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2016 (11) TMI 797 - RAJASTHAN HIGH COURT

2016 (11) TMI 797 - RAJASTHAN HIGH COURT - [2016] 388 ITR 259 - Rejection 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 .....

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aterial 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 .....

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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 o .....

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te 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. - D. B. Income Tax Appeal Nos. 210 of 2015, 174 and 175 of 2014 - Dated:- 29-7-2016 - M. N. Bhandari And J. K. Ranka, JJ. For the App .....

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y take into consideration the facts of the admitted appeal, namely, DB ITA No. 210 of 2015, as identical questions are involved, for the sake of convenience. The following questions were admitted by this court : "(i) Whether the learned Income-tax authorities below were justified in making/sustaining the concomitant of the rejection of the books of account under section 145(3) in view of the ratio laid down by this hon'ble court in case of CIT v. Gotan Lime Khanij Udhyog [2002] 256 ITR .....

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common order. This is second round of litigation. 3. Though we will be considering the facts from DBITA 210 of 2015, however, we give herein a comparative chart of the trading account in all the three appeals after examining the record of the appeals : D.B ITA Sales declared by the assessee Estimated sales by the AO Return of Income assessed by the AO Income by the CIT(A) Income by 210/2015 116,24,42,199 127,69,28,314 2,92,30,610 (Loss), remanded by High Court to ITAT (22.1.2014). ITAT estimated .....

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may briefly refer to the facts in the first round of litigation that the assessee declared a turnover of ₹ 116,24,42,199, however, declared loss at ₹ 2,92,30,610. The Assessing Officer after rejecting the books of account, estimated the turnover as aforesaid and made a trading addition of ₹ 8,52,55,512. On an appeal by the assessee before the Commissioner of Income-tax (Appeals), resulted into reduction of the trading addition. On a further appeal by the assessee as well as the .....

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court in the case of CIT v. Ram Singh [2014] 363 ITR 417 (Raj), quashed the orders of the Tribunal and remanded the matter to the Tribunal to revisit the issue afresh, de novo in accordance with the guidelines referred to in the judgment. Pursuant thereto, the Tribunal has passed orders in all the three appeals and have passed orders taking into account facts and material and after taking into consideration the arguments of both sides, which is assailed herein. 5. Learned counsel for the appella .....

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to consideration by the Tribunal while applying of a particular rate or making of an addition. It has been vehemently contended that the assessee had declared a loss of ₹ 2,92,30,610 and at least the same ought to have been allowed when the loss had been proved and was in accordance with law. 6. Per contra, learned counsel for the Revenue contended that the order of the Tribunal is just and proper and the Tribunal has taken into consideration several other cases while applying a particular .....

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tage of rate was applied. He thus supported the orders of the Tribunal. 7. We have heard learned counsel for the parties and taken into consideration the impugned orders as well as the orders passed by the Tribunal in the first round as well as the orders of lower authorities. 8. 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 .....

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rs 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. 9. Be that as it may, 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 .....

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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. 10. This court, while deciding the appeals in bunch of cases, namely Chaturbhuj Manoj Kumar v. CIT DBITA No. 684 of 2008 (reported in [2016] 388 ITR 194 (Raj)), vide order of even date, has not .....

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order. The learned counsel for the appellants has not been able to justify how even 1 per cent. net profit is excessive or unreasonable. 11. We may also notice that the 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 &# .....

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ome of the assessee. 12. We find 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. 13. In DBITA No. 174 of 2014 on a turnover of almost ₹ 4. 36 crore, the assessee only declared an income of ₹ 2,32,516, which .....

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ions. (d) Population mix of a particular area i.e., urban as well as rural. (e) Arrangements amongst various wine contractors. (f) Experience and availability of funds with the members of the association of persons. (g) Political conditions, natural prosperity or calamity. (h) Tourists revolving the public in a particular area. and has found as a finding of fact that in so far as country liquor is concerned, the income estimated by the Assessing Officer was in accordance with other assessees who .....

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dopt the same reasoning as in the other appeals referred to hereinbefore of Chaturbhuj Manoj Kumar (supra). 13.1 In the connected case, which is a sister concern of the same party, i.e., DBITA No. 175 of 2014, also on a turnover of almost ₹ 4. 01 crore, a meager income of ₹ 2,04,390 which had no apparent basis, has been shown and since the books of account were rejected, the Assessing Officer after taking into consideration identical cases of liquor traders decided by the Tribunal ap .....

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