TMI Blog2011 (5) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances by even date of order (i.e. 19.01.2011) has upheld the net profit rate of 2% on the sales shown by the appellant and therefore, application of net profit rate 3.73% in the impugned assessment year is wholly unjustified. 4. BECAUSE in any case, application of net profit rate at 3.73% on the sales shown by the appellant is highly excessive looking to the fact that the Assessing Officer has himself applied net profit rate of 3% in the impugned assessment year and CIT(A) himself has applied 2% in the case of the appellant for assessment year 1994-95. 5. BECAUSE the order appealed against to the extent of ground raised above, is contrary to the facts, law and principles of Natural Justice. 2. From the above grounds, it is gathered that the only grievance of the assessee in this appeal relates to the confirmation of the addition of ₹ 9,77,250 by applying net profit rate. 3. The facts of the case, in brief, are that the assessee is a partnership firm and derives income from purchase and sale of country liquor. Originally, assessment in this case was completed on total income of ₹ 12,23,750 against returned income of ₹ 5,970. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he I.T.A.T., Agra Bench in the case of Govind Prasad Krishna Kumar vs. JCIT held as under : We have heard both the parties and perused the material available on record. After rejection of books of account, the Assessing officer has to complete the assessment to the best of his judgment in the manner laid down u/s 144 of the Act. However, in the case before us the Assessing Officer has estimated the sales by applying 2.5 times of the bid money relying on the decision of Hon'ble M.P. High Court in the case of Badri Prasad Bhagwan Das Co. (supra). In this case, the purchase price of the liquor was 11.80 per liter and the sales were at ₹ 30/- per litre. The ratio of sales to purchase was 2.5. Thus the estimation of sales was made by multiplying 2.5 to the bid money. Thus, the estimation of sales on the basis of bid money was held to be justified. In the case before us, the information regarding the purchase and sales rates as fixed by the State Government are not available. The ratio of decision of Hon'ble M.P. High Court can be applied for estimation of sales on the basis of purchase and sales price fixed by the State Government. The assessee had purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per litre and thereby multiplying the amount of total purchases, excluding overall heads. This was categorically mentioned in the second limb of the I.T. A.T. order. In case, the sale rate fixed by the State Government for the financial year 1992-93 was not available then the second and third option given by the I.T.A.T. should have been followed. His main plea was that in the case of liquor business existing at that time there was no opening and closing stocks and purchases were fully verifiable quantitywise and also value wise as the purchase rates were fixed by the State Government in the license Fee itself. The only issue which needs to be determined is the sale price which can be determined by taking the average sale price as there is no dispute regarding the quantity of sales made during the year. 5. The ld.CIT(A), after considering the submissions of the assessee, confirmed the action of the AO observing as under : 8. I have carefully considered the facts of the case, material on record and the direction given by the I.T.A.T. vide their order dated 26.10.2007. On the issue of estimate of income from country liquor business, the first and foremost aspect is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouch If monthwise average sale rate as above is applied to over all quantity sold then the sale shown by the appellant at ₹ 2,62,34,427/- is liable to be accepted. 9. Now, comes the question of estimating the net profit rate after taking into consideration all the heads of expenses and also direct cost relating to bid money/license fee etc. The Assessing Officer in the impugned assessment order has applied net profit rate of 4% which can not be said to be excessive looking to the facts and circumstances of the case and also that the sales have been accepted by me as shown by the appellant. If, the rate of 4% is applied on the total sales shown by the appellant then the net profit comes to ₹ 10,49,377/-. However, the Assessing Officer has himself taken the net income from country liquor business at ₹ 9,77,250/-, the same is not disturbed and is accepted to be correct income from such business. Thus, the addition made by the Assessing Officer for ₹ 9,77,250/- is confirmed, as the net profit rate, roughly comes to 3.73% of the total sales which can not be said to be excessive. In the result no relief is called for on this score. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ami Satsang vs.CIT, (1992) 193 ITR 321(S.C.) as under : ` Strictly speaking, res judicata does not apply to income-tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. (i) In the case of CIT vs. J.K.Charitable Trust (2009) 308 ITR 161(S.C.), the Hon'ble Supreme Court held the similar view as under : Where the assessee takes the stand that the Revenue has acted mala fide in not preferring appeal in one case and filing appeal in another case, the assessee has to prove mala fides. There may be certain cases where because of the small amount of revenue involved no appeal is filed. Policy decisions have been taken not to prefer appeal where the revenue involved is below a certain amount. Similarly, where the effect of the decision is revenue neutral there may be no need for preferring the appeal. All ..... X X X X Extracts X X X X X X X X Extracts X X X X
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