TMI Blog2014 (3) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... nonspeaking, unreasoned, arbitrary and whimsical, and there is no option except to remand the matter back to the ITAT to re-visit the issue afresh de-novo - All the orders passed by the ITAT, wherein appeals (Schedule-A) have been filed either by the revenue or by the assessees cannot be sustained in the eyes of law and are set aside to be decided afresh and de-novo in accordance with law – Decided in favour of Revenue. - DB Income Tax Appeal No. 117/2004 and 244, 254 and 293 of 2005 - - - Dated:- 21-1-2014 - Ajay Rastogi And J. K. Ranka,JJ. For the Petitioner : Mr. Sameer Jain, Mrs. Parintoo jain, Mr. R. B. Mathur, Mr. Anuroop Singhi for, Mr. J. K. Singhi For the Respondent : Mr. R. P. Garg, Mr. P. K. Kasliwal, Mr. Prakul Khurana, Mr. Naresh Gupta, Mr. Anurag Kalavatiya, Mr. Mahendra Gargiya JUDGMENT By The Court 1. These Income Tax Appeals u/Sec. 260A of the Income Tax Act, (for short, IT Act') are directed against the orders of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, 'ITAT'). Most of the appeals have been preferred by the revenue while in some of the cases, the assessees have also chosen to file appeals as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale License, Rules, 1982 under exclusive privilege system for different places. In some of the cases, the assessees had formed Association Of Persons (AOP) and obtained license/contract to sell the liquor as aforesaid exclusively. The licenses were obtained by successful bidders and other than these licensees, no other person was permitted to sale the liquor which is a prohibited commodity. 4. In the State of Rajasthan contracts for wholesale and retail sale of liquor are awarded separately by the Excise Commissioner for a fiscal year after obtaining tenders from the registered contractors and it comes somewhere in the month of January/February of the preceding fiscal year for contract of the next financial year and by and large, the business begins from 1st of April and ends by 31st of March of the next year. 5. By and large, the revenue district is divided into various groups of shops, known as liquor group after combining two or more tehsils or areas of tehsils of a district. While in retail sale of particular liquor group of shops can only operate and for wholesale: sale of liquor is awarded to a licensee for whole of the Rajasthan. In some cases, the liquor contract is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to produce the details of sale of bottles and bardana which too was not provided and a lumpsum amount was credited on account of such sale. Details of purchases, being regulated and as per the guidelines of the Excise Department, were produced but sale vouchers, have not been produced for verification. The Assessing Officer was of the view that in the absence of sale vouchers, the assessees are at liberty to charge selling price as per their own sweet will and since the assessees had monopoly and have exclusive jurisdiction to sale goods in that area/district, could charge any amount. What amount was actually charged by the assessees was not known since sales are not open to verification. The AO was of the view that in view of the deficiency the books of accounts are liable to be rejected u/s 145(3) of the IT Act. 8. It was the claim of the assessees that all the purchases are vouched, detailed and verifiable and they have produced the relevant purchase vouchers/permits of the purchase of the liquor, but in so far as the sale bills are concerned, it was submitted that since the quantum of liquor is so small, in the case of IMCL, the same is being sold in pouches which co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... past history and decided the appeals but by and large without much of discussion orders have been passed. 13. It will be appropriate to quote the observation of the CIT Appeals made in the case of asseessee M/s. Ram Singh Party for the assessment year 1995-96 dt.13.9.1996 which reads ad infra- That the book results of the appellant cannot be relied upon is not disputed. Considering the book results of the appellant, during this year as compared to the earlier year, I feel that an addition to the extent of Rs.1 lac will be justified. The appellant will get a relief of Rs.11,35,929/-. In effect, the appeal is partly allowed . 14. Against the order of CIT(A), revenue has preferred appeal before ITAT and in some of the cases, the assessees have also chosen to file appeal and in some cases, cross-objections were also filed. 15. The ITAT, after hearing the parties, agreed with the contention as to rejection of the books of accounts under Section 145(3) of the Act and in some cases, even the counsels for the assessees admitted that provisions of Section 145 are applicable. However, in so far as the addition on account of quantum, the ITAT, did not adopt a particular yard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has brought adequate material on record to justify the additions. Following Table may be perused to highlight the point:- DB ITA No. Assessment Year Sale of IMCL Sale Of IMFL Beer Total Sale Income as per Assessee (Return Income) Addition made by A.O Addition sustained by CIT (A) Addition sustained by ITAT 236/2005 1996-97 3,26,95,853/- 2,53,90,736/- 5,80,86,589/- 1,64,693/- 7,26,520/- 75,000/- 75,000/- 218/2005 1997-98 1,50,68,031/- 50,488/- 9,55,289/- 1,00,000/- 3,00,000/- 254/2005 1997-98 8,09,03,720/- 4,75,011/- 7,00,000/- 50,000/- 2,00,000/- 24/2008 1998-99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their cases, relied upon the judgments in the case of CIT Madras Vs. Mahalakshmi Textile Mills Ltd.: 66 ITR 710(SC); CIT Vs. Gotan Lime Khanij Ugyog: 256 ITR 243 (Raj.); CIT Vs. Jewels Emporium: (2004) 186 CTR 464 (Raj.); Kansara Bearing P. Ltd. Vs. ACIT: 270 ITR 235 (Raj.); Malapani House of Stones Vs. CIT: 264 ITR 764 and CIT Vs. Dr. AP Bahal: 322 ITR 71 (Raj.). 