9911796707
TMI Blog2022 (11) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... small cases, without anything more, the AO was not justified in enhancing the sale to a huge Rs. 7.58 cr. There was no difference between the total amount as accounted for by the assessee and those paid by the customer hence there is no suppression at all - Except a minor variation, there is no case successfully made out by the AO of suppression of sale. Behind the minor variations there may be various reasons however, merely based on some small cases, without anything more, the AO was not justified in enhancing the sale. We find nothing on the record to justify the case of suppression of sale i.e., though amount was received but was not recorded. To effect the sale to such an extent, corresponding purchases of the vehicles are also required by the assessee, however, neither the claimed purchases have been discussed nor it is alleged so. At the best, it was a case of mere suspicion which was not substantiated with the help of strong evidences, wherein the revenue has completely failed. The authorities below this year also alleged the deferment of the sale which is not justified. Correctness of the application of the GP rate of 3.25% by the AO - We find that the AO in this year, ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om customers - no corresponding sale have been shown either in the current year or in the subsequent years - HELD THAT:- Admittedly vide letter assessee had furnished the complete name and address of all the 7 persons. However, as stated, no sale of vehicle could be effected to these customers and ultimately the amount had to be refunded back. It is not uncommon in this trade that some of the customers for one reason or other take back the amount of advance. Looking to the declared turnover which is of more than Rs.40 cr, the advances are of very small amount simply because the amount had to be refunded in absence of sale, could not have been considered as undisclosed income of the assessee, more particularly, when admittedly complete name and address of all such customers are already on record and no contrary material has been brought on record by the AO after making enquiries. Hence, all the advances are to be considered as trade advances. Moreover S.68 uses the word may which confers a discussion to be exercised judiciously the amount received. The AO was having some doubt, he could have made enquiries, which he has not done therefore, we do not find any justifiable reason and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reply to notices issued u/s 133(6). Such difference in term of percentage was of 12.15%. Therefore, he inferred that the assessee might have suppressed the sale to that extent. (AO pg. 6)Thereafter, he worked out the advances of Rs.21,92,72,275/- for which the assessee booked sales in A.Y. 2010-11 to 2013-14 i.e. in subsequent years and considering the amount of Rs.21,92,72,275/- (out of new advances of Rs.24,00,87,965/- during the year) as turnover, added the same to the declared turnover of Rs.40,48,200,629/- and thereafter enhanced the same by applying 12.15% (alleged suppressed sale as per his calculation) on total turnover of Rs.62,40,92,904/- (Rs.21,92,72,275/- + Rs.40,48,200,629/-) and worked out the alleged suppressed sale of Rs.7,58,27,287/- in addition to Rs.62.41 Cr. as stated above. Thus, as per AO the total sale should have been Rs. 69,99,20,191/- (Rs.40.48 Cr. + Rs.22 Cr. + 12.15% being Rs. 7.58 Cr.). Finally, the AO rejected the Books of Account u/s 145(3) and as per calculation at Pg 6 of the impugned order, he applied G.P. rate of 3.25% [as per 3.92% declared in the case of M/s Relan Motors (P) Ltd.] as against 0.05% (but correctly revised GP rate at 4.20%) decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the same line of business and dealer of Maruti Car. The GP rate shown by M/s Relan Motors Pvt. Ltd. Ltd. was 3.92%. Hence, I am of the considered view that the AO had been more than reasonable by estimating the GP of the appellant @ 3.25%. In view of the above discussion, the action of the AO rejecting the book results u/s 145(3) and estimating the profit at Rs. 2,27,47,406/- is held to be fully justified and in accordance with the provisions of law. Accordingly, addition of Rs.2,06,46,689/- made by the AO is hereby confirmed." 2.4 During the course of hearing, the ld. AR of the assessee placed following submissions. "A. Invalid application of S.145 (3) of the Act: 1. The AO in this case, invoked S.145(3) of the Act mainly alleging the case of suppression and deferment of sale as also low GP declared by the assessee in comparison to M/s Relan Motors (P) Ltd. The dispute appears w.r.t. the basis to invoke the S.145(3) of the Act i.e. (i) Where the AO is not satisfied about the correctness/completeness of the accounts and (ii) where the method of accounting provided in Sub S. (1), is not followed. The AO though alleged some deficiencies however, none of them are such so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o justify estimations. An arbitrary, capricious and wild estimation, as done in the present case, is not at all permitted in the eyes of the law. The AO however, did not conform to its settled requirement. Kindly refer Jotram Shershing vs. CIT 2 ITR 119 (All). 