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Rajasthan High Court · body

2005 DIGILAW 2437 (RAJ)

CIT-II, Jodhpur v. Meera Devi & Party

2005-09-13

R.S.CHAUHAN

body2005
Judgment Rajesh Balia, J. -Heard learned Counsel for the appellant. In spite of service no one present for the respondents. 2. This appeal is directed against the order of Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur dated 05.06.2003. The substantial question of law framed at the time of admission for consideration in this appeal is as under: Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the additions which has been made after invoking the proviso to Section 145 of the Act and whether the finding of the learned Tribunal is perverse? 3. The facts of present case are that the assessee-respondent is a liquor contractor for wholesale and retail sale for both country liquor and Indian Made Foreign Liquor. The assessee has submitted his return for assessment year 1993-1994 showing his total income as 18,27,180/-as per Profit and Loss Account. 4. During the course of regular assessment, the Assessing Officer found that while purchase of Country Liquor as well as Indian Made Foreign Liquor are duly vouched, the verifiable retail sales remain totally un-vouched, the result shown by the assessee cannot be accepted. He thereafter rejected the books of account and resorted to Section 145 (2) of the Income Tax Act, 1961 and the best Judgment assessment was made. The Assessing Officer made certain additions in the total income from business of Country Liquor as well as Indian Made Foreign Liquor. While assessing the income of the firm, profit and gains for the business of Country Liquor, the Assessing Officer resorted to apply net profit rate on the turnover which he determined on the basis of purchase price of the country liquor by applying the net profit rate. The net profit rate was determined by the Assessing Officer on the basis of net profit shown by a dealer of another area. On the order hand additions in profit and gains from Indian Made Foreign Liquor were made by applying G.P. Rate on total purchase price. However, after applying G.P. rate, no exercise for adjustment of allowable expenditure was made. 5. On appeal, CIT (Appeal) was of the opinion that so far as order of rejection of books of account and resort to best Judgment assessment was concerned, the order of Assessing Officer does not call for interference. However, after applying G.P. rate, no exercise for adjustment of allowable expenditure was made. 5. On appeal, CIT (Appeal) was of the opinion that so far as order of rejection of books of account and resort to best Judgment assessment was concerned, the order of Assessing Officer does not call for interference. However, the CIT (Appeals) was of the opinion that illustration picked up by the Assessing Officer for applying the net profit rate and G.P. rate respectively was not apt and held that additions made in the income declared by the assessee were excessive. He held that the assessees past record itself shows the better basis. He, therefore, gave relief to assessee by reducing the income assessed by the Assessing Officer from both businesses by lump sum amount in each case. 6. On further appeal, the Tribunal deleted entire additions made by the Assessing Officer, though he sustained the order rejecting the books of accounts. It was the obligation of the Assessing Officer to have brought on record cogent and relevant material to justify the application of G.P. rate and N.P. rate applied by him. In absence of any material having been produced by the Assessing Officer the result declared by the Assessee which are better than the previous year ought to have been accepted. 7. The facts of the present case are almost similar to the facts in the case of CIT-II, Jodhpur vs. M/s Sunil Talwar Murlidhar & Party, Jodhpur which was subject matter of D.B. I.T. Appeal No. 48/2004 decided on 30.03.2005. 8. It was noticed by the Court in the decision of D.B. Income Tax Appeal No. 48/2004, CIT -II, Jodhpur vs. M/s Sunil Talwar Murlidhar & Party, Jodhpur that rejection of books of accounts was only on the ground that retail sales were duly vouched and not verifiable and the Assessing Officer had resorted to best Judgment assessment by ignoring the turnover shown by the assessee, the Tribunal has founded its decision on the promise that turnover shown by the assessee could not be accepted and G.P. rates shown on such unacceptable turnover be accepted. Tribunals acceptance of such income on the rejected basis cannot be sustained. Tribunals acceptance of such income on the rejected basis cannot be sustained. The Court was of the opinion: - "In our opinion, on the face of it, it is contradictory in terms that the very foundation on which the books of accounts rejected by the Assessing Officer and which order has been affirmed by the Tribunal, should be taken to be the basis of accepting the assessees results because no material was produced by the Assessing Officer. It is to set at naught the initial presumption which at least shifted the burden on the assessee to prove that results declared by his books of accounts are still correct. The burden of proving exact facts to sustain the additions made on best Judgment with definiteness is to convert best Judgment , which is in the very nature a guess work, to an assessment in accordance with rejected books of account to a definiteness. The Tribunal has failed to consider the undisputed and unquestionable fact on which the Assessing Officer has proceeded to make the assessment, even the fact was not disputed by the assessee that cost price was verifiable for carrying the guess work. Therefore, in our opinion, the decision of the Tribunal in deleting the additions made by the Assessing Officer is reduced by the commissioner cannot be sustained in law." 9. The principle fully governs the facts of the present case also. The Court after considering that no criteria emerges from the order of the Assessing Officer in adopting different basis for best Judgment assessment in the case of Country Liquor and India Made Foreign Liquor and not giving any deductions in the gross profit, the matter requires reconsideration and remitted the case back to the Tribunal for deciding the appeals afresh in accordance with law. 10. Following the aforesaid decision, we allow this appeal. The Judgment of the Tribunal is set aside. The case is remitted back to the Tribunal for deciding afresh in accordance with law. 11. No order as to costs.