M/s. Vashistha Kumar Jaiswal & others, Kanpur v. DCIT, Faizabad

ITA 269/LKW/2011 | 1994-1995
Pronouncement Date: 11-07-2011 | Result: Dismissed

Appeal Details

RSA Number 26923714 RSA 2011
Assessee PAN AFWPJ8184R
Bench Lucknow
Appeal Number ITA 269/LKW/2011
Duration Of Justice 2 month(s) 1 day(s)
Appellant M/s. Vashistha Kumar Jaiswal & others, Kanpur
Respondent DCIT, Faizabad
Appeal Type Income Tax Appeal
Pronouncement Date 11-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 11-07-2011
Date Of Final Hearing 12-05-2014
Next Hearing Date 12-05-2014
Assessment Year 1994-1995
Appeal Filed On 10-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI. A. K. GARODIA ACCOUNTANT MEMBER ITA NO. 269/LKW/2011 ASSESSMENT YEAR: 1994 - 95 M/S VASHISTHA KUMAR JAISWAL & OTHERS GOSAIGANJ FAIZABAD V. DY. CIT FAIZABAD CIRCLE FAIZABAD PAN: AFWPJ8184R (APP ELL ANT) (RESPONDENT) ITA NO. 270/LKW/2011 ASSESSMENT YEAR: 1994 - 95 M/S RAM PALTAN JAISWAL & OTHERS SUCHITAGANJ FAIZABAD V. DY. CIT FAIZABAD CIRCLE FAIZABAD PAN: ADLPA0225F (AP P ELL ANT) (RESPONDENT) ITA NO. 271/LKW/2011 ASSESSMENT YEAR: 1994 - 95 M/S RAM DHANI JAISWAL & OTHERS SUCHITAGANJ FAIZABAD V. DY. CIT FAIZABAD CIRCLE FAIZABAD PAN: AFWPJ6199L (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: S/SHRI. S. S . GUPTA FCA & ASH ISH JAISWAL ADVOCATE RESPONDENT BY: SHRI. R. K. RAM D.R. DATE OF HEARING: 12 0 5 2014 DATE OF PRONOUNCEMENT: 23 0 6 2014 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 2 : - O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED ON BEHALF OF THE ASSESSEES AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A) ON COMMON GROUNDS WHICH ARE AS UNDER: - 1 . THAT THE LD. CIT(A) HAS ERRED IN LAW & ON FACTS IN CONFIRMING THE ACTION OF THE AO FOR REJECTING THE BOOK RESULTS PARTICULARLY IN VIEW OF JUDICIAL PRONOUNCEMENTS BY VARIOUS COURTS. 2 . THAT THE LD. CIT(A) HAS ERRED IN LAW & ON FACTS IN NOT GIVING ANY FINDING WITH REGARD TO ENHANCEMENT IN ORIGINALLY ASSESSED INCOME AND THE FINDING GIVEN IN APPEAL PROCEEDINGS BY HIS PREDECESSOR. 3 . THAT THE ACTION OF THE LD. CIT(A) IN CONFIRMATION OF ACTION OF THE A.O. IS ERRONEOUS AND BAD IN LAW AS IT TANTAMOUNT TO CHANGE OF OPINION. 4 . THAT THE LD. CIT(A) HAS ERRED IN LAW & ON FACTS IN NOT GIVING ANY FINDINGS WITH REGARD TO JUSTIFICATION FOR ESTIMATION OF SALES BY THE AO THOUGH HE HAS OBSERVED THAT 'THE ASSESSING OFFICER HAS FAILED TO APPLY THE FORMULA LAID DOWN BY THE ITAT SINCE THE STATE GOVT. HAD NOT FIXED THE SALE RATES FOR COUNTRY LIQUOR. 5 . THAT THE LD. CIT(A) HAS ERRED IN LAW & ON FACTS IN NOT TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE A.O. FOR COMPU TATION OF TURNOVER AND N.P. RATE AS PER DIRECTIONS OF THE HON'BLE ITAT IN THE CASE OF THE ASSESSEE IN INCOME - TAX ACT 1961 NO. 48/LUC/05 DT. 22/10/2007. 6 . THAT THE LD. CIT(A) HAS ERRED IN LAW & ON FACTS IN CONFIRMING THE ACTION OF THE AO FOR IN NOT TAKING IN TO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE A.O. FOR COMPUTATION OF TURNOVER AND N.P. RATE AS PERFECTIONS OF THE HON'BLE ITAT IN THE CASE OF THE ASSESSEE IN ITA NO. 48/LUC/05 DT. 22/10/2007 . PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 3 : - 7 . THAT THE LD. CIT(A) HAS ERRED IN LAW & ON FA CTS IN NOT HOLDING FOR THE ALLOWANCE OF INTEREST & SALARY TO THE PARTNERS AS PER PARTNERSHIP DEED AND IN VIEW OF CBDT CIRCULAR THOUGH THE SAME WAS ALLOWED AS PER ORIGINAL ASSESSMENT ORDER. 2 . THE FACTS IN BRIEF CULLED OUT FROM THE ORDERS OF THE LOWER AUTHOR ITIES ARE THAT THE ASSESSEE GOT LICENSE FROM THE STATE GOVERNMENT FOR SELLING COUNTRY MADE LIQUOR THROUGH RETAIL OUTLETS IN THE DISTRICT OF FAIZABAD UTTAR PRADESH. THE ORIGINAL ASSESSMENTS IN ALL THESE CASES WERE FRAMED AFTER REJECTING THE BOOKS OF ACCOU NT. IN THE FIRST APPEAL THE LD. CIT(A) HAS GRANTED PARTIAL RELIEF TO THE ASSESSEES AND THE TRIBUNAL SET ASIDE THE ASSESSMENTS FOR DETERMINING THE INCOME AS PER THE PRINCIPLE LAID DOWN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR IN I.T.A. NO.236/AGR/2006. IN THE SET ASIDE PROCEEDINGS THE ASSESSING OFFICER HAS AFFORDED SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEES BUT THE ASSESSEES D ID NOT APPEAR AND THE ASSESSING OFFICER WAS FORCED TO COMPLETE THE ASSESSMENTS UN DER SECTION 14 4 READ WITH 254 OF THE INCOME - TAX ACT 1961 (HEREINAFTER CALLED IN SHORT THE ACT') AT AN INCOME OF RS.21 72 569/ - IN THE CASE OF M/S VASHISTHA KUMAR JAISWAL & OTHERS FAIZABAD; RS.20 75 895/ - IN THE CASE OF M/S RAM PALTAN JAISWAL & OTHERS FAIZABAD AND RS.26 52 536/ - IN THE CASE OF M/S RAM DHANI JAISWAL & OTHERS FAIZABAD HAVING FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT KANPUR VS. UNNAO WINES IN I.T.A. NO.1073/ALLD/1995. 