1.2 Addition Need Not Be Made, Even if S.145 of the Act Invoked: In the case of CIT v/s Gotan Lime Khaniz Udyog 256 ITR 243(Raj), it has been held that mere rejection of books of account need not necessarily lead to additions to the returned income. It was also held that the books of account, together with past history of the case as also material collected by the AO should be considered for estimation of income. 2.1 Better Results: It is submitted that the correct andrevised G.P. rate declared this year by the appellant stands at 4.20% (and not 0.05% only) in as much as the assessee has been consistently in the practice of considering the target incentives, turnovers, cash discount and warranty income, etc. which are directly related to the trading activity only as a part of its gross profit. Based on the same, the correct and revised working of the G.P. comes to 4.20%, as per the following chart: S. No. Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd must be identical for a fair comparison. Firstly, A.Y. 2008-09 was the first year of the business wherein, the assessee started its business of selling Maruti Cars in Feb-2006. Hence, there was no target given for the dealers in first year of business and therefore, the assessee had no cut-throat competition, meaning thereby, the assessee had a free hand and was selling its product at his will without giving any/much discount to the customers. But in the next year i.e. in A.Y. 2009-10, the Maruti Company had fixed the sale targets of the assessee and therefore, the assessee had to pass heavy discounts to its customer to attract and to advertise its company. This certainly resulted in lower GP Rate. Secondly, the results of A.Y. 2008-09 cannot be a good comparable case for the simple reason that the turnover in that case was hardly of Rs. 16.29 Cr. only as against 40.48 Cr. this year and there was a huge increase of the turnover jumped by 149.51% this year. Moreover, in A.Y. 2008-09 the situation of demand and supply was favouring the assessee in as much as the demand of Maruti vehicle was on peek as against the current year. 2.5 In any case, the appellant's turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was assessed in A.Y. 2010-11. No proper opportunity of being heard was given for cross examination from various parties on account of which he has made such addition in sales in complete turnover on the basis of alleged difference found in various parties reply for Rs. 43,35,138/- as such he presumed suppressed sales on estimation basis without actual enquiry or verification of records &/or D.T.O records for actual invoice value. No such estimation can be made on sample basis which was also not correct and based on parties information without giving opportunity for cross examination from them. Accordingly no such addition can be made on random basis till actual sale found suppressed after making an independent enquiry. 3. That the GP rate taken &/or considered @3.25% is on higher side in view of actual G.P rate shown by us and reply filed for such GP rate. The actual sale presumed for Rs.69,99,20,191/- is quite wrong and accordingly GP rate also calculated on such sale is also wrong. In our own case GP rate 3.25% considered after re-casted trading results i.e. addition of other income directly related to business and as considered in the case of Relan Motors and in our own c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Full Bench of the Hon'ble Supreme Court in the case of Union of India vs. Tulsiram Patel & Ors. reported in AIR 1985 SC 1416 at 1469, holding that the principle of natural justice have thus come to be recognised as being a part of the guarantee contained in Article 14 of the Constitution of India because of the new and dynamic interpretation given by the Supreme Court to the concept of equality which is the subject-matter of that Article and that violation of principles of natural justice by a State action is a violation of Article 14. A quasi-judicial or administrative decision rendered or an order made in violation of the rule of audi alteram partem is null and void and the order made in such a case can be struck down as invalid on that score alone (Maneka Gandhi vs. Union of India AIR 1978 SC 597; Gangadharan Pillai vs. ACED: (1980) 126 ITR 356 (Ker) : (1978) 8 CTR (Ker) 352 at pp. 365 to 367). In other words, the order which infringes the fundamental principle, passed in violation of audi alteram partem rule, is a nullity. When a competent Court or authority holds such an order as invalid or sets it aside, the impugned order becomes null and void. (Nb. Kha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of Sales As Per Assesse after Debit Adjustment Chart PB AY. 2010- 11 1 Akhilesh Chandra Pachoree 315803 356326 -40523 42697 358500 2174 88 2 Akshay Jain (Kapoor Chand Jain) 301442 314702 -13260 39296 340738 26036 88 3 Alka Mathur 293751 327100 -33349 33349 327100 0 88 4 Anil Kumar Mathur 209087 231966 -22879 23723 232810 844 88 5 Anoop Kumar Goond 300940 359000 -58060 40760 341700 -17300 88 6 Arvind Kumar Nahta 598567 619144 -20577 53021 651588 32444 88 7 Ashutosh Shrivastav 275509 321059 -45550 45550 321059 0 89 8 Babu Lal Chipa 200836 226000 -25164 25164 226000 0 89 9 Badri Prasad Baser 358560 382126 -23566 29236 387796 5670 89 10 Bhagwnat Kaur 268874 302640 -33766 0 268874 -33766 89 11 B.L Meena 257193 288204 -31011 44735 301928 13724 89 12 Chiranji Lal Keer 302291 320000 -17709 19126 321417 1417 90 13 Cicil Pervaz Jonathan 291538 336300 -44762 26081 317619 -18681 90 14 Com.Islamia Intezamia Oqaf (Tech.Eng) 238676 260871 -22195 8218 246894 -13977 90 15 Deepkamal Choudhary 235941 274560 -38619 38742 274683 123 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTO a fair percentage should have been excluded before estimating the 'turnover' regarding sugar. But, if the entire turnover of the assessee is the sole foundation for estimating the income of the assessee from sale of sugar, that estimate would not be a fair and proper estimate; the resultant guess work would partake the character of a wild guess work. It will be a case of relying on a partly relevant and partly irrelevant material to make an order of assessment, if it is established that conclusive material was available to show the turnover from sugar distinctly from the gross turnover of the assessee. It is also true that the assessee could have produced the sales-tax assessment order. But, here, we are concerned with the propriety and fairness of the estimate made by the ITO, who ventured upon an investigation, which on the face of it is found to be incomplete. ITO should have in fairness sought the details of sales-tax assessment order, so that he could have obtained the real figures of turnover regarding sales of sugar. In view of Item 31B of Sch. V of Karantaka Sales-tax Act, 1957, turnover relatable to sugar is not taxable under the said Act. If so, taxable turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal advances Rs.30.47 Cr., the sales effected / registered was to the extent of 61% and accordingly, he determined the sales out of the advances received to the extent of Rs.18,57,60,105/- (Rs.30,46,50,118/- x 60.9749%), which, the assessee should have offered in this year. But making further addition the AO estimated the sale to the extent of Rs.30 Cr. and applied GP rate of 3.25% on the same, resulting into trading addition of deferred sale of Rs. 97,50,000/- vide assessment order passed u/s 143(3) dated 28.03.2014. The ld. CIT(A), in principle approved the theory applied by the AO but rejecting the over estimation of Rs.30 Cr., confirmed the sale to the extent of Rs.18.58 Cr. only. 7.1.3 In A.Y. 2009-10, when the assessee's case was reopened u/s 148, the AO changed the approach and took an altogether different view as was taken by his predecessors earlier. He firstly, worked out the advances of Rs.21,92,72,275/- for which the assessee booked sales in A.Y. 2010-11 to 2013-14 i.e. in subsequent years therefore, he considered the entire amount of Rs.21,92,72,275/- (out of new advances of Rs.24,00,87,965/- during the year) as turnover and added the same to the declared turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions has also been the same since beginning. The same books of account and the other ancillary record showing details maintained in a similar manner as in the past. Therefore, there appears no special reason as to why the revenue has departed from the settled position on facts and on law between the parties and to unsettle the settled position. In these circumstances therefore the doctrine of res judicata certainly applies on the facts of the present case, so far as this aspect is concerned. It has been held that though the doctrine of res judicata do not apply to Income Tax proceeding yet however, unless there is a change in the facts and circumstances, the view taken earlier should normally be taken consistently. For this kindly refer Sardar Kehar Singh v/s CIT (1991) 92 CTR 88/(1992) 195 ITR 769 (Raj), and a recent decision in CIT v/s Excel Industries Ltd. (2013) 358 ITR 295 (SC). It is a judicially accepted principle that when the facts are same, a uniform view should be adopted for the subsequent years in the income tax proceedings unless there is a material change in the facts, which has not been established by the AO. Kindly refer Radhasoami Satsang v/s CIT (1992 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of Rs.8.50 Cr. approx. constituted a part of the advances of Rs.20.29 Cr., which was already added by the AO in A.Y. 2010- 11. Thus, on one hand the AO has added this entire amount of Rs.8.50 Cr. in A.Y. 2010-11 as a part of Rs.20.29 Cr. addition and again in the current year, he considered the same amount of Rs.8.50 Cr. to be a part of the deferred sale (in as much as instead of considering the net of 21.96 Cr. (Rs.30.46 Cr. less Rs.8.50 Cr.) he considered entire 30.46 Cr. and by applying 60.97% thereon, he computed the deferred sale of Rs.18.57 Cr). Going by AO`s own theory, the AO could have applied 60.97 or 61% on the amount of Rs. 21.96 Cr only which comes to Rs. 13.64 Cr. only but not on Rs. 30.46 Cr. (which included Rs.8.50 Cr. relating to the A.Y. 2010-11). Again