confirmation of Shri Ashwani Kumar Dixit along with PAN No. ADVPD-1945-K (paper book 12). During the course of statement before the AO under s. 131 of the Act, Shri Dixit had denied that he had deposited any money with the assessee. 3. After hearing rival submissions, we are of the opinion that the PAN was given before the lower authorities and Shri Dixit was assessed to tax by the ITO, Ward 4(1), Jaipur, as per copy of acknowledgement slip. The counsel for the assessee submitted that no opportunity to cross examine Shri Dixit was given. Therefore, this issue is restored to the file of the AO with the direction that he should verify the fact of advancing Rs. 2 lacs from income-tax record of Shri Dixit. He should also give an opportunity of being heard and to cross-examine Shri Dixit by the assessee. Shri Anil Wadia--Rs. 15 lacs and Shri Sohan Lal Singla--Rs. 37 lacs 4. The brief facts of the case are that the assessee had filed confirmations along with PAN of these two persons (paper book 14 and 18). However, these persons could not be produced before the AO and the AO had not issued....
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....d in sustaining the addition of Rs. 10 lacs in the name of Smt. Kamoda Devi under s. 68 of the Act. Hence, we delete this amount of Rs. 10 lacs sustained by the learned CIT(A). By cash creditors Shri Devender Singh--Rs. 50,000 7. After perusal of the facts of the record, we find that Shri Devender Singh had deposited Rs. 50,000 in cash. He had not been assessed to tax. The simple confirmation had been filed before the lower authorities. We find no infirmity in the order of the learned CIT(A) on this issue. Therefore, we sustain the addition of Rs. 50,000. Shri Ghanshyam Das--Rs. 98,000 8. Similar is the case of Shri Ghanshyam Das who has given confirmation on plain piece of paper and no sources of the amount had been explained before the lower authorities. Therefore, the learned CIT(A) had rightly sustained the addition made for unexplained cash credit of Rs. 50,000. We decline to interfere with the order of the learned CIT(A) on this issue. Shri Nand Singh--Rs. 50,000 and Shri Pushpendra Singh--Rs. 50,000. 9. After perusal of the record, we find that both persons were neither produced before the lower authorities nor any confirmations in respect of them were filed. There....
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.... of Rs. 2,92,30,610 shown by the assessee. 13. The brief facts of the case are that the assessee AOP had taken liquor contract (IMFL/Beer wholesale, IMFL Beer retail and Country liquor for Tehsils of Ajmer, Kekri, Kishangarh, Vijaynagar and Beawar, the major parts of which are rural areas. The return of income was submitted along with audited statement of accounts under s. 44AB of the Act, declaring loss of Rs. 2,76,86,920. The assessment was completed vide order dt. 31st March, 2003 under s. 143(3) at income of Rs. 9,64,86,310 by the AO. The position of the trading results achieved, assessed and sustained was as under: Trading loss shown by the assessee Rs. 2,92,30,610 Add. Depreciation Rs. 15,43,690 = 2,76,86,920 Trading profit assessed by the AO (Total Rs. 11,29,42,432) 8,52,55,512 Trading additions sustained by the CIT(A) 2,60,00,000 On the basis of survey under s. 133A of the Act conducted on 21st March, 2003, on two or three retail shops of IMFL/Beer of M/s Surjeet Wines (liquor contractor of Jaipur city for the asst. yr. 2003-04) by some other officers of IT Department, Jaipur not the AO), the retail sales rates of Jaipur city were applied in the case of the assesse....
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....presentative made the following submissions: "On the basis of survey dt. 21st March, 2003, on two or three retail shops of IMFL/Beer of M/s Surjeet Wines (liquor contractor of Jaipur city in the financial year 2002-03) by some other officers of IT Department, Jaipur (not the learned AO), the retail sales rates of Jaipur city were applied on the assessee AOP and G.P. rate on that basis was applied which are as under: IMFL/Beer Wholesale 5 per cent IMFL/Beer retail 35 per cent Country liquor 65 per cent In avoidance of provisions of s. 142(3) of IT Act, no opportunity to cross-examine the source or the persons, from whom the information for margin of profit was collected by the Survey Team and applied on the assessee during the course of survey was allowed by the learned AO. In the appellate proceedings, the assessee had collected information from M/s Rajasthan Wines (who had liquor contract in the financial year 2003-04) for the retail rates of liquor. The learned CIT(A) also called for the remand report from the learned AO but the same was not considered in deciding the issue before the learned CIT(A). On the basis of above facts, we submit as under : (a) As per newspaper ....
