TaxTMI 
TaxTMI 
2016 (7) TMI 1230
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....) and are carrying on the business of sale of country liquor under rules 67(1) and 67(KK) of the Rajasthan Excise Rules, 1956 and retail sale of beer and Indian made foreign liquor (IMFL) under rule 3A of the Rajasthan Foreign Liquor (Grant of Wholesale and Retail sale Licences) Rules, 1982 under exclusive privilege system. 3. The present appeals were admitted by this court on the following substantial questions of law : D. B. I. T. A. No. 684 of 2008 "(i) Whether on the facts and in totality of the circumstances of the case and in law, the learned Income-tax Appellate Tribunal was justified in sustaining the trading addition as a result of necessary concomitant of the rejection of the books of account under section 145(3) ignoring the ratio laid down by this hon'ble court in case of CIT v. Gotan Lime Khanij Udhyog reported in [2002] 256 ITR 243 (Raj) ? (ii) Whether on the facts and in totality of the circumstances of the case and in law, in the proceedings under section 145(3) read with section 144 of the Act, addition made without any basis of computation as also without establishing nexus thereof with the available facts and circumstances if permissib....
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....proceedings under section 145(3) read with section 144 of the Act, addition of Rs. 25,00,000 made without any basis of computation as also without establishing nexus thereof with the available facts and circumstances is permissible in law ?" 4. The facts of appeal in the case of Chaturbhuj Manoj Kumar v. CIT (D. B. I. T. A. 684 of 2008) for the assessment year 2000-01 are being considered, as admittedly in all the appeals, the assessees are engaged in liquor trade and all the assessees had bid in an open auction of the State Excise Department and obtained licence for selling Indian made foreign liquor, beer and country liquor was a retailer of different Districts. All the assessees were required under the Rajasthan Excise Rules to pay the tender amount by purchasing the goods equivalent thereto and in case of failure to make adequate purchases, to deposit the deficit by way of short licence fee. The country liquor is sold by the Rajasthan State Ganganagar Sugar Mills Ltd., an undertaking of the Rajasthan Government to the assessees through the depots of Rajasthan State Ganganagar Sugar Mills Limited while the Indian made foreign liquor and beer is made available from distillery/....
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....even stock registers was not produced which could prove the availability of stock on a particular day or/and at the end of the close of the year and by invoking provisions of section 145(3) of the Act, he sought to arrive at proper profits and had also noticed that on a huge turnover in crores in almost all the cases as per the chart given hereinbefore, return of income was negligible/ very low in proportion to even the sale version by the assessee and even in some of the concerns even loss was declared. Accordingly, a show-cause notice was issued. Reply was filed and the assessee vide letter dated March 22, 2002 admitted that the defects were there. Taking into consideration the admission by the assessee that the defects were there, the Assessing Officer was of the opinion that the defects having been noticed and admitted by the assessee himself, it was enough to render the figures in trading account as well as in the profit and loss account unreliable and untrustworthy, for the simple reason that the actual sale rate per bottle was not verifiable and the brand wise and size wise details were unavailable. The figure of sale render themselves liable for manipulation. It was also no....
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....ntained is no reason to reject the books of account and in the alternative he contended that once the books of account are rejected whether it should result into an addition? He contended that it is not necessary that even in a case of rejection of books of account, addition is required to be made. He relied upon the judgment rendered by this court in the case of CIT v. Gotan Lime Khanij Udhyog [2002] 256 ITR 243 (Raj). He further contended that the addition even otherwise cannot be made as all the three authorities have overlooked the provisions of sections 44AA and 145(3) and rule 6F of the Income-tax Rules of 1962. He further contended that the Assessing Officer had no basis/evidence to assume estimation of sales which was drastically increased by the Assessing Officer. He further contended that the trading results are fair and reasonable. There was no justification for the Assessing Officer as well as the Tribunal ultimately in making trading addition. 10. Learned counsel for the appellant also contended that earlier this court in the bunch of cases of liquor traders, in the case of CIT v. Ram Singh [2014] 363 ITR 417 (Raj) held that the order of the Tribunal was non speakin....
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....t not to have been raised before the Tribunal and again before this court. 14. Once there is a clear cut finding by the Assessing Officer as well as the Tribunal that the books version cannot be relied on at all and the entire accounts were manipulated, the Assessing Officer or/and the Tribunal, in our view, had correctly gone into some estimation/guess work by invoking provisions of section 145(3) or in a case of a best judgment assessment under section 144, some guess work will always have to be resorted to by the authorities. However, the same should also be based on some material and should not be arbitrary or without any material. The Tribunal so also other authorities had considered the similarly situated identical liquor traders in this very line of business as the basis to sustain some addition as even the Assessing Officer had some comparable cases to rely upon. The learned Assessing Officer had taken into consideration the cases of Kanhaiya Lal Kailash Chand (I. T. A. No. 1549/3 P/97), Shakuntala Kanwar Khetri (I. T. A. No. 200/JP/1998), B.M.D. Khan, M/s. Tek Singh Sandu Singh and Partners, Hanumangarh, (I. T. A. No. 1503 and 2200/JP/1994) respectively which were decid....