in A.Y. 2009-10, the AO considered the amount of advances of Rs.21,92,72,275/- as deferred sale of the current year (and applying G.P. rate of 3.25% made trading addition) as against shown as sale by the assessee in subsequent year in A.Y. 2010-11 to 2013-14 (AO Pg-6 of A.Y. 2009-10). On one hand the AO made the trading addition in this year whereas the assessee itself has declared profits in the later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other income & our GP rate comes to 2.99% as against assessed by AO @ 3.25% but he has assessed 3.25% on exaggerated turnover of Rs.69,99,20,191/- as against actual sales of Rs. 40,48,20,632/- as shown in audited accounts & also as assessed by Commercial Taxes Deptt also. The sale actually assessed by C.T.O Anti Evasion as per books of accounts duly examined by him & order passed dated 14-03-11 for A.Y. 2009-10 i.e. relevant to our assessment in dispute for financial year 2008-09 (01-04-2008 to 31- 03-2009) and AY 2009-10 (PB 29-38). In support of our actual sale there is audited accounts under Tax Audit 2009-10. In support of our actual sale there is audited accounts under Tax Audit u/s 44AB & also VAT Audit report dated 29-12-2009 of M/s P.K Audit report dated 04- 09-2009 (PB 39-51)& Audit as per Company law dated 04-09-2009 (PB 2-9) enclosed herewith along with VAT Act Both the Audit reports i.e. Tax Audit report dated. 04-09-2009 (PB 10-28) enclosed herewith along with VAT Audit report dated. 29-12-2009 of M/s P.K. Khandelwal & Associates C.A enclosed herewith As per all auditor's report the total turnover as per books were Rs. 40,48,20,632/- & not as assessed merely on pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of subsequent year shown in our books & duly assessed by Commercial Taxes Deptt. As per VAT Act & also assessed by AO in A.Y. 2010-11 vide order dtd. 28-03-13 cannot be also considered for A.Y. 2209-10 to avoid double taxation on same turnover i.e. in A.Y. 2008-09 &also again in 2009-10. As such the turnover of Rs.219272275/- sale of F.Y. 2009-10 i.e asstt. Year 2010- 11 cannot be added in this year. As admitted the enhanced sale of Rs. 219272275/- + 12.15% i.e. 245913856/- which has already been assessed in income tax also in AY 2010-11 and sales tax in FY 2009- 10 cannot be taken into account for addition of GP rate @ 3.25% i.e. Rs. 7992200/- is quite illegal and unjustified. The GP rate @ 3.25% if any taken it should have been only on actual sales as shown in books of accounts duly audited by Chartered Accountant Firm and also assessed by Commercial Taxes Officer Anti Evasion Ajmer after enclosing herewith all these documents submitted in time, the sales shown in records and audited statements. Accordingly enhancement of turnover and addition of subsequent sales in this year is also wrong and illegal and specially when that turnover already considered and taxed in subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Sales Tax Deptt. Should have been accepted because they are best judge to assess sales tax liability and to determine total turnover. (As decided by supreme court in 10 VAT Reporter 101 (SC) State of AP vs Larson & Toubro - Double taxation is voilative as per Art. 14 (19) (1) (g) and 265 Constitution of India. 217 Taxman 80 (RHC) sec 145 CIT vs Ashok Bhehi Bharat Sethi & Party Addition in GP Rate of the assessee with reference to case of another assessee is not justified when assessee's past history in available and there is no material difference in facts pertaining to relevant astt. Year and past history year. The AO has wrongly mentioned in para 4.5 on page 7 of his order that "G.P. at the rate of 3.25% on actual sale as worked out as per his order" but actually it was not actual sale but it was working of his own ideas &/or presumption basis without any proof &/or presumption basis without any proof &/or evidence in support of such sales, which has already been assessed in subsequent years as admitted by AO and also as per our replies also. We reproduce herewith the detailed reply given to AO dtd. 11-03-2015 according to which there is an increasing trend of turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twice. Hence the impugned addition be deleted in full." 2.5 On the other hand, the ld. DR strongly relied upon the findings recorded by the authorities below and justified the additions made and confirmed by the ld. CIT(A) and prayed to uphold the addition/disallowance. 