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....llicit country liquor at number of places in the remote areas and villages takes place. The manufacture of illicit liquor results in lower sales of branded county liquor dealt by the licensed contractors like assessee AOP. (d) That in case of wholesale IMFL/Beer, the total sales are vouched. The retailers get credit of fulfilment of liquor contract price on the basis of purchases in terms of quantity and, therefore, it is compulsory to issue sale invoices so as to verify the purchases made by retailers. There is no justification for the learned AO to apply G.P. rate of 5 per cent on wholesale sales. (e) The major part of the sale by IMFL/Beer wholesale is to assessee's own retail and, therefore, application of 5 per cent of G.P. and, thereafter, 35 per cent in retail will have double effect on the total profit of retail sales. (f) From the information collected from the price list of the Jaipur liquor contractor for the financial year 2003-04, the current retail rates of Jaipur city as compared to purchase price adopted by the learned AO, were as under : S.No. Type of liquor Purchase price of Appellant Sale price of Jaipur (in financial year 2003-04) Rates applied by the AO....
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....ity on account of short license fee would have increased for not lifting the liquor as per obligation to purchase it as per the contract. (3) If one liquor contactor is indulging in any unlawful or illegal activities of carrying on liquor trade, the other liquor contractor cannot be taken akin to him. (4) In the case of Asstt. CIT vs. Bhanwar Ali Habib Mohammed & Party & Ors. (ITA No. 308, 309, 122, 259, 310, 311, 790, 375 & 374/Jp/2003 decided on 22nd Dec., 2004), cited by the learned Departmental Representative, this Hon'ble Tribunal has held that in the retail trade of the liquor, the location of the shop is very important. The assessee's case was Ajmer District where at the border areas, the Jaipur liquor contractor used to sell the liquor at about 50 per cent of the rates sold in Jaipur city and, therefore, the case of Jaipur liquor contractor cannot be compared. More so when the assessee had collected the retail rates which are quite lower to rates adopted by the learned AO in the assessment order. (5) The case of CST vs. H.M. Esufali H.M. Abdulali 1973 CTR (SC) 317 : (1973) 90 ITR 271 (SC) is not applicable on assessee AOP. No escaped turnover even for a single day was fo....
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....pplied were the actual rates or the creation of the learned AO. The assessee had collected evidence for retail rates of Jaipur city. The list is appearing at page No. (6) of the paper book. 18. We have heard the rival submissions and perused the materials available on record. We find that the learned CIT(A) had upheld the application of provisions of s. 145(3) of the Act for the reasons given by the AO in his order. The defects also find mention in the audit report under s. 44AB of the Act. In view of this, we decline to interfere with the order of the learned CIT(A) as far as application of s. 145(3) is concerned. Ground No. (i) of the Department and ground No. 1 of the assessee 19. Now we shall deal with the issue of deletion of trading addition of Rs. 5,92,55,512 pertaining to the Revenue and the issue of sustaining the trading addition of Rs. 2.60 crores against loss of Rs. 2,92,30,610 pertaining to the assessee wherein both the parties are aggrieved against the order of the learned CIT(A) and hence in appeal before us. 20. In this case, the AO relied upon the case of Surjeet Wines, Jaipur wherein survey under s. 133A of the Act was conducted. He applied the G.P. rate as un....
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....21st March, 2003. 24. As regards the application of G.P. rate of 5 per cent on IMFL Beer (wholesale), we agree with the opinion of the learned CIT(A) that no addition can be made in the case of wholesale IMFL beer because the total sales and purchases are vouched. Therefore, we sustain the order of the learned CIT(A) on this issue. 25. As regards the application of higher G.P. rate on country liquor, IMFL Beer (retail), we again sustain the order of the learned CIT(A) for the reasons that AO had grossly erred in relying upon the case of Surjeet Wines, Jaipur. In this case, the survey was conducted on 21st March, 2003, and the relevant asst. yr. was 2003-04 whereas the appeal is for asst. yr. 2000-01. The AO also grossly erred in relying upon the case of third party whose premises was situated in Jaipur whereas the area of operation of the assessee is rural area. The Jaipur resident never faced the seriousness of drought whereas major part of assessee's liquor contract area being the villages, faced acute drought for the third consecutive year. Huge amount of short license fee amounting to Rs. 18,48,07,627 was paid by the assessee. Therefore, the learned CIT(A) had rightly held th....
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....able cases as held by the various Courts and also as per the book "Techniques of Investigation for Assessment" issued by the IT Department. Besides after going through the arguments of the learned Authorised Representative, we find that the trading results of the year under appeal are not comparable with the trading results of the subsequent years for the following reasons. (i) This was first year of the liquor contract The assessee's liquor contract area consisted mainly of rural areas of Ajmer, Kekri, Kishangarh, Vijaynagar and Beawar. The assessee was new in these areas and took time to understand about these areas. (ii) Due to tough competition from Jaipur Liquor Contractor who sold liquor at 50 per cent of rates in the border areas (paper book 10), the assessee had to purchase more liquor in terms of quantity and had to sell at low price to capture the market in order to face the competition with the liquor contractor of the adjoining areas. This results into high sales in terms of quantity but low in value. (iii) In subsequent year, the assessee could understand the areas and its people that led to more income in the subsequent years. (iv) The AOP also came to know about ....