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TMI Blog2016 (7) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... action was taken by the Revenue in preferring appeal though 95 per cent. of the addition was deleted by the Commissioner of Income-tax (Appeals) and upheld by the Tribunal resulting into a relief of ₹ 6.58 crores and ₹ 10.25 crores respectively. Equally important is the fact that when the question of law was admitted by this court on October 22, 2008, notices were sent to the Revenue and the Revenue had a chance to file cross-objection then too none cared to file. Even this factum was noticed by us while examining the records and was not brought to the notice of this court by the counsel for the Revenue. - Income Tax Appeal Nos. 158, 193, 199 and 684 of 2008 - - - Dated:- 29-7-2016 - M. N. Bhandari And J. K. Ranka, JJ. For the Appellants : P. K. Kasliwal and Naresh Gupta For the Respondents : Nikhil Simlote on behalf of R. B. Mathur, O. P. Pareek on behalf of Anuroop Singhi and Sandeep Pathak, Advocates JUDGMENT J. K. Ranka, J. 1. These appeals under section 260A of the Income-tax Act, 1961 (for short the Act ) at the instance of the assessee are directed against orders of the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under section 145(3) read with section 144 of the Act, addition of ₹ 22,84,051 made without any basis of computation as also without establishing nexus thereof with the available facts and circumstances is permissible in law ? D. B. I. T. A. No. 199 of 2008 (i) Whether in learned Income-tax authorities below were justified in making/sustaining the addition as a result of necessary concomitant of the rejection of the books of account under section 145(3) in view of 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 the trading addition made without there being established the same to have been earned by the appellant during the year under consideration being a national, hypothetical or unreal addition the levy and recovery of Income-tax thereon is permissible ? (iii) Whether the learned Income-tax Appellate Tribunal was justified in not giving the telescoping benefit of the addition of ₹ 1,00,000 as sustained on account of disallowance of expenses qua the trading addition as sustained at a higher figure ? D. B. I. T. A. No. 158 of 2008 (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to apply 55per cent. GP rate on the sale estimated by AO (ii) ITAT directed to apply 22.5per cent. in case of IMFL/Beer on the estimated sale made by AO 193/2008 27,76,91,665 34,48,01,640 57,34,330 7,28,61,927 70,49,259 80,00,000 199/2008 42,41,87,891 52,79,85,381 7,91,701 10,47,89,190 19,81,705 Remanded to AO to decide in the light of last year, i.e., as in D. B. I. T. A. No. 193/2008 (supra) 158/2008 6,78,63,735 9,50,70,790 34,97,280 3,06,92,336 15,00,000 25,00,000 6. The Assessing Officer examined the books of account and other supporting material produced by the assessee. However, the Assessing Officer not satisfied with the way in which the books of account were maintained as well as non production of the vouchers mainly relating to the sale of the country liquor or/and Indian made foreign liquor/beer and was of the opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country liquor account as well as the Indian made foreign liquor and beer account. 7. The assessee being not satisfied with the additions assailed the said order before the Commissioner of Income-tax (Appeals), though the issue about invoking of provisions of section 145(3) was specifically challenged before the Commissioner of Income-tax (Appeals), however, at the time of hearing the learned counsel for the assessee himself did not press the ground relating to the provisions of section 145(3) and the Commissioner of Income-tax (Appeals) while granting partial relief upheld the rejection of the books of account and dealing with the issue observed in para. 4 as under : However, the learned authorised representative expressed that he is not pressing for this ground of appeal as the appellate authorities are constantly holding the provisions of section 145(3) are applicable in liquor cases. Therefore, this ground of appeal is dismissed. The Commissioner of Income-tax (Appeals) was however of the opinion that the income assessed by the Assessing Officer was higher, therefore, reduced the trading addition. 8. Both the assessee as well as the Assessing Officer being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, even as per the admission of the assessee and even the assessee had no basis for adopting the sales figure and book results were held to be manipulated by all the three authorities therefore, the Assessing Officer, the Commissioner of Income-tax (Appeals) as well as the Tribunal taking into consideration identical cases rightly applied particular gross profit rate and supported the order of the Tribunal. Learned counsel for the Revenue also contended that when this court in the case of CIT v. Ram Singh (supra) found the orders to be non speaking, therefore, the court was constrained to remand the matter to the Tribunal but at least in these cases, there is ample finding by the Tribunal and the case should not be remanded and contended that the addition made even otherwise is negligible looking to the huge turnover. 12. We have heard the learned counsel for the parties and have perused the impugned orders as also the orders of the authorities below. 13. Admittedly, the books of account have been found to be defective and even as per the admission of the counsel for the assessee before the Commissioner of Income-tax (Appeals) and in not pressing the same, therefore, in so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en a reference of 13 cases and after taking into consideration findings in 13 cases in addition to the cases taken into consideration by the Assessing Officer, had also given elaborate finding while applying a particular gross profit rate in the country liquor account as well as the Indian made foreign liquor and beer accounts. It would be appropriate to quote the findings by the Income-tax Appellate Tribunal and relevant para. Nos. 6 and 7 are quoted hereunder : 6. As regards the estimation of income, the Assessing Officer has relied upon the various case law who had declared the gross profit rate up to 77.78 per cent. in the case of country liquor and 26 per cent. in the case Indian made foreign liquor and beer. The comparable cases do not help much to estimate the income in the cases of such trade. The various decisions have been relied upon by the Assessing Officer. The learned authorised representative has also relied upon various decisions in support of this claim. As a matter of fact, different assessees are declaring different gross profit. Since in almost all the cases in such trade, sales are unvouched and sales are entered in the books of account as per the convenie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the decisions relied upon by the Assessing Officer and by the learned authorised representative it will be in the interest of justice if the gross profit rate of 55 per cent. is applied in the case of country liquor at the estimated sales by the Assessing Officer and 22.5 per cent. in the case of Indian made foreign liquor and beer at the estimated sales by the Assessing Officer. The Assessing Officer is directed to act accordingly. This court noticed in the case of CIT v. Ram Singh (supra) that most of the appeals were disposed of in either six lines/eight lines without even referring to the submissions of the counsel for the parties and this court has quoted and reproduced some of the orders of the Tribunal. While we notice that in the instant case the Tribunal's findings are elaborate and consider su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 three orders therefore, we would have refrained in dealing with it but since counsel vehemently argued therefore we would also consider the same. We fail to understand as to how these provisions are applicable at all in the instant case of liquor traders particularly when section 44AA applies to a person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette and they are required to maintain such books of account and other documents as is required under the Act, however, in our view, in the instant case, the said provisions are inapplicable as the assessee is not carrying on any of profession referred to in section 44AA. To say that liquo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 in July, 2006 and around that time, the Revenue was invariably filing appeals in this court even where petty tax was involved. Though, in the instant case, the Assessing Officer made a trading addition of about ₹ 7,28,61,924 and ₹ 10,47,89,190 respectively, however, the Commissioner of Income-tax (Appeals) deleted trading addition of about ₹ 6,58,12,665 and ₹ 10.25 crores respectively. The Assessing Officer estimated the turnover of ₹ 34,48,01,640 as against ₹ 27,76,91,665 in D. B. I. T. A. No. 193 of 2008 and ₹ 52,79,05,381 as against ₹ 42,41,87,891 in D. B. I. T. A. No. 199 of 2008 on the premise that the sale version had no basis and after rejecting the books of account, the turnover was taken by the Assessing Officer at ₹ 34,48,01,640 and ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive 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, a copy of which has been furnished. The learned authorised representative has, however, not pointed out as to how the facts and circumstances of those cases are similar to the present case. Under these circumstances, we are of the view that the learned Commissioner of Income-tax (Appeals) appears to have rightly applied the net profit rate of 5 per cent. on the declared turn over but ignoring the loss, if any, derived by the assessee on Indian made foreign liquor and beer business, however, keeping in view the objection raised by the learned Departmental representative in support of the Departmental appeal discussed hereinabove, we are of the view that a lump sum addition of ₹ 80,00,000 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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