3 . WHILE FRAMING THESE ASSESSMENTS CONSEQUENT TO THE ORDE R OF THE TRIBUNAL THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE DIRECTIONS OF THE TRIBUNAL TO COMPUTE THE INCOME PURSUANT TO THE DIRECTIONS GIVEN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) COULD NOT BE FOLLOWED AS THE FORMULA LAID DOWN IN THAT CASE WAS NOT WORKABLE IN THE ABSENCE OF PRICE FIXED BY THE STATE EXCISE DEPARTMENT. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 4 : - 4 . THE ORDERS OF THE ASSESSING OFFICER WERE CHALLENGED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS AFFORDED VARIOUS OPPORTUNITIES TO THE AS SESSEES BUT THE ASSESSEES D ID NOT RESPOND PROPERLY AND FINALLY THE LD. CIT(A) WAS CONSTRAINED TO DISPOSE OF THE APPEAL S EX - PARTE AND HAS CONFIRMED THE ORDERS OF THE ASSESSING OFFICER. 5 . THE LD. CIT(A) HAS ALSO OBSERVED THAT THE SALES WERE TO BE ESTIMATED AS PER FORMULA/DIRECTION GIVEN BY THE TRIBUNAL AND SINCE THE STATE EXCISE DEPARTMENT HA S NOT FIXED THE SALE PRICE OF COUNTRY MADE LIQUOR THE FORMULA LAID DOWN BY THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) WOULD NOT BE WORKABLE. 6 . AGGRIEVE D THE ASSESSEES HAVE PREFERRED APPEALS BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSING OFFICER HAS NOT COMPLIED WITH THE DIRECTIONS OF THE HON'BLE TRIBUNAL AND HAS ESTIMATED THE TOTAL INCOME OF THE ASSESSEE S FOLLOWING THE ORDER OF THE TRIBUNAL DATED 15.1.2003 IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR IN I.T.A. NO.1073/ALLD/1995. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER S OF THE TRIBUNAL IN THE CASE OF M/S BALMIKI SINGH VS. ACIT IN I.T.A. NO. 157/LKW/2001; A CIT VS KAMLESH KUMAR JAISWAL IN I.T.A. NO.534/LKW/2011 AND INCOME TAX OFFICER GWALIOR VS. LAXMI NARAIN RAMSWAROOOP SHIVHARE [2009] 119 ITD 15 (AGRA)(TM) IN SUPPORT OF HIS CONTENTION THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE S SHOULD HAVE BEEN AC CEPTED AND MOREOVER THE ASSESSING OFFICER HAS NOT FOLLOWED THE DIRECTIONS ISSUED BY THE TRIBUNAL WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. HE HAS ALSO FILED WRITTEN SUBMISSIONS WHICH ARE TAKEN ON RECORD. THROUGH THE WRITTEN SUBMISSION S THE LD. C OUNSEL FOR THE ASSESSEE HAS PLACED EMPHASIS THAT THE REJECTION OF THE BOOKS OF ACCOUNT WAS NOT PROPER . 7 . THE LD. D.R. ON THE OTHER HAND HAS STRONGLY CONTENDED BESIDES SUPPORTING THE ORDER OF THE LD. CIT(A) THAT THE FORMULA LAID DOWN BY THE TRIBUNAL IN T HE FIRST ROUND OF APPEAL WAS NOT WORKABLE AS THE SALE RATE OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 5 : - COUNTRY MADE LIQUOR WAS NOT FIXED BY EXCISE DEPARTMENT OF THE STATE GOVT. THE LD. D.R. HAS FURTHER CONTENDED THAT THE ASSESSEES DID NOT EXTEND ANY CO - OPERATION EITHER WITH THE ASSESSING OF FICER OR THE LD. CIT(A) AS THE LD. CIT(A) HAS AFFORDED ALMOST 10 OPPORTUNITIES TO THE ASSESSEES TO PRESENT THEIR CASE BUT MOST OF THE TIME THEY SOUGHT ADJOURNMENT AND FINALLY STOPPED APPEARING BEFORE THE LD. CIT(A). THE LD. CIT(A) HOWEVER EXAMINED THE ENTIRE CASE IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD AND HAS CONCLUDED THAT THE DIRECTIONS OF THE TRIBUNAL COULD NOT BE COMPLIED WITH AS THE FORMULA LAID DOWN THEREIN WAS NOT WORKABLE IN THE ABSENCE OF SALE RATE FIXED BY THE EXCISE DEPARTMENT OF THE STATE GOVT. THE REVENUE AUTHORITIES HAVE NO OTHER OPTION BUT TO FOLLOW THE CRITERIA LAID DOWN BY THE TRIBUNAL IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (SUPRA) AND ESTIMATED THE INCOME. 8 . THE LD. D.R. HAS FURTHER CONTENDED THAT SO FAR AS REJEC TION OF THE BOOKS OF ACCOUNT ARE CONCERNED THE TRIBUNAL IN THE FIRST ROUND OF APPEAL APPROVED THE REJECTION OF THE BOOKS OF ACCOUNT AND ONCE THE BOOKS OF ACCOUNT ARE REJECTED THE QUESTION LEFT OUT WITH THE REVENUE WAS TO ESTIMATE THE TOTAL INCOME OF THE ASSESSEE FOR WHICH THE TRIBUNAL HAS DIRECTED TO ESTIMATE THE INCOME OF THE ASSESSEE FOLLOWING THE ORDER OF THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) BUT THE FORMULA LAID DOWN BY THE AGRA BENCH OF THE TRIBUNAL IN TH E CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) WAS NOT WORKABLE IN THE INSTANT CASE AS THE SALE RATE WAS NOT FIXED BY THE EXCISE DEPARTMENT OF THE STATE GOVT. THEREFORE THE ASSESSING OFFICER HAS NO OTHER OPTION BUT TO FOLLOW THE OTHER ORDER OF THE T RIBUN AL IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (SUPRA) AND COMPLETE THE ASSESSMENT S FOLLOWING THE FORMULA LAID DOWN IN TH AT CASE. 9 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW; THE ORDER OF THE TRIBUNAL IN THE FIRST ROUND OF APPEAL AND THE CASE LAWS REFERRED TO ON BEHALF OF THE ASSESSEE S WE FIND THAT IN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 6 : - THE FIRST ROUND OF APPEAL THE TRIBUNAL HAS APPROVED THE REJECTION OF THE BOOKS OF ACCOUNT AND THEREAFTER DIRECTED THE ASSESSING OFFICER TO COMP UTE THE TOTAL INCOME OF THE