2015 (9) TMI 1297 - AT - Income Tax

Rectification of mistake - Estimation of sales and profit - as objected tribunal has estimated the sale by applying the multiplier of 2.5 times to the licence fee/bid money whereas the facts of the case are quite identical with the case of Govind Pd. Krishan Kumar vs. Jt. CIT (Spl.), Agra but the Assessing Officer has not followed the same and repeated previous assessment order Held that - Undisputedly, in the instant case, the sale rates are neither notified by the State Government nor fixed by the Excise Department. Therefore, the Tribunal has rightly held that the formula laid down by the Tribunal in the instant case, following the order of the Tribunal in the case of Govind Pd. Krishan Kumar vs. Jt. CIT (Spl.), Agra cannot be applied in the instant case. Therefore, the direction issued by the Tribunal could not be applied with. But in that case, the sales are to be estimated and the Assessing Officer has estimated the sales by applying the multiplier of 2.5 times of licence fee/bid money of ₹ 3,14,53,860/-. Therefore, we are of the view that the Tribunal has correctly applied the formula in the light of the orders of the Tribunal and also the judgment of the Hon ble M.P. High court in the case of Badri Prasad Bhagwandas & Co vs. CIT (1994 (10) TMI 268 - MADRAS HIGH COURT ), of which reference was made in the case of Govind Pd. Krishan Kumar vs. Jt. CIT (Spl.), Agra (supra). Since the Tribunal has adjudicated the issue in the light of the facts available before it, no error as suggested by the ld. counsel for the assessee, is crept in the order of the Tribunal. No merit in this Miscellaneous Application of the assessee, as no error apparent in the order of the Tribunal is pointed out. The ld. counsel for the assessee has tried to dispute the findings of the Tribunal and seeking a review of the order of the Tribunal which is not permissible under section 254(2) of the Act and we accordingly reject the Miscellaneous Application. - Decided against assessee.

Summary

Issues Involved:
1. Estimation of sales and profit.
2. Application of previous judgments and formulas for sales estimation.
3. Scope of rectification under Section 254(2) of the Income-tax Act.

Issue-wise Detailed Analysis:

1. Estimation of Sales and Profit:
The Tribunal was tasked with determining the correct method for estimating sales and profit. The Tribunal had previously directed the Assessing Officer to use a specific formula for sales estimation, which involved multiplying the average sale rate per liter by the quantity purchased. The formula was derived from the case of Govind Pd. Krishan Kumar vs. Jt. CIT (Spl.), Agra, where sales were estimated based on rates fixed by the State Excise Department. However, in the present case, no such rates were available, leading to the application of an alternative method from the case of ACIT vs. M/s Unnao Wines, Kanpur, which estimated sales by applying a multiplier of 2.5 times the license fee/bid money.

2. Application of Previous Judgments and Formulas for Sales Estimation:
The Tribunal examined whether the Assessing Officer had complied with its directions and considered relevant judgments. The Tribunal noted that in the absence of state-fixed sale rates, the formula from Govind Pd. Krishan Kumar could not be applied. Instead, the Tribunal followed the judgment in the case of ACIT vs. M/s Unnao Wines, which justified estimating sales by applying a multiplier to the license fee. The Tribunal found no error in this approach, as it was consistent with previous judgments, including the Hon'ble M.P. High Court's decision in Badri Prasad Bhagwandas & Co vs. CIT.

3. Scope of Rectification under Section 254(2) of the Income-tax Act:
The Tribunal emphasized the limited scope of Section 254(2), which allows for rectification of only apparent or arithmetical errors. It cannot be used for reviewing or modifying orders based on reappraisal of facts or legal arguments. Citing multiple judgments, the Tribunal clarified that a mistake must be obvious and patent, not requiring elaborate reasoning or re-argument. The Tribunal concluded that the assessee's application sought a review rather than rectification, which is not permissible under Section 254(2).

Conclusion:
The Tribunal dismissed the Miscellaneous Application, affirming that no apparent error existed in its previous order. The Tribunal's approach to estimating sales and profit was consistent with applicable legal precedents, and the scope of rectification under Section 254(2) did not allow for the review sought by the assessee. The order was pronounced in open court, finalizing the decision.