AI Drafter 
TaxTMI 
TaxTMI 
2022 (9) TMI 1629
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.... estimation of sales and profit made by the AO based on the decision of the Hon'ble Jurisdictional High court in the case of Badri Prasad Bhagwan Das & Co. (MCC No.202 of 1985, 11.10.1994), is unjustified." 2. Briefly stated the assessee-company is engaged in the business of retail sale of country liquor and foreign liquor. For the relevant assessment year, the assessee submitted return of income on 15.10.2016 declaring a loss of Rs. 3,93,04,468/-. The case was selected under complete-scrutiny and statutory notices u/s 143(2)/142(1) of the Act were issued from time to time which were complied with by assessee. During assessment-proceeding, the Ld. AO was not satisfied with the correctness and completeness of books of account and therefore, rejected books of account by invoking section 145(3) of the Act. Ld. AO, thereafter, estimated the sales and net profit of assessee at Rs. 45,75,27,240/- and Rs. 2,28,76,362/- respectively as against sales of Rs. 20,75,00,239/- and loss of Rs. 3,93,04,468/- disclosed by assessee, following the decision of Hon'ble Jurisdictional High Court of Madhya Pradesh in Badri Prasad Bhagwan Das & Co. Vs. CIT MCC No. 202 of 1985, dated 11.10.1994. Acc....
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....reafter, defects in the audited books of account should have been pointed out by the ld. A.O. The Appellant has shown Opening and closing stock at NIL. Despite extensive examination of voluminous information submitted, no specific defects could be pointed out by the ld. A.O. Some general observations and suggestions to the appellant has been given in the assessment order. No comparable case of the similar trade has been discussed for assessing income of the appellant and also historical comparison of G.P. or N.P. of appellant's own case has been made. The AO has not drawn any comparable instance of contemporary cases while estimating sales on the basis of license fee paid by the Appellant. It is found that the Purchases were around 85 % of the sales and Net Profit rate was between 1.64 % to 3.01 % in the succeeding years. Such financial results should have been compared with the results of the similar nature of trade to arrive at justifiable income. The estimation of sales @ 2.5 times of the license fee and applying net profit rate of 5% on the sales so arrived is based on the Judgment of Hon'ble M.P. High Court in case of Badri Prasad Bhagwan das (supra). The assessment or....
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....0 ii Chikli C-38/2015-16 Country Liquor 4354125 11893500 iii Narshingla Country liquor 1899750 3593250 iv. Indoriya Foreign Liquor 25877616 Total 19,95,07,456 As per above calculation on the basis of Maximum Retail Price, maximum sales comes to Rs. 19,95,07,456/-. The above sales price is the maximum price on which a dealer can sale his goods whereas the Ld. AO has estimated the same at Rs. 45,75,27,240/-. It does not appear justifiable from any point of view. The ld. Assessing Officer has totally ignored the prevailing excise policy of the Government. Therefore, estimation of sales and profit on the basis very old excise policy on which the judgment of Hon'ble M.P. High court is based, is unjustified. The ld. Assessing Officer ignored various factors as discussed earlier while estimating the income of the appellant. In view of the above, such addition cannot be sustained. Therefore, the addition made by the Ld. Assessing Officer is hereby deleted. This ground of appeal is allowed." 4. Dissatisfied with the order of Ld. CIT(A), the revenue has now filed this appeal and now before us. 5. We think i....
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....ally different. There was no control of the Government over the sales price and the Licensee was free to sale liquor to customers at the price as per his will, but now the situation has totally changed. Now, State Government has issued excise policy for sale of liquor, according to which there is a price band of fixed MSP (Minimum selling price) and MRP (Maximum retail price). This policy is effective since 15.01.2008 / 15.01.2009 and the assessee has filed a copy of Gazette to Ld. CIT(A), which is very clear from appeal-order passed by Ld. CIT(A) itself. Now as per new policy, a retailer cannot charge more than MRP from customer. Therefore, according to Ld. AR, the decision of Badri Prasad Bhagwandas (Supra) was rendered in the pre-policy era and the same is not applicable. Ld. AR submitted that the Ld. CIT(A) has taken note of this material difference and thereafter rightly held that the said decision is not applicable. 9. We have considered rival submissions of both sides. We observe that the above submissions made by Ld. AR are fully incorporated in the appeal order of Ld. CIT(A). We further observe from Page No. 12 of the appeal-order of Ld. CIT(A) that the assessee has dul....
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.... and the audited accounts were submitted along with return of income, wherein no adverse remarks or discrepancies have been reported by the auditors. Ld. AR submitted that (i) the business of assessee is strictly regulated by government; (ii) the sale prices are fully controlled; (iii) the purchase is fully controlled and never doubted by revenue; (iv) the assessee could sell only that much of quantity as is procured from Govt. and nothing more, hence there should not be any doubt on quantitative-details; and (v) the Ld. AO has not cited even a single instance of bogus expenditure having been claimed by assessee, the observations made by Ld. AO with regard to expenses-vouchers are just general and passing remarks. Ld. AR submitted that the liquor business carried on by assessee is such that there are large number of products of different brands and packs and as submitted during assessment-proceeding a rough estimate is that more than 1073501 bottles (Page No. 6 of the assessment-order) might have been sold during the year to different buyers due to which it is practically not possible to issue invoices but, however, the assessee has maintained excel-sheets on daily basis and the sa....
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.... the appellant has been given in the assessment order." To buttress his argument further, Ld. AR also raised a contention that the revenue has not taken any specific ground in Appeal-Memo to rebut the finding of Ld. CIT(A), which is sufficient enough to demonstrate that the revenue is no more insisting that the rejection of books of account was a valid action of Ld. AO. 14. We have considered rival submissions of both sides, perused the material held on record and considered the legal precedents cited before us. It is an admitted fact by assessee that the sales-invoices and quantitative details are not maintained. Hence, suffice it to say, this is a significant lapse by assessee which makes the books of account incomplete, warranting rejection of books u/s 145(3). Therefore, we do not find any infirmity in the action of Ld. AO. Having said so, we now have to confine ourselves to the computation of profit of the business carried on by assessee. In this regard, we find weightage in the submission of assessee that the maximum possible sales of the year can be computed by using MRP. In fact, the Ld. AO has himself mentioned on Page No. 11 of the assessment-order: "From the ....