ASSESSEE S FOLLOWING THE FORMULA LAID DOWN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). [EMPHASIS SUPPLIED]. FOR THE SAKE OF REFERENCE WE EXTRACT THE FINDINGS OF THE TRIBUNAL GIVEN IN TH E FIRST ROUND OF APPEAL IN THE ASSESSEES CASE AS UNDER: - 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN OUR VIEW THERE IS NO DISPUTE WITH THE PROPOSITION LAID DOWN BY THE HON'BL E ALLAHABAD HIGH COURT IN THE CASE OF AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS. (SUPRA). IN THE SAID CASE BOOKS WERE REJECTED BECAUSE NO STOCK REGISTER CASH MEMO OR VOUCHERS IN SUPPORT OF PURCHASES MADE WERE AVAILABLE AND THEREFORE THE SALES AND PURC HASES WERE NOT VERIFIABLE. THE HON'BLE ALLAHABAD HIGH COURT OBSERVED THAT TAKING ALL THESE ASPECTS AND MATERIALS INTO CONSIDERATION THE TRIBUNAL HAD FOUND AS A FACT THAT THE CLAIM OF THE ASSESSEE FOR ACCEPTANCE OF ACCOUNT BOOKS WAS NOT SUSTAINABLE. TH E HON'BLE HIGH COURT CATEGORICALLY HELD THAT THIS WAS A FINDING OF FACT AND NO Q UESTION OF LAW AROSE FROM IT. HOWEVER IN THE INSTANT CASE LEARNED COUNSEL FOR THE ASSESSES DID NOT CONTEST SERIOUSLY THE ORDER OF CIT(A) IN REJECTING THE BOOK RESULTS ON THE GROUND THAT SALES ARE NOT VERIFIABLE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT(A) IN REJECTING THE BOOKS OF ACCOUNTS. AS REGARDS ESTIMATION OF SALES AND PROFITS THEREON WE FOLLOW THE ORDER OF ITAT AGRA BENCH IN THE CASE OF GOVIND PRASAD KRISHNA KUM AR (SUPRA) BECAUSE THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS. HAD NO OCCASION TO CONSIDER THE BASIS FOR ESTIMATION OF SALES AND PROFITS IN THIS TYPE OF BUSINESS THE ITAT AGRA BENCH IN THE CASE OF GOYIND PR ASAD KRISHNA KUMAR (SUPRA) HELD AS UNDER: PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 7 : - 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER REJECTION OF BOA THE ASSESSING OFFICER HAS TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT IN THE MANNER LAID DOWN U/S 144 OF THE ACT. HOWEVER IN THE CASE BEFORE US THE ASSESSING OFFICER HAS ESTIMATED THE SALES BY APPLYING 2.5 TIMES OF THE BID MONEY RELYING ON THE DECISION OF HON'BLE M.P. HIGH COURT IN THE CASE OF BADRI PRASAD BHAGWAN DAS & CO. (SUPRA). IN THIS CAS E THE PURCHASE PRICE OF THE LIQUOR WAS 11.80 PER LITRE AND THE SALES WERE AT RS.30/ - PER LITRE. THE RATIO OF SALES TO PURCHASE WAS 2.5. THUS THE ESTIMATION OF SALES WAS MADE BY MULTIPLYING 2.5 TO THE BID MONEY. THUS THE ESTIMATION OF SALES ON THE BASIS OF BID MONEY WAS HELD TO BE JUSTIFIED. IN THE CASE BEFORE US THE INFORMATION REGARDING THE PURCHASE AND SALES RATES AS FIXED BY THE STATE GOVT. ARE NOT AVAILABLE. THE RATIO OF DECISION OF HON'BLE M.P. HIGH COURT CAN BE APPLIED FOR ESTIMATION OF SALES ON TH E BASIS OF PURCHASE AND SALES PRICE FIXED BY THE STATE GOVERNMENT. THE ASSESSEE HAD PURCHASED LIQUOR ON BULK RATE BASIS WHEREAS THE SALES ARE MADE ON RETAIL BASIS IN PACKING OF BOTTLES BOTTLES BOTTLES AND POUCH OF 100 ML. THE SALES RATES ARE DIFFEREN T FOR EVERY PACKING. THE AVERAGE SALE RATE PER LITRE HAS TO BE WORKED OUT FROM THE RATES FIXED BY THE STATE EXCISE DEPARTMENT. THE QUANTITY OF LIQUOR PURCHASED IS AVAILABLE WITH THE ASSESSEE. THE SALES CAN BE ESTIMATED BY MULTIPLYING AVERAGE SALES RATE PER LITRE TO THE QUANTITY PURCHASED. THE SALES CAN ALSO BE ESTIMATED FROM THE RATIO OF SALE PRICE PER LITRE TO PURCHASE PRICE PER LITRE AND MULTIPLYING AMOUNT OF TOTAL PURCHASES EXCLUDING ALL OVERHEADS. MATHEMATICALLY IT CAN BE ARRIVED AS UNDER: PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 8 : - LET THE TOTA L PURCHASES MADE DURING THE YEAR ARE X AND PURCHASE PRICE PER LITER IS Y AND SALE RATE PER LITER FIXED IS Z. THE SALES WILL BE = Z X_X. IT IS FURTHER CLARIFIED THAT THE Y METHOD GIVES THE CORRECT ESTIMATION OF SALES SHOULD BE ADOPTED. 11. LEARNE D CIT(A) HAS ESTIMATED THE SALES BY APPLYING THE FACTOR OF 1.25 TO THE BID MONEY IN OUR VIEW THE ESTIMATION OF SALES IN THE RATIO OF 1 : 1.25 OF BID MONEY ARRIVED ON THE COMPARISON OF RESULTS OF VARIOUS ASSESSEES IS A CRUDE METHOD. WE THEREFORE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR ESTIMATIN OF SALES AS DISCUSSED ABOVE. 10. THE FACTS OF THE PRESENT BASE ARE SIMILAR TO THAT OF THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT AGRA BENCH (SUPRA) WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR ESTIMATION OF SALES AS DISCUSSED IN THE ORDER OF ITAT AGRA BENCH (SUPRA). 11. AS REGARDS ESTIMATION OF NET PROFIT WE ARE OF THE VIEW THAT THE ESTIMATION OF PROFIT @4% OF TH E SALES IS REASONABLE WHICH HAS BEEN APPLIED BY THE ASSESSING OFFICER. IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) THE ITAT AGRA BENCH HELD THAT THE ESTIMATION OF PROFIT AT 5% OF THE SALES IS REASONABLE. ACCORDINGLY WE DIRECT THE ASSESSING OFFICE R TO APPLY NET PROFIT @ 4%. 