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2004 DIGILAW 610 (KER)

N. U. Joseph v. The Commissioner Of Income Tax

2004-12-03

C.N.RAMACHANDRAN NAIR, K.S.RADHAKRISHNAN

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Judgment :- Radhakrishnan, J. Assessment years relate to 1990-1991 and 1991-1992 respectively. When the matter came up for admission this court framed the following questions of law. 1) Whether the Appellate Tribunal was justified in sustaining the gross profit addition for the assessment year 1991-92 amounting to Rs. 87,277/- by enhancing the gross profit from 3.98% to 4.5% when there was no reason stated by the assessing officer for treating the declared profit as low? 2) Whether the Appellate Tribunal is justified in its view that the revenue authorities cannot be found fault in regard to the estimate of gross profit at 4.5% for 1991-92, when there is absolutely no material or basis given either for rejecting the declared gross profit and for estimating the gross profits at 4.5%? Counsel appearing for the Revenue submitted that no question of law arises for consideration in these cases. 2. Order of the assessing authority would indicate that survey under section 133A was conducted in the business premises of the assessee. Assessee had not filed any return of income for almost ten years. Therefore notice under Section 148 was served with the previous approval of the Joint Commissioner of Income tax. Return was filed only on 15.3.2000 declaring total income of Rs.25,250/-. Return was processed under section 143 (1) and notice under Section 143 (2) was issued. Assessing authority noticed that assessee was doing wholesale business in liquor and on scrutiny of the P & L account, it is seen that G.P. adopted by the assessee is only 3.98% which was too low. Assessing authority therefore adopted gross profit @ 4.5%. Total turnover was Rs.1,70,23,277, 4.5% of Rs.1,70,23,277/- comes to Rs.7,66,047/- resulting in an addition of Rs.87,277/-. Aggrieved by the said order assessee took up the matter in appeal before the Appellate Assistant Commissioner. Common order was passed by the Commissioner in respect of the year 1991-92 and rest of the assessment years. Commissioner rejected the appeal and held as follows: “In my view the gross profit rate shown by the appellant in all the five years had discussed above (supra) is definitely low in the type of business being carried out by the appellant of the liquor business. The enhancement of the gross profit rate to 4.5% for 3 years and 7% for two years is just and reasonable. The enhancement of the gross profit rate to 4.5% for 3 years and 7% for two years is just and reasonable. It is not a case before me of the appellant neither in the grounds of appeal nor in statement of facts and not so also written submissions that defects free accounts has been maintained by the appellant. In the type of business being carried out by the appellant it is certain and definite that accounts are being always rejected by the A.O. The non co-operation at the appellate state and not divulging any more information over and above VDIS is purposeful and suitable to the appellant against the interest of revenue.” Aggrieved by the said order assessee took up the matter in appeal before the Appellate Tribunal with regard to the assessment years 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96 submitted that the Tribunal should have accepted the appellant’s contention that addition made to the gross profit for 1991-92 would amount to “Rs.87,277/- and the same yardstick should have been adopted for the year 1990-91 and 1991-92 as well. The said request was not accepted by the Tribunal and the Tribunal upheld the addition made by the authorities. Counsel appearing for the Department strongly contended that there is no justification in adopting the same standard which was for the year 1990-91. Counsel also made reference to the decisions in CIT v. Maharaja Shree Umeed Mills Ltd. (192 ITR 565 (Raj.), ACIT v. Punjab Machinery works P. Ltd. (2003 (176) Taxation 53) (Trib), CIT v. Gotan Lime Khamij Udyog (256 ITR 243 (Raj.), Vel Metal Industries v. State of Tamil Nadu (1988) 68STC 55 (Mad) and Ratna Café Madras v, State of Madras (1993 (33) STC 39). We find it difficult to accept the contention of the assessee. Taking into consideration the entire facts, the mere fact that Revenue has not filed appeal is not a reason to adopt the same yardstick in respect of the years 1990-1991 and 1991-1992. this is a case where assessee is doing wholesale business in liquor and not filed return. Return was filed only on 15.3.2000 and claimed the benefit of VDIS. Further we also notice that during the previous years asessee has not maintained defect free accounts. this is a case where assessee is doing wholesale business in liquor and not filed return. Return was filed only on 15.3.2000 and claimed the benefit of VDIS. Further we also notice that during the previous years asessee has not maintained defect free accounts. All these factors weighed with the Appellate Tribunal to sustain the order of the assessing authority for the years 1990-91 and 1991-92 which is essentially a question of fact. Though there is some inconsistency in paragraph 4 in the relief portion the order the Tribunal has accepted the order passed by the assessing authority in respect of the assessment year 1990-91 and 1991-92. That being the position we find no illegality in the order of the Tribunal. The appeals are accordingly dismissed.