Dy.C.I.T.-6, Jhansi v. M/s Surendra Kumar Rai & Co., Jhansi

ITA 157/AGR/2010 | 2006-2007
Pronouncement Date: 17-09-2010 | Result: Dismissed

Appeal Details

RSA Number 15720314 RSA 2010
Assessee PAN ABAFS4114N
Bench Agra
Appeal Number ITA 157/AGR/2010
Duration Of Justice 4 month(s) 3 day(s)
Appellant Dy.C.I.T.-6, Jhansi
Respondent M/s Surendra Kumar Rai & Co., Jhansi
Appeal Type Income Tax Appeal
Pronouncement Date 17-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 17-09-2010
Date Of Final Hearing 15-09-2010
Next Hearing Date 15-09-2010
Assessment Year 2006-2007
Appeal Filed On 14-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA BEFORE SHRI R.K. GUPTA J. M. AND SHRI P.K. BANSAL A.M. PAN NO. ABAFS4114N I.T.A.NO . 240/AGR/2009 & 157/AGR/2010 A. Y. 2004-05 & 2006-07 ADDL. CIT/DY. CIT-6 M/S.SURENDRA KUMAR RAI & CO. RANGE 6 VS. 91/1 CIVIL LINES JHANSI JHANSI APPELLANT RESPONDENT APPELLANT BY : NONE.(APPLICATION REJECTED) RESPONDENT BY : SHRI RAJENDRA SHARMA ADV. O R D E R PER R.K.GUPTA J.M. THESE ARE TWO APPEALS BY THE DEPARTMENT AGAINST T HE ORDER OF THE LD. CIT(A) RELATING TO ASSESSMENT YEARS 2004-05 AND 2006-07. 2. THE DEPARTMENT IS OBJECTING IN HOLDING THAT ESTIMAT ION OF SALE AND APPLICATION OF NET PROFIT RATE OF 5 % IS NOT JU STIFIED AND ACCORDINGLY DELETING THE ADDITION OF RS. 1 07 18 110/- FOR ASSE SSMENT YEAR 2004-05 AND SIMILARLY HOLDING THAT ESTIMATION OF SALE OF AP PLICATION IN NET PROFIT RATE OF 5% IN NOT JUSTIFYING IN DELETING THE ADDITI ON FOR ASSESSMENT YEAR - 2 - 2 2006-07. SINCE FACTS ARE IDENTICAL IN BOTH OF THESE CASES THEREFORE BOTH THE APPEALS OF THE DEPARTMENT ARE DECIDED BY THIS CONSOLIDATED ORDER. 3. THE LD.COUNSEL FOR THE ASSESSEE WHO APPEARED BEFOR E THE TRIBUNAL SUBMITTED THAT THE ISSUE IS SQUARELY COVER ED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2003-04 DECIDED IN I.T.A.NO. 195/AGR/2008 COPY OF WHICH IS PLACED AT PAGE 1 15. IT WAS ALSO SUBMITTED THAT SIMILARLY FOR ASSESS MENT YEAR 2001-02 ALSO THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE COPY OF THE SAME IS PLACED IN THE PAPER BOOK AT PAGES 16 19. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ENHANCED THE SALE OF THE ASSESSEE BY 2.5 TIMES FOLLOWING THE DECISION OF BAD RI PRASAD BHAGWANDAS 82 TAXMAN 109 (MP). THE FACTS OF THIS C ASE ARE ENTIRELY DIFFERENT AND NOT APPLICABLE ON THE FACTS OF THE PR ESENT CASE. THE LD. CIT(A) HAS CONSIDERED THIS ASPECT AND THEN ONLY HAS ALLOWED THE CLAIM OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THAT TH E LD. CIT WHO INITIATED PROCEEDINGS UNDER SECTION 263 FOR ASSESSMENT YEAR 2 003-04 HAS SET ASIDE THE ORDER OF ASSESSING OFFICER IN VIEW OF THE DECIS ION OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF BADRI PRASAD BHAGWANDAS & CO. AND THIS ORDER OF THE LD. CIT WAS SET ASIDE BY THE TRIBUNAL IN I.T .A.NO. 195/AGR/208 (SUPRA). THEREFORE THE ISSUE IS SQUARELY COVERED B Y THE ORDER