10 . THROUGH THIS ORDER THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE SALES AND TO COMPUTE THE NET PROFIT @ 4% HAVING OBSERVED THAT THE FACTS OF THIS CASE WERE SIMILAR TO THAT IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) . IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) THE AGRA BENCH OF THE TRIBUNAL HAS LAID DOWN CERTAIN FORMULA IN ORDER TO DETERMINE THE QUANTUM OF SALE S AND IN THAT FORMULA THE PURCHASE PRICE S NOTIFIED BY THE EXCISE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 9 : - DEPARTMENT WERE REQU IRED TO BE A DOP TED. WHILE PASSING THE ORDER CONSEQUENT TO THE TRIBUNALS ORDER THE ASSESSING OFFICER HAS ISSUED A LETTER TO THE STATE EXCISE OFFICER FOR PROVIDING THE SALE RATE OF THE COUNTRY MADE LIQUOR FIXED BY THE STATE GOVT. FOR THE FINANCIAL YEAR 19 93 - 94 RELEVANT TO THE ASSESSMENT YEAR 1994 - 95 AND IN RESPONSE THERETO THE STATE EXCISE OFFICER HAS REPLIED THAT NO SALE PRICE WA S FIXED BY THE EXCISE DEPARTMENT. IN THE ABSENCE OF SALE PRICE NOTIFIED BY THE EXCISE DEPARTMENT IT HAS BECOME VERY DIFFICULT FOR THE ASSESSING OFFICER TO ESTIMATE THE SALES OF THE ASSESSEE S BY APPLYING THE FORMULA LAID DOWN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). THE ASSESSING OFFICER HAS ALSO ISSUED NOTICE TO THE ASSESSEE S BUT THE ASSESSEE S D ID NOT RESPOND TO IT AND THE ASSESSING OFFICER HAD NO OPTION BUT TO COMPLETE THE ASSESSMENT S FOLLOWING THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (SUPRA) AND ESTIMATED THE SALES AT 2.5 TIMES OF THE BID MONE Y AT RS.5 43 14 220 AND THEREAFTER APPLIED NET PROFIT RATE AT 4% AND ESTIMATED THE TOTAL INCOME AT RS.21 72 569/ - IN THE CASE OF M/S VASHISTHA KUMAR JAISWAL & OTHERS FAIZABAD . FOR THE SAKE OF REFERENCE THE RELEVANT PORTION OF THE ORDER OF THE ASSESSING OFFICER IN THAT CASE IS EXTRACTED HEREUNDER: - 4.1. NOTICES U/S 143(2) WERE ISSUED BUT NO COMPLIANCE OF THE VARIOUS NOTICES ISSUED WERE MADE BY THE ASSESSEE. IN THE CIRCUMSTANCES MENTIONED ABOVE I HAVE NO OPTION BUT TO COMPLETE ASSESSMENT EXPARTE UNDER SE C. 144 ON THE BASIS OF MATERIAL AVAILABLE ON RECORDS. 4.2. A LETTER DATED 26.1.2008 WAS ALSO ISSUED TO THE DISTT. EXCISE OFFICER FOR PROVIDING SALES RATE FIXED BY THE STATE GOVERNMENT FOR FINANCIAL YEAR 1993 - 94 RELEVANT FOR THE A.Y. 1994 - 95. THE DISTT. EXC ISE OFFICER FAIZABAD VIDE LETTER DATED 28.1 1 .2008 HAS INFORMED AS UNDER: PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 10 : - [ 1993 - 94 ( ) [ 4.3. THUS IT IS CLEAR THAT IN ABSENCE OF SALE RATE FIXE D BY THE STATE GOVERNMENT IN RESPECT OF COUNTRY LIQUOR THE FINDINGS OF HON'BLE IT AT AGRA BENCH IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR AS MENTIONED ABOVE CANNOT BE APPLIED HERE IN THE PRESENT CASE. I THEREFORE HAVE NO OPTION BUT TO COMPLETE ASSESSM ENT ON THE BASIS OF JUDGMENT OF HO'BLE ITAT LUCKNOW IN THE CASE OF ACIT CIRCLE(2) KANPUR VS. UNNAO WINES KANPUR IN INCOME - TAX ACT 1961 NO.1073/ALLD/1995 DATED 15.01.2003 AS IT WAS TAKEN EARLIER AND WORKOUT NET PROFIT OF ASSESEE AS UNDER: TOTAL COST OF BID MONEY/LICENSE FEE RS.2 17 25 688/ - SALES ESTIMATED AT 2.5 TIMES OF RS.2 65 25 360/ - RS.5 43 14 220/ - NET PROFIT ESTIMATED @ 4% RS. 21 72 569/ - ASSESSED ON TOTAL INCOME OF RS.21 72 569/ - DISCUSSED AS ABOVE. CHARGE INTEREST U/S 234A 234B 234C & 234D AS PER RULE. PENALTY NOTICE UNDER SEC. 271(1)(B) AND 271(1)(C) IS BEING ISSUED SEPARATELY. ISSUE NOTICE OF DEMAND AND CHALLAN. 11 . WHEN THE MATTER WAS TRAVELLED TO THE LD. CIT(A) THE LD. CIT(A) HAS AFFORDED NUMBER OF OPPORTUNITIES TO THE ASSESSEES BUT THE A SSESSEES HA VE NOT PARTICIPATED IN THE CASE EFFECTIVELY AND MOST OF THE TIME SOUGHT ADJOURNMENT. THE PROCEEDINGS RECORDED BY THE LD. CIT(A) ARE ALSO EXTRACTED HEREUNDER TO PLACE ON RECORD AS TO HOW THE ASSESSEES HAVE PROSECUTED THEIR APPEAL BEFORE THE LD. CIT(A): - 2. IN THE COURSE OF APPELLATE PROCEEDINGS A NUMBER OF NOTICES WERE ISSUED IN ORDER TO AFFORD A FAIR AND REASONABLE OPPORTUNITY TO THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) - : 11 : - APPELLANT WHO EITHER SOUGHT ADJOURNMENT OR DID NOT RESPOND TO THE NOTICES. THE FACTS IN THIS REGARD ARE AS U NDER: - S. NO. DATE OF ISSUE OF NOTICE DATE OF COMPLIANCE REMARKS (I) 24.08.2009 05.10.2009 NOTICE SENT THROUGH SPEED POST. APPELLANT SEEKS ADJOURNMENT. APPEAL IS ADJOURNED FOR HEARING ON 10.11.2009. (II) - 10.11.2009 CASE DISCUSSED PARTLY. ADJOURNED FOR FURTHER HEARING ON 17.12.2009. (III) - 17.12.2009 ADJOURNMENT SOUGHT BY THE APPELLANT. APPEAL IS ADJOURNED FOR HEARING ON 04.02.2010. (IV) - 04.02.2010 ADJOURNED FOR HEARING ON 08.03.2010. (V) - 08.03.2010 ADJOURN ED FOR HEARING ON 23.03.2010. (VI) - 23.03.2010 NO RESPONSE FROM THE APPELLANT. (VII) 30.07.2010 01.09.2010 NOTICE SENT THROUGH SPEED POST. AS THE NOTICE IS NOT RETURNED UNSERVED BY THE POSTAL AUTHORITIES IT IS PRESUMED TO HAVE BEEN SERVED TIMELY AND PROPERLY. ADJOURNMENT SOUGHT AND GRANTED. APPEAL IS FIXED FOR HEARING ON 15.11.2010. (VIII) - 15.11.2010 NO RESPONSE ON 15.11.2010 THOUGH THE DATE WAS SPECIFICALLY NOTED BY THE AR OF THE APPELLANT ON PREVIOUS DATE OF HEARING. (IX) 16.11.2010 21.01.2011 LETTER SEEKING ADJOURNMENT IS FILED ON 21.01.2011. HEARING OF APPEAL IS ADJOURNED TO 24.03.2011. (X) - 24.03.2011 NO RESPO NSE ON 24.03.2011. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) THE SEQUENCE OF EVENTS AS NARRATED ABOVE CLEARLY SHOWS THAT THE APPELLANT IS NOT INCL INED TO PROSECUTE ITS APPEAL. THE PROCESS OF NON COOPERATION WHICH BEGAN BEFORE THE ASSESSING OFFICER THUS CONTINUED EVEN BEFORE THIS APPELLATE AUTHORITY WHICH DESPITE HAVING ACCORDED A FAIR AND REASONABLE OPPORTUNITY TO THE APPELLANT IS CONSTRAINED T O DECIDE THE APPEAL EXPARTE. THIS C ONSTRAIN T CAUSED TO THE APPELLATE AUTHORITY IS ENTIRELY ATTRIBUTABLE TO THE APPELLANT. 12 . THE LD. CIT(A) HOWEVER EXAMINED THE FACTS OF THE CASE IN THE LIGHT OF THE DIRECTIONS OF THE TRIBUNAL AND NOTICED THAT THE DIRECT IONS OF THE TRIBUNAL COULD NOT BE COMPLIED WITH AS THE STATE GOVERNMENT HAD NOT FIXED THE SALE PRICE FOR COUNTRY MADE LIQUOR. HE ACCORDINGLY APPROVED THE ESTIMATION OF SALES AND NET PROFIT RATE AS DETERMINED BY THE ASSESSING OFFICER. THE RELEVANT OBSERV ATIONS OF THE LD. CIT(A) IN THIS REGARD IS ALSO EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 4.2 1 HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE MATERIAL ON RECORD AND THE DIRECTION GIVEN BY THE ITAT VIDE THEIR ORDER DATED 22.10.2007. ON THE ISSUE OF ESTIMATE OF INCOME FROM COUNTRY LIQUOR BUSINESS THE FIRST AND FOREMOST ASPECT THAT THE PROFIT SHOWN BY THE APPELLANT AS PER ITS BOOKS OF ACCOUNTS HAS NOT BEEN ACCEPTED BY ANY OF THE AUTHORITIES EARLIER AND THEREFORE THE PROFIT SHOWN BY THE APPELLANT C ANNOT BE UPHELD (AS A RESULT OF THE REJECTION OF BOOKS OF ACCOUNTS) TO BE SUBJECT MATTER OF ADJUDICATION AT THIS STAGE. THE ONLY ISSUE IS WHETHER THE SALES COULD BE ESTIMATED AS PER THE FORMULA/DIRECTION GIVEN BY THE HON'BLE ITAT. THE ASSESSING OFFICER HA S FAILED TO APPLY THE FORMULA LAID DOWN BY THE ITAT SINCE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : THE STATE GOVERNMENT HAD NOT FIXED THE SALE RATES FOR COUNTRY LIQUOR. 4.3 NOW COMES THE QUESTION OF ESTIMATING THE NET PROFIT RATE AFTER TAKING INTO CONSIDERATION ALL THE HEADS OF EXPENSES AND ALSO DIRECT COST RELATING TO BID MONEY/LICENSE FEE TO ARRIVE AT THE SALES OF RS.5 43 14 220/ - ON WHICH THE NET PROFIT HAS BEEN ESTIMATED @ 4% WHICH CANNOT BE SAID TO BE EXCESSIVE LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE NET PROFIT DETERMINED AT RS.21 72 569/ - AND ASSESSED AS TOTAL INCOME BY THE AO THEREFORE DOES NOT CALL FOR INTERFERENCE AND ANY RELIEF/REDUCTION BY THIS APPELLATE AUTHORITY. 13 . NOW THE QUESTION BEFORE US IN THIS CASE IS AS TO WHETHER THERE IS A PROPER COMPLIANCE OF THE DIRECTIONS OF THE TRIBUNAL BY THE ASSESSING OFFICER WHILE PASSING THE CONSEQUENTIAL ORDERS. IN TH IS REGARD WE HAVE CAREFULLY EXAMINED THE DIRECTI O NS OF THE TRIBUNAL GIVEN TO THE ASSESSING OFFICER FOR ESTIMATING THE SALES AND WE FIND THAT THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE SALES FOLLOWING THE FORMULA LAID DOWN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). ON CAREFUL PERUSAL OF THE ORDER OF THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRA SAD KRISHNA KUMAR (SUPRA) WE FIND THAT THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER THAT THE AVERAGE SALE RATE PER LITER HAS TO BE WORKED OUT FROM THE RATES FIXED BY THE STATE EXCISE DEPARTMENT (EMPHASIS SUPPLIED) . BUT IN THE INSTATE CASE THE ASSESS ING OFFICER HAS MADE H IS EFFORTS TO FIND OUT THE SALE RATE FIXED BY THE STATE EXCISE DEPARTMENT BUT THE EXCISE DEPARTMENT HAS CANDIDLY ADMITTED THAT THEY HAVE NOT FIXED THE SALE RATE OF THE COUNTRY MADE LIQUOR DURING THE YEAR UNDER CONSIDERATION. IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) BY APPLYING THE SALE RATE FIXED BY THE STATE EXCISE DEPARTMENT THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 14 - : QUANTUM OF SALE HAS TO BE WORKED OUT AS PER FORMULA GIVEN IN THAT CASE. BUT IN THE INSTANT CASE WHEN THE SALE RATES ARE NOT NOTIFIED BY THE S TATE EXCISE DEPARTMENT THE QUANTUM OF SALE CANNOT BE ESTIMATED BY FOLLOWING THE FORMULA LAID DOWN IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). THOUGH THE TRIBUNAL IN THE FIRST ROUND OF APPEAL HAS OBSERVED THAT THE FACTS OF THE PRESENT CASE ARE SIM ILAR TO THAT OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) BUT WE ARE OF THE VIEW THAT THIS FIND ING OF THE TRIBUNAL ARE CONTRARY TO THE FACTS AS IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) THE SALE RATE WAS NOTI FIED BY THE STATE EXCISE DEPARTMENT AND IN THE INSTANT CASE THE STATE EXCISE DEPARTMENT HAS NOT NOTIFIED ANY SALE RATE OF THE COUNTRY MADE LIQUOR. 