24. We have carefully considered the arguments advanced and have perused the impugned orders and material on record. As regards rejection of books of accounts, cogent reasons have been assigned by all the three Income-tax Authorities and we see no reason to take a different view. It is well settled that in a best judgment assessment there is always a certain degree of guess work. The authorities concerned should make a honest and fair estimate of the income even in a best judgment assessment and should not act arbitrarily. It is equally true that assessee is himself to be blamed as he did not submit proper accounts. 25. It is no doubt true that it was the duty of the assessee to place all facts truthfully before the assessing authority and if he fails to do his duty, he cannot be allowed to call upon the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority. Therefore, the law applicable to the proceedings before the subordinate or original authority is continued to be played before the appellate authority. 29. It is true that proceedings before the CIT (Appeals) are considered to be an extension of the initial assessment proceeding. Therefore apart from the powers specifically vested in the CIT (A), the CIT (A) is empowered to make further enquiry as he thinks fit or may direct the AO to make further enquiry and submit report thereof. In fact the power of the CIT (A) is co-extensive with the power of AO. He can do what the AO can do or could have done in the assessment proceedings. 30. The CIT (A) may confirm, reduce, enhance or annul the assessment. The CIT (A) while making an order in writing is required to state the facts of the case, the points for determination, the decision thereon as well as the reasoning underlying the decision. Thus, he is in fact required to pass a speaking order. In absence of reasonable verification by CIT (A) obviously based on appreciation of material on record, the very purpose of legislation in providing appeal before the Appellate Tribunal (second appellate) will remain empty forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XXXIV of Code of Criminal Procedure. The ITAT, being a judicial body, while exercising judicial powers under the statute, is not empowered to employ its jurisdiction arbitrarily. Whatever it does, must be done in consonance with the sound judicial principles and in accordance with accepted doctrine applicable to judicial bodies. Any appeal against the order of the ITAT involving only a substantial question of law can be filed by either of the parties before the High Court, In the case, where no substantial question of law is involved, then order passed by the ITAT attains finality. Therefore, onerous duty is casted on the Tribunal to pass speaking, reasonable and orders shorn of any arbitrariness. 35. It would be appropriate to quote few orders passed by the ITAT. In the case of CIT Vs. Ram Singh Party (DB ITA 117/2004) the ITAT passed order in the following terms:- The solitary grievance in both the appeals is related to trading addition made on account of country liquor by applying section 145. The AO made the addition of Rs.11,89,764/-. But the same was reduced by the CIT(A) to Rs.1,50,000/-. By following the earlier decisions of the Tribunal, we are of the view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ADDITION SUSTAINED BY THE CIT (A) ADDITION SUSTAINED BY THE ITAT 308/JP/2003 Rs. 4848300/- Rs. 200000/- Rs. 1000000/- 309/JP/2003 Rs. 45981187/- Rs. 200000/- Rs. 8000000/- 789/JP/2003 Rs. 30356401/- Rs. 500000/- Rs. 7000000/- 310/JP/2003 Rs. 3529450/- Rs. 200000/- Rs. 1000000/- 311/JP/2003 Rs. 35761582/- Rs. 200000/- Rs. 7500000/- 790/JP/2003 Rs. 7614428/- Rs. 100000/- Rs. 1500000/- 375/JP/2003 Rs. 34865660/- Rs. 200000/- Rs. 1000000/- 374/JP/2003 Rs. 2534180/- Rs. 200000/- Rs. 500000/- 38. On perusal of the above, orders it as apparent and patent that the ITAT has not even recorded the arguments advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The Hon'ble Apex Court in the case of Kranti Associates (P) Ltd. Vs. Masood Ahmed Khan: (2010)9 SCC 496, while dealing with the requirement of passing reasoned order by an authority whether administrative, quasi-judicial or judicial, has laid down as under:- a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons in support of its conclusions. c. Insistence on recording of reasons is meant to serve the wider principle of justice, that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. g. Reasons facilitate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in (2012) 347 ITR 491, 499:- We cannot avoid observing that of late the quality of orders that are come out from the Tribunal in exercise of its appellate power under section 256 of the Act are found to be wanting and in many respect and many a times the orders are very prefecture, even nonspeaking orders and has no correlation to the fact situation that prevails in a given case. We also notice that the members of the Tribunal have developed an unhealthy habit of quoting totally unrelated judgments which are not applicable at all to the facts of the case, to pass orders not otherwise sustainable on facts or in law. We strongly deprecate such a tendency on the part of the members of the Tribunal, which is quite naturally a professional Tribunal comprised of expert members, one member from the Revenue side and another member from the accounting side, with considerable experience in their respective fields and to whom we can attribute expertise. We feel sorry that the confidence posed by the Legislature is not being justified by passing orders that are outcome from the Tribunal now-a-days. It is high time the method of recruitment to the Tribunal is also reviewed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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