OF THE TRIBUNAL. THE ATTENTION OF THE BENCH WAS DRAWN ON T HE RESPECTIVE COPY OF THE ORDERS PLACED IN THE PAPER BOOK. IT WAS FURTHER SUBMITTED THAT ON - 3 - 3 SIMILAR CIRCUMSTANCES IN VARIOUS OTHER CASES I.E. I N CASE OF LAXMINARAYAN SHIVHARE IN CASE OF VINOD KUMAR RATHORE AND IN CAS E OF SURJEET SINGH ON SIMILAR FACTS THE ASSESSING OFFICER ENHANCED TH E SALE OF THOSE ASSESSEES BY FOLLOWING THE DECISION OF BADRI PRASAD BHAGWAN DAS DECIDED BY THE HON'BLE M.P. HIGH COURT AND THE TRIB UNAL HAS ALLOWED THE APPEALS IN FAVOUR OF THE ASSESSEE IN THESE CASES. C OPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD AT PAGES 20 48 OF TH E COMPILATION. ACCORDINGLY IT WAS SUBMITTED THAT THERE IS NO INFI RMITY IN THE FINDING OF THE LD. CIT(A). 4. NONE APPEARED ON BEHALF OF THE REVENUE. HOWEVER AN APPLICATION DATED 15.9.2010 FOR ADJOURNMENT WAS SUB MITTED AND THE SAME WAS REJECTED AS THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL. 5. AFTER CONSIDERING THE ORDERS OF ASSESSING OFFICER A ND THE LD. CIT(A) WE FIND THAT THE LD. CIT(A) WAS JUSTIFIED I N ALLOWING THE APPEALS OF THE ASSESSEE FOR THESE TWO YEARS. 6. IT IS NOTED THAT THE ASSESSEE HAS SHOWN NET PROFIT RATE OF 3.3 % FOR ASSESSMENT YEAR 2004-05. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE PROFIT DECLARED BY THE ASSESSEE. THE ASSES SEE WAS REQUIRED TO FILE THE COMPARATIVE CHART FOR EARLIER THREE YEARS AND A LSO THE DETAILS OF SALES OF EARLIER THREE YEARS WERE FILED BEFORE THE ASSESS ING OFFICER. G.P. RATE SHOWN BY THE ASSESSEE WAS AT 6.49 % FOR ASSESSMENT YEAR 2002-03 8.10 % FOR ASSESSMENT YEAR 2003-04 AND 8.32 % FOR ASSESS MENT YEAR 2004-05. - 4 - 4 THE DETAILS OF SALES WERE ALSO FILED FOR ALL THE YE ARS. DETAILS OF BID MONEY PAID BY THE ASSESSEE WAS ALSO FILED FOR ALL THE THR EE YEARS. THESE REPLY AND DETAILS FILED ON BEHALF OF THE ASSESSEE ARE INCORPO RATED IN THE ORDER OF ASSESSING OFFICER. THEREAFTER THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAS MADE PAYMENT OF BID MONEY TO THE EXTEN T OF RS. 9.83 CRORES WHICH IS MORE BY RS. 2.82 CRORES PAID IN THE YEAR 2 003-04. ACCORDINGLY HE NOTED THAT NO PERSON WOULD MAKE THE PAYMENT IN S UCH A HUGE DIFFERENCE. THE ASSESSING OFFICER FURTHER NOTED THA T THE ASSESSEE HAS SHOWN INABILITY TO FILE SEPARATE TRADING ACCOUNT IN RESPECT OF COUNTRY LIQUOR AND IMFL ETC. THE ASSESSING OFFICER ALSO NOT ED THAT THE ASSESSEE HAD ADMITTED THAT THERE ARE NO SALE VOUCHERS AND NO STOCK REGISTER HAD BEEN MAINTAINED. THE ASSESSEE HAS ALSO NOT FILED TH E QUANTITATIVE TALLY OF THE COUNTRY LIQUOR AS WELL AS IMFL PURCHASED AND SO LD DURING THE RELEVANT ACCOUNTING YEAR UNLIKE THE EARLIER YEAR WHEREIN TH E RETURNS OF INCOME WERE ACCOMPANIED BY QUANTITATIVE DETAILS AND PURCHA SES AND SALES IN LIQUORS. IN VIEW OF THESE DEFECTS THE ASSESSING OF FICER APPLIED THE RATIO OF THE DECISION OF THE HON'BLE M.P. HIGH COURT IN T HE CASE OF BADRI PRASAD BHAGWANDAS 82 TAXMAN 109 AND ACCORDINGLY ESTIMATED THE ASSESSEES INCOME BY TAKING THE SALES AT 2.5 TIMES OF THE TOTAL LICCNCE FEE AMOUNTING TO RS. 13.55 CRORES AND APPLIED NET PROF IT RATE OF 5 % TO SUCH ESTIMATED SALES OF RS. 33 37 50 000/-. ACCORDINGLY NET PROFIT WAS WORKED OUT AT RS. 1 66 87 500/- WHICH WAS ADDED TO THE INCOME OF THE - 5 - 5 ASSESSEE. DETAILED SUBMISSIONS WERE FILED BEFORE TH E LD. CIT(A). IT WAS SUBMITTED THAT REGULAR BOOKS OF ACCOUNT HAVE BEEN M AINTAINED DURING THE COURSE OF BUSINESS WHICH HAVE DULY BEEN AUDITED BY THE AUTHORIZED CHARTERED ACCOUNTANT. IT WAS FURTHER SUBMITTED THAT ALL THE PURCHASES OF LIQUORS HAD BEEN MADE BY THE ASSESSEE FROM THE GOVE RNMENT WAREHOUSE AGAINST PERMITS ISSUED BY THE EXCISE DEPARTMENT . C ONSEQUENTLY ALL THE PURCHASES AND OTHER PAYMENTS MADE TO EXCISE DEPARTM ENT ARE VOUCHED. THE SALES SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACC OUNT ARE SUPPORTED BY THE SALES SHEETS BY THE VARIOUS SALES MANGER OF THE 90 SHOPS AT WHICH THE LIQUOR WAS BEING SOLD. EVERY DAY THE ACCOUNTANT COL LECTED THE AMOUNT OF SALES FROM EACH SHOP IS SUPPORTED BY THE SALE SHEET S AND ENTRY WAS ACCORDINGLY RECORDED IN THE HEAD OFFICE. THUS THE SALES ARE BEING MADE BY THE SALESMAN THE COLLECTION OF SALES WAS MADE B Y THE MUNIM AND FINALLY ALL THE SALES WERE RECORDED IN THE CASH BOO K IN THE CENTRAL OFFICE. THUS THE BUSINESS OF THE ASSESSEE WAS BEING MANAGE D BY VARIOUS EMPLOYEES AND ACCOUNTED FOR BY VARIOUS SUPERVISORY STAFF RULING OUT THE SCOPE OF MANIPULATION BY THE PARTNER. IT WAS FURTHE R SUBMITTED THAT THIS MODE OF BUSINESS AND ACCOUNTING IS BEING FOLLOWED N OT ONLY BY THE ASSESSEE BUT ALL THE LIQUOR CONTRACTORS. RELIANCE W AS PLACED ON THE DECISION OF HON'BLE M.P. HIGH COURT IN THE CASE OF GENDAL HAZARILAL 263 ITR 677 WHEREIN IT WAS HELD THAT REJECTION OF BOOK S OF ACCOUNT MERELY ON THE GROUND THAT SALES ARE NOT SUPPORTED BY CASH MEM OS IS NOT CORRECT. - 6 - 6 RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE PATNA HIGH COURT IN THE CASE OF MOHD. UMER 101 ITR 525 AND ALSO ON TH E DECISION OF AMRITSAR BENCH IN CASE OF ASHOK KUMAR & COMPANY. TH E CASE ON WHICH THE RELIANCE HAS BEEN PLACED BY THE ASSESSING OFFIC ER I.E. IN CASE OF BADRI PRASAD BHAGWANDAS WAS STATED TO BE DISTINGUISHABLE ON THE FOLLOWING REASONS. 7. IN CASE OF BADRI PRASAD BHAGWANDAS THE SAID ASSESS EE WAS LIQUOR CONTRACTOR ENGAGED ONLY IN PURCHASE AND SALE OF COUNTRY LIQUOR WHERE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CO UNTRY LIQUOR IMFL AND BEER. IT WAS FURTHER SUBMITTED THAT THE DECISIO N IN THE CASE OF BADRI PRASAD BHAGWANDAS WAS RENDERED FOR ASSESSMENT YEAR 1977-78 TO 1979- 80 WHEREAS IN THE YEAR UNDER CONSIDERATION IS 2004 -05. IN THIS GAP OF 25 YEARS THE EXCISE POLICY HAS UNDER GONE VAST CHANG ES AND THEREFORE THE RATIO OF THE SAID DECISION IS NOT APPLICABLE. IT WA S FURTHER SUBMITTED THAT THE MARGIN OF PROFIT IN IMFL AND BEER IS 0.5 % TO 0 .15 % AND THEREFORE THE BASIS OF ESTIMATION UPHELD IN CASE OF BADRI PRA SAD BHAGHWANDAS CANNOT BE APPLIED TO THE ASSESSEES CASE. RELIANCE WAS ALSO PLACED ON THE VARIOUS DECISIONS OF AGRA BENCH I.E. IN THE CASE OF SURJEET SINGH AND IN THE CASE OF RAM KUMAR SHIVHARE AND IN CASE OF VINOD KUMAR RATHORE. 