2.6 We have carefully considered the facts of the case, finding recorded in the impugned orders, the rival contentions raised by both the parties as also the material placed on record. We have also gone through the judicial pronouncements cited by the parties. As can be seen, the subjected addition is a result of consideration of advances received from the customers this year but declared as sale in AY 2010-11 to 2013-14 of Rs.2,19,27,275/- and the enhancement made of 12.15% (of the declared sale of Rs. 40.48 cr and of the deferred sale as deemed sale of Rs. 21.93 cr totaling to 62.41 cr) which comes to Rs.7.58 cr. Thus, total sale was estimated atRs.70 cr(69,99,20,191/-) and application of GP rate of 3.25% thereon has resulted into the subjected impugned addition of Rs. 2,06,46,689/- which is under challenge. Coming to the aspect of suppression of sale, it is seen that such an enhancement was not justified w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression of sale. Behind the minor variations there may be various reasons however, merely based on some small cases, without anything more, the AO was not justified in enhancing the sale. We find nothing on the record to justify the case of suppression of sale i.e., though amount was received but was not recorded. Moreover, to effect the sale to such an extent, corresponding purchases of the vehicles are also required by the assessee, however, neither the claimed purchases have been discussed nor it is alleged so. At the best, it was a case of mere suspicion which was not substantiated with the help of strong evidences, wherein the revenue has completely failed. The authorities below this year also alleged the deferment of the sale which is not justified. On this aspect, we have rejected such contention and approach of the revenue for the detailed reasonings in the appeal of the assessee for AY 2010-11 vide ITA no.396/JP/15and the same hold good for this year as well as because the facts & circumstances are the same in this year also. In other words, our findings in that year shall apply mutatis mutandis. Coming to the correctness of the application of the GP rate of 3.25% by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts, past history and material collected by the AO, no interference is warranted. Thus, we don't find any justification on the application of enhanced GP rate of 3.25% which is completely without furnishing any justified grounds hence, the trading results as declared by the assesseeare hereby accepted. Therefore, the authorities below were completely unjustified in applying higher GP rate of 3.25%. Thus, the enhancement of the sale (due to suppression and deferment) and application of GP rate of 3.25% is not approved and the resultant addition to the extent of Rs.2,26,41,521/- is hereby deleted. However, in the peculiar facts of the case and the reasoning adopted by the authorities below, we upheld the rejection of the accounts and taking an overall view of the entire matter it is felt justified that an ad hoc addition of Rs. 2,00,000/- shall cover up the possible leakage of the income, if any. This ground of the appeal No. 1 is therefore partly allowed. 3.1 In Ground of Appeal No.2 of the assessee, the Addition of Rs.3,03,000/- is under challenge. 3.2 Brief facts of the case are that during the year under consideration the AO on verification of details noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o loans and advances but these were received against sale of vehicle and covered in trade creditors on which section 68 not applicable. The amount received were amanat for purchase of car by customers without interest. As no sale were effected to these persons the sums lying as an amanat returned back as and when demanded by them. We have shown name and addresses of persons from when amount received for purchase of vehicle and amount returned to them because of no delivery of vehicle taken by them for which AO could have made an enquiry by issuance of notice u/s 131 of IT Act. We have provided name and addresses of all the seven persons for 303000/- as per law there is no provision to take PAN and source of deposit made by them for purchase of vehicle. As replied and admitted by AO name and address have been provided. In such case no onus cast upon us to prove identity, credit worthiness and genuineness of transaction for such small advances taken from customers to purchase vehicles as the same is not covered in cash credits and/or not applicable because we have to sale vehicle and if we harass them for such documents, he will go to the other dealer to purchase other car. In such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of Expenses Rs. 1,07,366/- (wrongly typed as Rs.2,14,731/-) is under challenge. In this case, it is noted that . AO has dealt with the issue at pg-2 of the impugned order and onwards. A bare perusal of the impugned order shall reveal that the various disallowances have been made simply on surmises and conjectures. The objections, taken in almost all the cases, are that no proper bills / vouchers have been maintained therefore, the expenses are not verifiable. 4.2 In the first appeal the ld. CIT(A) restricted to the same at Rs.1,07,366/- vide order dated 22.08.2016 in appeal no. 29/2015-16 by observing as under:- ''6.3 I have gone through the assessment order, statement of facts, grounds of appeal and written submissions carefully. In view of the facts discussed by the AO in the assessment order, I am of the considered view that some disallowance out of various expenses was required to be made by the AO. However, the disallowance made by the AO appears to be on higher side. I am of the considered view that it would be fair and reasonable to restrict the disallowance out of these expenses to Rs.1,07,365/-. Accordingly, the disallowance out of above expenses is restricted to R ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
