9911796707
TMI Blog2019 (5) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of books of accounts in spite of specific defects pointed out in the assessment order and deleting the addition of Rs. 3,09,63,422/-. (2) Whether on the facts and in the circumstances of the case, Ld.CIT (A) was justified in restricting the addition of Rs. 3,09,95,390/- made on account of suppression of sale to Rs. 31,968/- allowing relief of Rs. 3,09,63,422/- without taking into consideration that suppression of sales has been logically derived by AO by taking into consideration the duties on purchases and other factors as mentioned in assessment order. (3) Whether on the facts and in the circumstances of the case, Ld.CIT (A) was justified in deleting the addition of Rs. 13,97,442/- made on account of undervaluation of closing stock without appreciating the fact that huge breakage of bottles is not possible as the assessee has mainly purchased goods in plastic bottles and as such there cannot be breakage of such a large number of bottles and no supporting evidence given by the assessee for the claim. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. ITA No.490/Ind/2017in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e net profit @ 3.4% of the total turnover as against 3.17% shown in the immediately preceding assessment year. On examining the books of accounts as well as the documents placed before him he noticed that various purchases and sale bills were not produced, no regular sale bills are issued which makes the verification of sale difficult. In absence of sale bills Ld. A.O took the basis of MSP (Maximum Sale Price) and MRP (Maximum Retail Price) mentioned on the label of bottles to compute the sales. Quantity of liquor was taken from the document of Excise Department showing the goods purchased by the assessee. Ld. A.O also observed certain anomalies relating to entry of purchase in the books of accounts and he also challenged the valuation of closing stock being made incorrectly. He accordingly on the basis of following observations rejected the books of accounts and applied provisions of Section 145(3) of the Act:- 1. The assessee has not maintained sale bills and in absence of sale bills correct sales are not verifiable. 2. The sales declared by the assessee found undervalued due to assessee applied the rate below than MSP whereas as per Govt. norms the liquor cannot be sold belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been shown at Rs. 23.62 crores with a gross profit of Rs. 2.17 crores which comes to 9.220/0 and the net profit is shown at 3.9. 1. The detailed procedure of the business is enumerated hereunder: a. The tenders are floated for the group shops which are allotted to the highest bidder. The tenders are also renewed with an increase of 15 every year. b. The shops of foreign liquor and country liquor are grouped separately and the amounts payable are determined as per the allotment of group shops. c. After getting the tender or the renewal of the licence (a) 10 of the amount is deposited as the initial amount for the 0.::of the shop (Dharohar Rashi). (b) 90 of the balance amount is divided into 24 parts and is payable every fortnightly. (c) 45 i.e. half the amount is paid as basic license fees which is fixed against which the goods are not delivered. (d) 45 i.e. half the amount is paid as license fees against the supply of goods. This amount is payable irrespective of the fact whether the goods are purchased or not. (e) For the amount of 90 of the tender price a bank guarantee of 12 is required to be given immediately on acceptance/renewal of tender. (f) If the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has sold the goods at 15 above the MSP and made the addition of Rs. 1,15,53,323/_ for foreign liquor. Similarly, he has calculated the sale of country liquor by adopting 15 of MSP and made the addition of 3,03,91,278/-. For IMFL spirit he has adopted the sale rate at 15% above MSP and made the addition of Rs. 1 ,92,21,773/-. Thus, the total addition is made at Rs. 6,16,66,374/-. The Ld. A.O. further disallowed the breakages and shortages claimed by the assessee at Rs. 12,85,423/- on the ground that these shortages are not mentioned in the audit report. This addition has been made for undervaluation of stock assuming the full quantity of stock is available with the assessee. 5. The Ld. CIT(A) after considering the submissions of the assessee and after discussing the trade practice of selling the goods below the MSP observed that many shops are selling the goods below the MSP price and against the action be the Department the penalties have been levied of Rs. 10,000/-. It is submitted that such an information was obtained under the R TI Act and the copies of the orders are placed in the paper book from Pgs.27-47. It was the business expediency to pay the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the finding of Ld. CIT(A) not upholding the rejection of books of accounts and deleting the addition for suppressed sales of Rs. 3,09,63,442/-. 15. Ld. CIT(A) deleted the addition for suppressed sale of Rs. 3,09,63,442/- observing as follows; "4.1 Ground No.1: Through this ground of appeal the appellant has challenged the addition of Rs. 3,09,95,390/- on account of suppression of sale. I have gone through the assessment order and reasons brought out by the AO. The AO has stated that the appellant has made the sale of liquor below the m1l11mUm sale price on presumptive basis particularly when the books of account are duly maintained and audited by the auditor u/s 44AB. Moreover, the AO has not pointed out any specific defects in the books of accounts. The AO failed to point out any discrepancy in quantitative details of sale and purchases. The A 0 has s imply rejected the books of accounts u/s 145 of the I.T. Act without pointing out any specific defects. The AO's action of arriving suppression of sale at Rs. 3,09,95,39/- after rejecting books of account without any basis is not justifiable. 