14 . THEREFORE KEEPING IN VIEW THE TOTALITY OF THE FACTS AND THE CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE FIRST ROUND OF APPEAL IN THE ASSESSEES OWN CASE CANNOT BE COM PLIED WITH AS THE FORMULA LAID DOWN IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) IS NOT WORKABLE TO ESTIMATE THE TOTAL SALES OF THE ASSESSEE. ON ACCOUNT OF NON - COOP ERATION OF THE ASSESSEE THE ASSESSING OFFICER HAS NO OTHER OPTION BUT TO FOLLOW THE OTHER ORDER S OF THE TRIBUNAL RENDERED ON THIS ISSUE AND THE ASSESSING OFFICER HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (S UPRA). 15 . DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER S OF THE TRIBUNAL IN THE CASE OF M/S BALMIKI SINGH VS. ACIT (SUPRA) AND ACIT VS KAMLESH KUMAR JAISWAL (SUPRA) IN SUPPORT OF HIS CONTENTION THAT FIRST OF ALL THE BOOKS OF ACCOUNT SHOULD NOT HAVE BEEN REJECTED AND THE RESULT DECLARED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AND SECONDLY THE ASSESSING OFFICER SHOULD HAVE FOLLOWED THE AFORESAID ORDERS IN WHICH THE NET PROFIT RATE WA S ESTIMATED @ 2% ON THE DECLARED SALE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 15 - : 16 . WE HAVE CAREFULLY PERUSED THE AFORESAID ORDERS AND WE FIND THAT IN THE CASE OF M/S BALMIKI SINGH VS. ACIT (SUPRA) THE TRIBUNAL HAS FOLLOWED THE RULE OF CONSISTENCY IN THE LIGHT OF THE FACT THAT THE D EPARTMENT HAS A CCEPTED THE NET PROFIT RATE AT 2% IN ASSESSMENT YEAR 1994 - 95. BUT IN THE INSTANT CASE THE TRIBUNAL HAS CONFIRMED THE REJECTION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSING OFFICER WAS DIRECTED TO RE - COMPUTE THE TOTAL SALE AND THEREAFTER TO A PPLY THE NET PROFIT RATE BY ADOPTING A PARTICULAR FORMULA LAID DOWN IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). THEREFORE THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S BALMIKI SINGH VS. ACIT (SUPRA) CANNOT BE FOLLOWED IN THE INSTANT CASE AS IT IS DISTINGUISHABLE ON FACTS. 17 . SO FAR AS THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS KAMLESH KUMAR JAISWAL (SUPRA) IS CONCERNED WE FIND THAT IN THAT CASE THE BOOKS OF ACCOUNT WERE ACCEPTED BY THE TRIBUNAL HAVING GIVEN A SPECIFIC FINDING THAT THERE WAS NO MERIT IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE TRIBUNAL HAS ACCEPTED THE GROSS PROFIT RATE AFTER RECASTING THE TRADING ACCOUNT. IN THAT CASE THE ISSUE WAS ENTIRELY DIFFERENT AND THE TRIBUNAL HAS ACCEPTED THE RECASTED BOOKS OF ACCOUNT AN D THE PROFIT ESTIMATED BY THE LD. CIT(A). THEREFORE THE ORDER OF THE TRIBUNAL IN THAT CASE CANNOT BE FOLLOWED WHILE ADJUDICATING THE IMPUGNED APPEAL. 18 . A REFERENCE WAS ALSO MADE TO ANOTHER ORDER OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER GWALIOR VS . LAXMI NARAIN RAMSWAROOOP SHIVHARE (SUPRA) AND THE FACT IN THAT CASE ARE ALSO DISTINGUISHABLE AS IN THAT CASE THE TRIBUNAL HAS ACCEPTED THE BOOK RESULTS DECLARED BY THE ASSESSEE AFTER REVERSING THE ORDER OF THE ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUNT. BUT IN THE INSTANT CASE THE TRIBUNAL HAS APPROVED THE REJECTION OF THE BOOKS OF ACCOUNT BY GIVING A SPECIFIC FINDING. THEREFORE THE RATIO LAID DOWN IN THAT CASE CANNOT BE APPLIED HERE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 16 - : 19 . OUR ATTENTION WAS ALSO INVITED TO THE ORDER OF THE ALLA HABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT (C) ALLAHABAD VS. M/S RAMESH CHANDRA & OTHERS ALLAHABAD IN I.T.A. NO.30/ALLD/1998 IN WHICH THE TRIBUNAL HAS REJECTED THE ACTION OF THE ASSESSING OFFICER FOR TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE AFTE R REJECTING THE BOOKS OF ACCOUNT. IN THAT CASE WHILE REJECTING T HE BOOKS OF ACCOUNT AND ESTIMATING THE NET PROFIT RATE THE ASSESSING OFFICER HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS IN I .T.A. NO. 1379/198 8 IN WHICH THE TRIBUNAL AFTER REJECTING THE BOOKS OF ACCOUNT HAS DIRECTED TO ESTIMATE THE SALES AT 2.5 TIMES OF THE BID MONEY AND THEREAFTER APPLY THE NET PROFIT RAT AT 5% TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE. BUT THE LD. CIT(A) AND TH E TRIBUNAL REVERSED THE ORDER OF THE ASSESSING OFFICER HAVING OBSERVED THAT THE REJECTION OF THE BOOKS OF ACCOUNT WAS NOT PROPER AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE. ACCORDINGLY THE TRIBUNAL HAS ACCE PTED THE NET PROFIT DECLARED BY THE ASSESSEE IN THAT CASE. BUT IN THE INSTANT CASE THE REJECTION OF THE BOOKS OF ACCOUNT BY THE ASSESSING OFFICER WAS APPROVED BY THE TRIBUNAL IN THE FIRST ROUND OF APPEAL AND THE MATTER WAS RESTORED TO THE ASSESSING OFFIC ER FOR COMPUTING THE NET PROFIT OF THE ASSESSEE S BY