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2016 (11) TMI 797 - RAJASTHAN HIGH COURTRejection of the books of account - G.P. determination - Held that:- In this case the assessee has shown a turnover of ₹ 116,24,42,199 which was estimated by the Assessing Officer after rejecting the books of account to an amount of ₹ 127,69,28,314 which has now been reduced by the Tribunal to ₹ 120 crore. Be that as it may, even on a turnover of ₹ 116 crore which is as per the assessee himself, the assessee showed a loss of ₹ 2,92,30,610, but neither before the lower authorities nor even before this court the learned counsel for the assessee could justify as to how a loss of almost ₹ 2,92,30,610 was suffered. An assessee has to bring cogent material on record, and prove the reasons for suffering of a loss if the results are not fair or suffers a loss. A genuine loss will always have to be allowed in accordance with law. But we notice that before the three authorities no such evidence, material or reasoning was given about sufferance of loss. Once the Assessing Officer rejects the books of account, applies a particular gross profit rate or/net profit rate, the returned loss goes out of picture, rather it is effaced with what has been applied by the Assessing Officer. Had there been a plausibly reasonable basis of suffering of a genuine loss, possibly the claim of the assessee could have been well justified and reasoned, but in a case like this when admittedly the books of account have been rejected by all the three authorities and even this court found that the learned counsel at the time of arguing the appeal in the first round of litigation in the case of CIT v. Ram Singh (2014 (3) TMI 849 - RAJASTHAN HIGH COURT ), admitted about application of provisions of section 145(3) of the Act, claiming that the loss is required to be allowed, in our view is not proper. To reiterate a point which was already considered by this court about rejecting the books of account under section 145(3) of the Act, is not proper and still learned counsel for the appellants insisted that this court in Ram Singh's case (supra) did not consider this issue. Argument of the learned counsel for the assessee that loss is required to be set off, has no legs to stand, as even otherwise the justification for loss has not been proved by the assessee either before the lower authorities or before this court as to how the assessee would have suffered a loss on a declared turnover of about ₹ 116 crore, particularly in the line in which the assessee is dealing. It is one of the rare cases where we have found that an assessee is declaring such a huge loss when we have come across majority of cases where most of the assessees have declared positive income. In our view, once net profit rate is applied, it takes into consideration the overall trading result, and trading account/profit and loss account as declared, goes out of picture and the resultant figure is the ultimate net income of the assessee. No reason to deviate with the findings of the Tribunal in applying a net profit rate of only 1 per cent. to which we concur with the finding of the fact recorded by the Tribunal, which has also taken into consideration other similarly situated identical cases of liquor traders in the same line as that of the assessee/appellant.
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