4.1.1 The appellant's case was not comparable with other case particularly f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases the excise department has imposed the penalty for indulging in the sale of liquor below MSP. Although the prohibition of sale below MSP and above MRP as per the licensing condition may be true but the fact that liquor contractors in the State sell the liquor even below the MSP is also equally true and is a matter of fact. In fact the sale of liquor below MSP, if noticed by the State Excise authorities is merely an irregularity and in such case, the license of the concerned contractor is liable to be suspended minimum for a period of 3 days and maximum for one week and in case of violation for more than once, the license for remaining period of year can be cancelled. The liquor contractors under the conditions of license are required to purchase minimum guaranteed quantity of liquor which is the basis for fixation of the license fees. Such minimum guaranteed quantity of liquor is required to be purchased irrespective of whether the contractor in question has been able to sale quantity earlier purchased by him and if the minimum guaranteed quantity is not purchased the contractor is liable to pay Excise Duty on such minimum guaranteed quantity. In view of these conditions of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that there was no justification in rejection of books of accounts and application of provisions of section 145(3). The ITAT also held that estimation of sales at higher figures are not justified and held that NP Rate of l. 77 was reasonable. 2. ACIT v/s Surewin Marketing Pvt Ltd reported in (2016) 28 ITJ 299. In that case also the ITAT disapproved the rejection of books of accounts in absence of any discrepancy in quantitative details of sales and purchases. The ITAT upheld the view of CIT (A) that the purchase of liquor was on the basis of permit granted by Excise authorities and in absence of any adverse finding or in absence of any discrepancy in daily sales recorded and in particular in absence of any material to show that the assessee was indulged in' effecting sales outside the books of accounts. The rejection of books is not held to be proper. Finally the ITAT directed for applying NP Rate of 1.5% as against 1.25% declared by the assessee. 3. ACIT v/s Gulmohar Traders (a case of liquor contractor) reported in (2016) 28 IT J 302. In that case also the IT AT has disapproved the rejection of books of accounts only on the ground of non issuance of cash memos for sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales goods at a higher price but records at lower price in the books. Ld. A.O made the addition for suppressed sales at Rs. 3,09,95,390/- riding on these observations. 17. We observe that no specific instance has been pointed out by the Ld. A.O about any transaction which could prove that the assessee had suppressed the sales by way of receiving higher amount for sales but entered the figure on lower price in the books of accounts. The basis taken by the Ld. A.O is the MSP and MRP. No weightage has been given by the Ld. A.O that the goods are not always sold on MRP due to competition which forces to make sale at lower price. Gross Profit rate remains consistent. Books of accounts have been duly audited. Quantitative details of various qualities of goods have been maintained. We find that in the similar set of facts the Co-ordinate Bench in the case of ACIT Vs Avinash Chalana & Co (2016) 28 ITJ 295, after considering the position of strict regulation and condition over the country liquor contractor under the provisions of law and after considering the facts that regular books of accounts were maintained which is duly audited and in view of fact no discrepancy in any manner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be fair to both the parties and meet the ends of justice, we sustain addition of Rs. 2,00,000/- for under valuation of closing stock and allow partly revenue's Ground No.3. In the result Ground No.3 of the revenue's appeal is partly allowed. 22. Now we take up Revenue's Appeal No.490/1nd/17 in the case of Shri Jaswinder Singh Oberoi. As referred above that both the parties agreed that the facts and issues raised in both the appeals are same and therefore the decision taken by us while adjudicating the issues in the case of Smt. Gurucharan Kaur Oberoi in the preceding paras shall apply mutandis mutandis on the issues raised in the case of Shri Jaswinder Singh Oberoi. We accordingly confirm the findings of Ld. CIT(A) deleting the addition for suppressed sales of Rs. 6,16,66,374/- and dismiss revenue's Ground No. 1 & 2. Similarly as regards Ground No.3 relating to addition of undervaluation closing stock at Rs. 12,85,423/-, as decided in the preceding paras, we partly confirm the addition for undervaluation closing stock at Rs. 1,50,000/- on the basis of our observation given herein above in para 21. 23. In the result both the appeals of the revenue are partly allowed The order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