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD THE LD. CIT(A) FOUND THAT THE ASSESSING OFF ICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND ENHANCING THE SALES BY 2.5 TIMES AND - 7 - 7 APPLYING THE NET PROFIT RATE OF 5%. THE LD. CIT(A) HAS NOTED THAT WITHOUT BRINGING ANY MATERIAL ON RECORD ENHANCEMENT OF SAL E IS NOT JUSTIFIED. THE DECISION OF HON'BLE M.P. HIGH COURT WAS FOUND DISTI NGUISHABLE AND ACCORDINGLY HE DELETED THE ENTIRE ADDITION AND DIR ECTED THE ASSESSING OFFICER TO ACCEPT THE RETURNED INCOME SHOWN BY THE ASSESSEE. 9. AFTER CONSIDERING THE ORDER OF THE LD. CIT(A) WE F OUND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). DISTINGUI SHABLE FACTS IN CASE BEFORE THE HON'BLE M.P. HIGH COURT I.E. IN CASE OF BADRI PRASAD BHAGWANDAS WAS FOUND DISTINGUISHABLE. ON THE CONTRA RY THE TRIBUNAL IN VARIOUS SIMILAR CASES HAS ALLOWED THE APPEALS OF T HE ASSESSEE. WE FURTHER NOTED THAT IN CASE OF ASSESSEE ITSELF THE TRIBUNAL FOR ASSESSMENT YEAR 2003-04 HAS SET-ASIDE THE ORDER PASSED BY THE LD. C IT UNDER SECTION 263. IN THIS CASE ALSO THE LD. CIT DIRECTED THE ASSESSI NG OFFICER TO APPLY THE RATIO OF THE DECISION IN CASE OF M/S. BADRI PRASAD BHAGWAN DAS. THE TRIBUNAL DISCUSSING THE ISSUE IN DETAIL HELD THAT T HE RATIO OF THE DECISION OF HON'BLE M.P. HIGH COURT IS NOT APPLICABLE AND THE B OOK RESULTS DECLARED BY THE ASSESSEE ARE LIABLE TO BE ACCEPTED. THE FACT S ARE IDENTICAL FOR THE YEAR UNDER CONSIDERATION. THEREFORE WE SEE NO REAS ON TO INTERFERE IN THE FINDING OF THE LD. CIT(A) WHO DIRECTED THE ASSESSI NG OFFICER TO ACCEPT THE TRADING RESULT SHOWN BY THE ASSESSEE. ACCORDING LY WE CONFIRM THE FINDING OF THE LD. CIT(A) WHICH IS SIMILAR TO THE FINDING GIVEN BY THE - 8 - 8 TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04. 10. SIMILAR FACTS ARE INVOLVED FOR ASSESSMENT YEAR 2006 -07. ON SIMILAR BASIS THE ASSESSING OFFICER HAS ENHANCED T HE SALE AND HAS APPLIED 5% NET PROFIT RATE. THE LD. CIT(A) FOLLOWING THE DE CISION FOR ASSESSMENT YEAR 2004-05 HAVE DELETED THE ADDITION. WE HAVE ALR EADY CONFIRMED THE ORDER OF THE LD. CIT(A) FOR ASSESSMENT YEAR 2004-05 ABOVE. FACTS ARE IDENTICAL THEREFORE ON THE SAME REASONING WE CON FIRM THE ORDER OF THE LD. CIT(A) FOR THE YEAR UNDER CONSIDERATION ALSO. 11. IN THE RESULT BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER 2010. SD/- SD/- ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA DATED : 17 TH SEPTEMBER 2010. CPU* 1516 COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT - 9 - 9 THE CIT(A) CONCERNED. THE D.R ITAT AGRA. GUARD FILE BY ORDER AR I.T.A.T. AGRA.