ADOPTING A PARTICULAR FORMULA LAID DOWN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). ON A CAREFUL PERUSAL OF THIS ORDER OF THE TRIBUNAL IN THE CASE OF ACIT (C) A LLAHABAD VS. M/S RAMESH CHANDRA & OTHERS ALLAHABAD (SUPRA ) WE FIND FROM THE FACTS OF THE CASE OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS (SUPRA) OF WHICH ORDER OF THE TRIBUNAL WAS APPROVED BY THE HON'BLE HIGH COURT OF ALLAHABAD AS REPORTED IN 210 I TR 406 AS CULLED OUT BY THE TRIBUNAL THAT OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS (SUPRA) WAS ENGAGED IN COUNTRY MADE LIQUOR BUSINESS AND ITS BOOKS OF ACCOUNT WERE REJECTED BY THE ASSESSING OFFICER IN THE ABSENCE OF STOCK REGISTER OR DETAILS OF DAY - TO - DAY STOCK IS NOT VERIFIABLE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 17 - : THE ASSESSING OFFICER ACCORDINGLY ESTIMATED THE SALE AT 2.5 TIMES OF THE BID MONEY AND APPLIED THE NET PROFIT RATE AT 5% AND ASSESSED THE INCOME OF THE ASSESSEE. THE TRIBUNAL HAVING EXAMINED ALL THESE FACTS IN DETAIL C ONFIRMED THE ESTIMATION OF SALES AT 2.5 TIMES OF THE LICENSE FEE/BID MONEY AND APPROVED THE APPLICATION OF NET PROFIT RATE AT 5% OF THE ESTIMATED SALES. THE FACTS IN THE CASE OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS (SUPRA) NARRATED BY THE TRIBUNAL IN PARA 9 OF ITS ORDER IN THE CASE OF ACIT (C) ALLAHABAD VS. M/S RAMESH CHANDRA & OTHERS ALLAHABAD (SUPRA) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 9. IT APPEARS FROM THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE A.O. MAINLY COMPUTED THE INCOME OF THE ASSESSEE ON ESTIMATE BASIS AS PER THE DECISION IN THE CASE OF AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS. IN WHICH THE TRIBUNAL HAS CONFIRMED THE ADDITION AND THE AFORESAID DECISION WAS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE R EPORTED IN 210 ITR 406. THE GRI EVANCE SO RAISED IN THE GROUNDS OF APPEAL IS ALSO MAINLY ON THE SAME REASONS TH AT THE CASE OF THE REVENUE IS COVERED BY THE AFORESAID DECISION IN THE CASE OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS. THEREFORE IT WOULD BE APPROPRIATE BEFORE GOING FURTHER INTO THE MATTER TO CONSIDER WHETHER THE DECISION IN THE CASE OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS. IS APPLICABLE IN THE CASE OF THE ASSESSEE. THE ID. COUNSEL FOR THE ASSESSEE FILED COPY OF THE LETTER DATED 1 7 TH SEPTEMBER 1991 IN IT.A. NO. 1379/1988 PASSED BY THE I.T.A.T. ALLAHABAD 'B' BENCH IN THE CASE OF M/S. AWDHESH PRALAP SINGH ABDUL RAHMAN & BROS. FOR THE ASSESSMENT YEAR 1986 - 87 IN THE PAPER BOOK. THE I.T.A.T. ALLAHABAD BENCH IN THE ABOVE CASE OBSERVED THAT THE CIT (A) NOTED THAT THE SALES WERE NOT FULLY VOUCHED AND VERIFIABLE AND THAT NO PROPER STOCK POSITION WAS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 18 - : AVAILABLE THEREFORE THE SALES WERE ESTIMATED AT 2 TIMES OF THE LICENCE FEES AND INCOME WAS COMPUTED BY APPLYING NET PROFIT RATE OF 5% ON THE ESTIMATED SALES. THE TRIBUNAL FURTHER OBSERVED IN THAT CASE THAT AS REGARDS THE AUDITOR'S RE - PORT IT IS NOTED THAT THE AUDITORS HAVE ALSO INDICATED THAT THE PURCHASES AND OTHER EXPENSES OF THE BRANCHES THOUGH THEY HAD NOT AUDITED OR VERIFIED THE BRANC HES RECORDS FOR RETURNS MADE IN CASH THIS WAS NOT CAPABLE OF VERIFICATION. THE TRIBUNAL FURTHER OBSERVED THAT IT IS UNBELIEVABLE THAT SUM OF RS. 36 000/ - WAS EARNED BY THE ASSESSEE EVEN ON THE TURNOVER DISCLOSED WILL BE AN OVER - DRAFT ON HUMAN CREDIBILITY. THE TRIBUNAL ALSO FOUND THAT THE OTHER CASES RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE. THE TRIBUNAL CONSIDERING THE ABOVE FACTS DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ESTIMATION OF THE SALES AND THE INCOME BY APPLYING NET PROFIT RATE OF 5%. THE ASSESSEE MOVED BEFORE THE HON'BLE ALLAHABAD HIGH COURT U/S 256 (2) OF THE INCOME - TAX ACT CHALLENGING THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH AND ULTIMATELY THE APPLICATION WAS REJECTED AS ACCORDING TO THE HON'BLE HIGH COURT THE ORDER OF THE TRIBUNAL DOES NOT GIVEN RISE TO ANY QUESTION OF LAW. ACCORDINGLY THE APPLICATION WAS DISMISSED. 20 . THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER TRIED TO DISTINGUISH THE FACTS OF THE IMPUGNED CASE WITH THE FACTS IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (SUPRA) ON THE GROUND THAT UNNAO WINES KANPUR WAS ENGAGED IN IMFL LIQUOR BUSINESS WHEREAS THE ASSESSEE WAS ENGAGED IN COUNTRY MADE LIQUOR. THEREFORE THE RATIO LAID DOWN IN THE CASE OF ACIT KANPUR VS. UNNAO WINES K ANPUR (SUPRA) SHOULD NOT BE APPLIED. IN THIS REGARD THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (SUPRA) HAS NOT BEEN PLACED BEFORE US FOR PERUSAL. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 19 - : THEREFORE WE ARE NOT ABLE TO MAKE ANY COMMENTS IN THIS REGARD BUT FROM THE ORDERS OF THE LOWER AUTHORITIES IT APPEARS THAT IN THE CASE OF ACIT KANPUR VS. UNNAO WINES KANPUR (SUPRA) THE BOOKS OF ACCOUNT WERE REJECTED AND SALE WAS ESTIMATED AT 2.5 TIMES OF THE BID MONEY/LICENSE FEE AND THEREAFTER THE NET PROFIT RATE WAS APP LIED AT 5% BY THE ASSESSING OFFICER WHICH WAS LATER ON RESTRICTED TO 4% BY THE TRIBUNAL. BUT IN THE CASE OF M/S AWDHESH PRATAP SINGH ABDUL RAHMAN & BROS (SUPRA) WHERE THE VIEW OF THE TRIBUNAL WAS APPROVED BY THE HON'BLE HIGH COURT OF ALLAHABAD THE ASSES SEE WAS ENGAGED IN THE BUSINESS OF COUNTRY MADE LIQUOR. THEREFORE THE FACTS OF THAT CASE ARE ALMOST SIMILAR TO THE PRESENT CASE. 21 . IN THE INSTANT CASE IN SET ASIDE PROCEEDINGS THOUGH THE ASSESSING OFFICER WAS ASKED TO ADOPT THE FORMULA LAID DOWN IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) BUT THE SAME COULD NOT BE FOLLOWED ON ACCOUNT OF INCOMPLETE INFORMATION AND THE ASSESSING OFFICER WAS LEFT WITH THE ONLY OPTION TO FIND OUT OTHER COMPARABLE CASES TO ESTIMATE THE SALE S IN ORDER TO WORK OUT THE NET PROFIT RATE. THE REJECTION OF THE BOOKS OF ACCOUNT WAS APPROVED BY THE TRIBUNAL THEREFORE THE SAME CANNOT BE LOOKED INTO FOR ESTIMATING THE SALE AND THE ONLY OPTION AVAILABLE WITH THE ASSESSING OFFICER WAS TO FOLLOW THE OTHER ORDERS OF THE TRIBUNAL IN WHICH SALE WAS ESTIMATED AT 2.5 TIMES OF THE LICENSE FEE/BID MONEY AND THEREAFTER APPLIED THE NET PROFIT RATE AT 4%. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ASSESSMENT ORDER AS THE ACTION OF THE ASSESSING OFFICER WAS IN CONSONANCE WITH THE OT HER ORDERS OF THE TRIBUNAL RENDERED UNDER SIMILAR CIRCUMSTANCES. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND THAT THE ASSESSEE HAS NOT CO - OPERATED WITH THE LD. CIT(A) DESPITE VARIOUS OPPORTUNITIES AFFORDED TO HIM AND THE LD. CI T(A) HAD NO OPTION BUT TO ADJUDICATE THE APPEALS IN THE ABSENCE OF THE ASSESSEES. WE HOWEVER FIND THAT THE APPROACH OF THE LD. CIT(A) IS CORRECT AS THE NET PROFIT WAS ESTIMATED IN THE LIGHT OF THE OTHER ORDER OF THE TRIBUNAL RENDERED PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 20 - : UNDER SIMILAR CIRC UMSTANCES. WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A). 22 . SO FAR AS GROUND NO.7 RELATING TO ALLOWANCE OF INTEREST & SALARY TO THE PARTNERS IS CONCERNED WE FIND THAT DURING THE COURSE OF HEARING OF THE APPEAL NO ARGUMENT WAS RAISED IN THIS REGARD BY THE LD. COUNSEL FOR THE ASSESSEE. WE HOWEVER HAVE CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES AND THE ORDER OF THE TRIBUNAL DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE SALES AND RE - COMPUTE THE NET PROFIT FOLLOWING THE ORDER OF THE AGRA B ENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA) AND WE FIND THAT THE ASSESSEE HAS ALSO RAISED A SIMILAR GROUND RELATING TO INTEREST ON CAPITAL AND SALARY AS GROUND NO.7 IN EARLIER APPEAL BUT THE TRIBUNAL HAS NOT GIVEN ANY FINDING I N THIS REGARD IN ITS ORDER DATED 28.2.2007 AND DIRECTED THE ASSESSING OFFICER TO RE - ESTIMATE THE TOTAL SALES AND TO COMPUTE THE PROFIT FOLLOWING THE ORDER OF THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF GOVIND PRASAD KRISHNA KUMAR (SUPRA). NON - ADJUDICATI ON OF AN ISSUE AMOUNTS TO REJECTION BY THE CONCERNED AUTHORITY AND MOREOVER THIS ORDER WAS PASSED ON 22.10.2007 AND THE ASSESSEE HAS NOT MOVED TO THE TRIBUNAL WITH A REQUEST TO ADJUDICATE THE GROUNDS BY FILING A MISCELLANEOUS APPLICATION UNDER SECTION 254( 2) OF THE ACT. NOW THIS GROUND IS RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL BUT NO ARGUMENT WAS ADVANCED IN THIS REGARD. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THIS GROUND DOES NOT SURVIVE IN THE LIGHT OF THE FACT THAT THE IMPUGNED APPEAL IS EM ANATED FROM THE ORDER OF THE ASSESSING OFFICER PASSED CONSEQUENT TO THE ORDER OF THE TRIBUNAL DATED 22.10.2007. IN THIS CASE THE SCOPE OF JURISDICTION OF THE ASSESSING OFFICER IS VERY LIMITED AND HE HAS TO ACT ACCORDING TO THE DIRECTIONS OF THE TRIBUNAL. HE HA D NO JURISDICTION TO ENTERTAIN ANY OTHER ISSUES WHICH WAS BEYOND THE SCOPE OF HIS JURISDICTION AS PER DIRECTIONS OF THE TRIBUNAL RAISED BY THE ASSESSEE. WE ARE THEREFORE OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 21 - : THE VIEW THAT THE ISSUE WITH REGARD TO THE ALLOWANCE OF INTEREST ON CAPI TAL AND SALARY TO PARTNER DOES NOT SURVIVE AND WE ACCORDINGLY REJECT THE SAME. 23 . THE FACTS OF ALL THE CASE ARE ALMOST IDENTICAL EXCEPT THE DIFFERENCE IN QUANTUM OF NET PROFIT. WE THEREFORE FOLLOWING THE AFORESAID ORDER DECIDE ALL THE APPEALS AGAINST THE A SSESSEES AND CONFIRM THE ORDERS OF THE LD. CIT(A). 24 . IN THE RESULT THE APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.6.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD JUNE 2014 JJ: 11&1206 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )