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Shri Sanjay Jain Prop. M/s. Mahaveer Transport Co. Versus The ACIT, Circle- 5, Jaipur

2016 (5) TMI 368 - ITAT JAIPUR

Rejection of books of accounts - estimation of net profit rate - Held that:- The assessee has not maintained proper records and books of account. The assessee's non-explanation of huge expenses around ₹ 1.00 crore and wayside expenses of ₹ 92,01,739/- cannot be taken lightly as they are incurred in cash. It is the burden on the assessee to demonstrate that the expenses claimed by him are corroborated and reasons for non-maintenance of records are duly explained. It has not been demon .....

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facts are distinguishable. It is settled law that estimate based on best judgment assessment due to rejection of books of accounts, should not be ordinarily interfered by appellate authorities, unless there are demonstratively cogent reasons to do so. In this case, the assessee has failed to point out that order of the ld. CIT(A) as to estimation of net profit rate is contrary or excessive. In view thereof, we see no infirmity in the order of the ld. CIT(A) which is upheld. - Decided against ass .....

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ld. AO of invoking the provisions of Section 145(3) of the I.T. Act, 1961. 2. That the ld. CIT(A) has erred further seriously on facts in sustaining the application of the net profit rate of 3.4% on freight receipts, resulting into an addition of ₹ 22,42,558/- 3. That the ld. CIT(A) has erred seriously on facts and in law in not following the earlier decisions of Hon'ble ITAT in the case of the appellant in respect of last three assessment years. 2.1 Brief facts of the case are that th .....

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eficiencies in the books of accounts, which were not made good by the assessee, ld. AO rejected the books of accounts by observing that the assessee himself has accepted deficiencies pointed out in the books of account which included the freight payment of ₹ 8,00,21,464/-. Most of the payments made were in cash. The relevant records were not produced before the AO and even complete vouchers in this behalf were not maintained. The AO observed that the names and address of the recipients of .....

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,739/- incurred through drives as way side expenses were not vouched and could not be produced by the assessee. No log book of trucks was maintained, besides assessee has claimed loading and loading charges for which no vouchers were maintained. In the absence of proper records and vouchers, the AO was of the view that real income of the assessee was not verifiable. Relying on assessee's own case in preceding years, the AO after rejecting books of accounts, worked out the net profit rate of .....

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of the appellant has emphasized the facts of earlier years and application of net profit of 2% as upheld by Hon'ble ITAT in A.Y. 2006-07 and 1.75% in A.Y. 2007-08 and 1.19% in A.Y. 2008-09. However, the facts and circumstances of the current year undergone material change. The position in the current year is as under:- (i) it is seen that freight receipts have been reduced from ₹ 21.48 crores in A.Y. 2007-08 to ₹ 17.26 crores in A.Y. 2008- 09 to ₹ 15.31 crores in the curre .....

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of the appellant in any of the earlier years. The orders of the appellate authorities for earlier years do not set any precedent which is bound to be followed in subsequent years if the facts and circumstances have undergone a material change. Moreover, strictly speaking res judicata does not apply to income tax proceedings as each assessment year being a separate unit, what is decided in one year may not apply in the following year. It was held by Hon'ble Rajasthan High Court in the case o .....

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r (185 ITR 70) held that the decision on one issue in respect of a particular assessment year cannot be held to be conclusive for another assessment year. The principle of res judicata was therefore, held to be not applicable. 4.5 In the case of Commissioner of Sales Tax, Madhya Pradesh vs. H.M. Esufali H.M. Abdulali (90 ITR 271), the Hon'ble Supreme Court while holding that the Assessing Officer was the best judge of the situation and the High Court could not substitute its best judgement f .....

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at it is not the most appropriate basis, the estimate made by the Assessing Officer cannot be disturbed. 4.6 It is seen that the ITAT too has not accepted the book results of the appellant and has varied the rate of net profit from year to year, on the basis of facts of that year. Considering the facts and circumstances in the present case and decisions cited above, the addition of ₹ 22,42,558/- made by the AO is confirmed. Accordingly, this ground of appeal is dismissed . 2.4 The ld. AR o .....

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as not been disputed that there is increase in the turnover of the transportation charges received by the assessee and there being three ITAT orders in assessee's own case, the average net profit of the respective years should be adopted. It is further contended that it has be held by Hon'ble Jurisdictional High Court that past history of the assessee is the best guide for applying a particular rate while assessing income in case books of account are being rejected. Such view was held in .....

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o avoid proper scrutiny and determination of taxable profits. Such clandestine practice of not maintaining proper record from year to year cannot be claimed by the assessee as a matter of right, to be applying average net profit in every year. The income tax law does not contemplate the assessee to be rewarded for continuing default of rejection of books of account indulged in by his own lapses. The assessee must be found to be cleaned handed, he has not given any plausible explanation as to why .....

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is year and earlier years. The assessee has not controverted any of the distinguishing features pointed by ld. CIT(A) in this year as compared to others. Consequently, earlier orders based on pure facts of each year, cannot be held as binding judicial precedents and average net profit cannot be applied in this year. It is settled principle of law that principles of res judicata are not applicable as each assessment year is separate entity of assessment. Since the facts are held to be distinguish .....

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