The Income Tax Officer, Bathinda v. M/s. Sutlej Wine Enterprises, Bathinda

ITA 716/ASR/2013 | 2010-2011
Pronouncement Date: 28-11-2014 | Result: Dismissed

Appeal Details

RSA Number 71620914 RSA 2013
Assessee PAN ABRFS9069B
Bench Amritsar
Appeal Number ITA 716/ASR/2013
Duration Of Justice 11 month(s) 22 day(s)
Appellant The Income Tax Officer, Bathinda
Respondent M/s. Sutlej Wine Enterprises, Bathinda
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-11-2014
Date Of Final Hearing 27-11-2014
Next Hearing Date 27-11-2014
Assessment Year 2010-2011
Appeal Filed On 06-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN JUDICIAL MEMBER AND SH. B.P. JAIN ACCOUNTANT MEMBER I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 PAN: ABRFS9069B INCOME TAX OFFICER VS. M/S SUTLEJ WINE ENTERPR ISES WARD-1(3) BATHINDA PHUL ROAD RAMPURA PHUL DIST. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. RATINDER KAUR DR RESPONDENT BY: SH. P.N. ARORA ADVOCATE DATE OF HEARING: 27.11.2014 DATE OF PRONOUNCEMENT: 28.11.2014 ORDER PER A.D. JAIN J.M. 1. THIS IS DEPARTMENTS APPEAL AGAINST THE ORDER DAT ED 23.09.2013 FOR THE ASSESSMENT YEAR 2010-11 PASSED BY LEARNED C IT(A) BATHINDA. 2. THE ASSESSEE PARTNERSHIP-FIRM DURING THE YEAR CARRIED ON THE BUSINESS OF RETAIL TRADE OF LIQUOR. IT DECLARED A L OSS OF RS. 34 936/-. THE A.O. HOWEVER VIDE ASSESSMENT ORDER DATED 25.03.20 13 PASSED UNDER SECTION 144 OF THE INCOME-TAX ACT 1961 ( FOR SHORT THE ACT) ASSESSED THE INCOME OF THE ASSESSEE AT RS. 55 62 830/- APPLY ING NET PROFIT OF 5%. BY VIRTUE OF THE IMPUGNED ORDER THE LEARNED CIT(A) DIRECTED THIS NET 2 I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 PROFIT RATE TO BE REDUCED TO 0.5%. AGGRIEVED THE D EPARTMENT IS IN APPEAL BEFORE US. 3. THE LEARNED DR HAS CONTENDED THAT THE LEARNED CI T(A) HAS ERRED IN DIRECTING THE A.O. TO ASSESS THE INCOME OF THE ASSESSEE AT RS. 5 56 300/- BY APPLYING NET PROFIT RATE OF 0.5% ON T HE GROSS SALES OF RS. 11 12 56 585/- IN VIEW OF THE NET PROFIT RATE ASSES SED U/S 143(3) OF THE ACT AT 0.506% ON GROSS SALES OF RS. 29 75 78 035/- IN T HE CASE OF M/S BATHINDA WINE TRADERS BATHINDA FOR THE ASSESSMENT YEAR 2009-10; THAT IGNORING THE FACT THAT IN THE PRESENT CASE THE ASS ESSEE EVEN DID NOT MAINTAIN BANK ACCOUNT AND COULD NOT PRODUCE THE CON FIRMED COPIES OF ACCOUNT OF THE PARTIES FROM WHOM PURCHASES WERE MAD E BY IT DESPITE A NUMBER OF OPPORTUNITIES BEING AFFORDED AND THUS TH E ASSESSMENT WAS COMPLETED IN THE MANNER PRESCRIBED U/S 144 OF THE A CT BUT IN THE CASE OF M/S BATHINDA WINE TRADERS BATHINDA THE ASSESSME NT WAS COMPLETED U/S 143(3) OF THE ACT MEANING THEREBY THAT PROPER BOOKS OF ACCOUNT BILLS/VOUCHERS AND OTHER DETAILS WERE PROVIDED BY T HE ASSESSEE WHICH WERE REQUIRED BY THE A.O. FOR ASSESSING THE INCOME. HENCE THE CASE IS NOT COMPARABLE AND MOREOVER BOTH THE CASES ARE NOT LOCATED IN THE SAME AREA/TERRITORY AS THE INSTANT CASE RELATES TO A SM ALL TOWN WHERE MONOPOLY EXISTS AND PROFIT AT HIGHER RATE CANNOT BE RULED OU T. 3 I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 4. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OT HER HAND HAS PLACED RELIANCE ON THE IMPUGNED ORDER. IT IS SUBMIT TED THAT THE ASSESSEE WAS HAVING 23 RETAIL OUTLET SHOPS IN AND AROUND BAT HINDA FOR WHICH LICENCE WAS ISSUED BY THE EXCISE AND TAXATION DEPAR TMENT FOR THE YEAR UNDER CONSIDERATION; THAT COMPLETE BOOKS OF ACCOUNT I.E. CASH BOOK LEDGER PURCHASE/SALES VOUCHERS AND AUDIT REPORT ALONG WITH AUDITED ACCOUNTS WERE FURNISHED BEFORE THE A.O.; THAT THE A SSESSEE WAS MAINTAINING STOCK REGISTER AS PRESCRIBED BY THE EXC ISE AND TAXATION DEPARTMENT; THAT HOWEVER THIS REGISTER COULD NOT BE PRODUCED BEFORE THE A.O. AS THE SAME HAD TO BE DEPOSITED WITH THE EXCI SE AND TAXATION DEPARTMENT FOR ISSUANCE OF LICENCE; THAT THE BUSI NESS OF RETAIL TRADE OF LIQUOR CAN ONLY BE CARRIED OUT BY MAKING PURCHASES FROM THE WHOLESALERS ON THE BASIS OF PERMITS ISSUED BY THE DEPARTMENT; T HAT THE WHOLESALERS ARE ALSO ISSUED LICENCES BY THE EXCISE AND TAXATION DEP ARTMENT; THAT FURTHER EVEN THE QUANTITY OF PURCHASE HAS TO BE IN ACCORDAN CE WITH THAT APPROVED IN THE PERMIT; THAT NOT ONLY THIS EVEN THE NAME OF THE SELLER IS IN THE PERMIT AND NO PURCHASE CAN BE MADE FROM ANYONE ELSE ; THAT COMPLETE COPIES OF ACCOUNTS OF THE SELLER PARTIES ALONG WITH THEIR COMPLETE NAMES AND ADDRESSES WERE ALSO PRODUCED BEFORE THE A.O.; T HAT THE A.O. DID NOT CARRY OUT ANY INQUIRY DESPITE THEREOF; THAT IT WAS AFTER TAKING INTO 4 I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 CONSIDERATION ALL THESE FACTS THAT THE LEARNED CIT (A) CORRECTLY REDUCED THE NET PROFIT RATE TO 0.5% FROM 5%. 5. WE HAVE HEARD BOTH THE PARITIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. 6. THE A.O. APPLIED THE NET PROFIT RATE OF 5% ON TH E GROSS TURNOVER OF THE ASSESSEE OBSERVING THAT THE ASSESSEE HAD NO T FILED CONFIRMED COPIES OF ACCOUNT OF THE SELLER PARTIES FROM WHOM T HE PURCHASES EXCEEDING RS. 1 LAKHS HAD BEEN MADE BY THE ASSESSEE DURING THE YEAR. THE A.O. ALSO OBSERVED THAT THE PAYMENTS TO THE PA RTIES HAD BEEN MADE IN CASH FOR WHICH NO PLAUSIBLE EXPLANATION HAD BE EN GIVEN. IT WAS ALSO OBSERVED THAT IT APPEARED THAT NO BANK ACCOUNT HAD BEEN MAINTAINED BY THE ASSESSEE. 7. WHILE REDUCING THE NET PROFIT RATE FROM 5% TO 0. 5% THE LEARNED CIT(A) HAS DULY TAKEN INTO CONSIDERATION THE FACTS THAT THE ASSESSEE HAD PRODUCED ITS BOOKS OF ACCOUNT I.E. CASH BOOK LED GER PURCHASE/SALES VOUCHERS RELATING TO ITS BUSINESS OF LIQUOR BEFORE THE A.O.; AND THAT THE AUDIT REPORT ALONG WITH AUDITED ACCOUNTS AS WELL A S COMPLETE COPIES OF ACCOUNT OF THE SELLERS INCLUDING THEIR COMPLETE NA MES AND ADDRESSES HAD ALSO BEEN FURNISHED BY THE ASSESSEE BEFORE THE A.O. THE LEARNED CIT(A) OBSERVED THAT THE A.O. HOWEVER DID NOT MAKE ANY E FFORT TO CONFIRM THE COPIES OF ACCOUNT OF THE SELLERS AND NO INDEPENDEN T INQUIRY WAS MADE 5 I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 NOR ANY DEFECT WAS POINTED OUT IN THE BOOKS OF ACCO UNT OF THE ASSESSEE BY THE A.O. THE LEARNED CIT(A) AGREED WITH THE A.O. TH AT NO BANK ACCOUNT HAD BEEN MAINTAINED BY THE ASSESSEE AND SO ITS BOO KS OF ACCOUNT WERE NOT CORRECT AND COMPLETE OBSERVING THAT PAST HISTO RY OF THE CASE WAS NOT AVAILABLE. THE LEARNED CIT(A) RELIED ON THE TRIBUNA LS DECISION FOR A.Y. 2009-10 IN THE CASE OF M/S BATHINDA WINE TRADERS WHERE THE NET PROFIT RATE APPLIED WAS 0.506%. 8. IT IS WELL SETTLED THAT EVEN IF THE RESULTS OF T HE BOOKS OF ACCOUNT ARE REJECTED AND AN ESTIMATE IS TO BE MADE SUCH ES TIMATE OF INCOME HAS TO BE FAIR AND REASONABLE AND BASED ON MATERIAL AVAILA BLE ON RECORD AND THERE IS NO SCOPE FOR GUESS-WORK WHILE MAKING SUCH ESTIMATE. AS SUCH THE ESTIMATE CANNOT BE EITHER ARBITRARY OR CAPRICI OUS. THE A.O. IT IS SEEN WHILE ARRIVING AT THE NET PROFIT RATE OF 5% HAS NO T GIVEN ANY BASIS FOR SUCH RATE. THE LEARNED CIT(A) ON THE OTHER HAND H AS PLACED RELIANCE ON M/S BATHINDA WINE TRADERS (SUPRA). IN THAT CASE UNDER SIMILAR CIRCUMSTANCES THE NET PROFIT RATE APPLIED WAS OF 0 .5%. IT IS THE CONTENTION OF THE DEPARTMENT THAT THE CASE OF M/S BATHINDA WI NE TRADERS (SUPRA) IS DISTINGUISHABLE INASMUCH AS IN THAT CASE CASH BOO K LEDGER BILLS AND VOUCHERS AND OTHER DETAILS WERE PROVIDED BY THE ASS ESSEE WHICH IS NOT SO IN THE PRESENT CASE RENDERING THE SAID CASE NOT CO MPARABLE WITH THE FACTS OF THE PRESENT CASE. HOWEVER THIS IS NOT SO. AS NO TED HEREINABOVE THE 6 I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 ACCOUNTS OF THE ASSESSEE ARE UNDISPUTEDLY AUDITED A CCOUNTS. THESE WERE PRODUCED BEFORE THE A.O. THE BALANCE-SHEET TRADING AND PROFIT & LOSS ACCOUNT ARE REQUIRED TO BE NECESSARILY FURNISHED AL ONG WITH THE RETURN OF INCOME. SO OBVIOUSLY THESE WERE ALSO AVAILABLE BE FORE THE A.O. THUS EVEN IF THE BOOKS OF ACCOUNT WERE REJECTED AND AN E STIMATE WAS MADE THIS ESTIMATE AS ARRIVED AT BY THE LEARNED CIT(A) ON TH E BASIS OF M/S BATHINDA WINE TRADERS (SUPRA) IN THE ABSENCE OF A NY OTHER COMPARABLE CASE SUPPORTING THE ESTIMATE OF NET PROFIT RATE OF 5% IS SQUARELY APPLICABLE AND HAS RIGHTLY BEEN APPLIED BY THE LEAR NED CIT(A). 9. ANOTHER OBJECTION OF THE DEPARTMENT IS THAT THE CASE RELATES TO A SMALL TOWN WHERE MONOPOLY EXISTS AND PROFIT AT A H IGHER RATE CANNOT BE RULED OUT WHEREAS THESE WERE NOT THE FACTS OF M/S BATHINDA WIND TRADERS (SUPRA). HOWEVER IT REMAINS UNDISPUTED A S DULY TAKEN NOTE OF BY THE LEARNED CIT(A) THAT IN THE BUSINESS OF LIQU OR WINE THE EXCISE AND TAXATION DEPARTMENT MAKES SPECIFIC PROVISIONS AS TO THE QUANTITY OF LIQUOR TO BE PURCHASED THE PARTY FROM WHOM IT IS T O BE PURCHASED AND THE RATES. THESE ASPECTS THEREFORE ARE UNDER THE STRI CT CONTROL AND SUPERVISION OF THE EXCISE AND TAXATION DEPARTMENT. IT HAS AGAIN REMAINED UNDISPUTED THAT NO PURCHASES CAN BE MADE F ROM THE OPEN MARKET. THE EXCISE AND TAXATION DEPARTMENT HAS NOT BE SHOWN TO HAVE BEEN RAISED ANY OBJECTION IN THIS REGARD IN THE CAS E OF THE ASSESSEE. ONCE 7 I.T.A. NO.716 (ASR)/2013 ASSESSMENT YEAR: 2010-11 THIS IS SO IT DOES NOT LIE IN THE MOUTH OF THE REV ENUE TO CONTEND THAT PROFIT AT A HIGHER RATE CANNOT BE RULED OUT. THIS I S PARTICULARLY SO WHEN NO MATERIAL TO THE CONTRARY HAS BEEN PLACED ON RECO RD AT ANY STAGE. WE DO NOT FIND ANY ERROR WHATSOEVER IN THE ORDER OF LE ARNED CIT(A) AND THE SAME IS CONFIRMED. 10. FOR THE ABOVE DISCUSSION FINDING NO MERIT THERE IN THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS REJECTED. 11. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER 2014 SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH NOVEMBER 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S SUTLET WINE ENTERPRISES PHUL R OAD RAMPURA PHUL DISTT. BATHINDA. 2. INCOME TAX OFFICER WARD-I(3) BATHINDA. 3. THE CIT(A) 4. THE CIT 5. THE SR DR I.T.A.T. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.