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.... 9 208/JP/03 dated 15-09-06 ACIT v. Harjinder Singh and Party 10 219/JP/04 dated 15-09-06 ACIT v. Harjinder Singh and Party 11 426/JP/01 dated 31-05-05 DCIT v. Jai Mai Ram and Partty, etc. 12 472/JP/2006 dated 27-7-07 Shankar Lal Choudhary and Party v. ACIT 13 226/JP/2006 dated I.T.O. v. M/s. Om Singh Rathore Omkar Pathak and Party. 7. The learned Commissioner of Income-tax (Appeals) on the other hand has estimated the lump sum addition in the case of country liquor and Indian made foreign liquor and beer without any basis and no cogent reasoning has been given while making the estimates and while sustaining the addition in lump sum and it appears that the learned Commissioner of Income-tax (Appeals) has made the estimates to allow the relief to the assessee. The order of the Assessing Officer appears to be reasoned one since he has relied upon various decisions of the Tribunal in support of his order. As observed by us hereinbefore that the Tribunal has held different gross profit rate in different cases mentioned hereinbefore, in the circumstances and facts of the present case, and various decisions relied upon herein before and....
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....not reliable and invoked provisions of section 145(3) of the Act while the Assessing Officer made trading addition to the tune of Rs. 3,34,960 by adopting a higher gross profit rate, the Commissioner of Income-tax (Appeals) sustained an addition of Rs. 34,000 which was also deleted by the Tribunal. On a Departmental appeal, this court found that the addition was made "to cover up the possible leakages in the books of account of unverifiability", the addition was made merely on suspicion of pilferage or leakages and this court noticed that the finding of the Tribunal was based on the finding of fact and not giving rise to any question of law whereas in the instant case, the Tribunal has come to a definite finding of fact based on the other cases decided in the same line of business and by making comparison of facts of the appeal of the assessee with those of the other similarly situated liquor traders, therefore, the judgment in Gotan Lime Khanij Udhyog (supra) is distinguishable. 17. Learned counsel for the assessee has also raised the issue about overlooking of provisions of section 44AA as also rule 6F of the Income-tax Rules, 1962, though it does not arise out of any of the t....
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....ks of account are not maintained or/and vouchers are not available, the chartered accountant possibly cannot do audit and is required to put a qualification in such an eventuality, therefore, in our view, the arguments of the counsel are worth rejection and accordingly rejected. We refrain our self from mentioning anything more at this juncture. 18. We after taking note of the results tabulated in para 5 hold that on facts the addition sustained by the Tribunal had proper basis of comparing the cases of the assessee with other similarly situated liquor traders. Accordingly, in our view, the order of the Tribunal is just and proper and all the questions raised by the assessee are answered against the assessee and in favour of the Revenue. 19. Though we have dismissed all the appeals of the appellant-assessee including D. B. Income Tax Appeal No. 193 of 2008 and D. B. I. T. A. No. 199 of 2008 (Rajaram v. CIT) both appeals by assessee only, however, after having perused the order of the Commissioner of Income-tax (Appeals) as well as the Tribunal, it goes to show the casual approach of the Revenue officers concerned in the matters like this. The Tribunal disposed of this appeal ....
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....8,01,640 and again while granting relief, takes into consideration the figure of total turnover to be at only Rs. 14,09,85,178 and ignores enhanced turnover and it would be appropriate to quote this portion as well : "Considering these factors and the location of the territory of business of the assessee, the learned Commissioner of Income-tax (Appeals) has applied net profit rate of 5 per cent. on the total turn over of Rs. 14,09,85,178 and the loss, if any, derived by the assessee on Indian made foreign liquor and beer business has been ignored. He has, accordingly, worked net profit of Rs. 70,49,259 as against Rs. 57,51,948 declared by the assessee. The learned authorised rep resentative has given instances of Rajaram Hazari Ram v. Asst CIT, decided by the Jaipur Bench of the Tribunal (supra), wherein the net profit rate after second appeal effect was just 0.27 per cent. He has also given other instance in the case of Rajaram and Party (Thanagaji Group) for the assessment year 1998-99, wherein the learned Commissioner of Income-tax (Appeals) had applied net profit rate of 0.30 per cent., which has been upheld by this Bench of the Tribunal in I. T. A. No. 258/JP/2000-01,....