TMI Blog2003 (7) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... -In this appeal preferred under section 260A of the Income-tax Act, 1961 (for brevity "the Act"), the Revenue has called in question the penetrability of the order passed by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), in I.T.A. No. 243/Ind of 1997 dated January 25, 1999. The facts as have been depicted are that the respondent-assessee's firm carries on business of liquor contract. For the assessment year 1993-94, the assessee was handling Sehore Group, Ashta Group and Doraha Group of shops. It filed the return disclosing income of Rs. 98,245 which was the profit as per the profit and loss account after allowing interest and remuneration to partners. The profit prior to allowing of interest and remuneration was Rs. 3,89,525 which was said to be supported by the certificate issued by the competent authority of the Excise Department. As per P-5 certificate for the three groups, the profit worked out to Rs. 3,89,525. As observed in the assessment order the assessee did not maintain shop wise accounts and no cash memos were produced and, therefore, the sale price mentioned in P-5 certificate could not be subjected to verification. The expenses mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal's order dated October 21, 1981, in the case of Ramanad and Company. The N.P. rate upheld by the Commissioner of Income-tax (Appeals) in the assessment year 1983-84 was 3.42 per cent. (c) The learned Income-tax Appellate Tribunal, Indore Bench, vide their order dated February 18, 1993, in the case of Dilip Kumar Shivhare for the assessment year 1988-89 have upheld a N.P. rate of 3 per cent. as reasonable. (d) The learned Income-tax Appellate Tribunal, Indore Bench, in the case of the appellant for the assessment year 1984-85 have upheld a N. P. rate of 13 per cent. shown by the appellant as reasonable. 3.2 Considering the various factors, it is held that it shall be reasonable to estimate sales at two times of licence fees and applying a N.P. rate of 3 per cent. on the said estimated sales. By this method, the net profit of the appellant during the year is worked out at Rs. 14,40,000 (3 per cent. of Rs. 4.80 crores). The appellant shall therefore get a relief of Rs. 15,61,246 (30,01,246-14,40,000) during the year." Being dissatisfied, the assessee preferred an appeal before the Tribunal which in its order in paragraph 2 expressed the view as under: "2. During the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s including the accounts for branches were properly maintained in the head office and the shop-wise details were also available in the books of the assessee. Even the quantitative details were available in the books of account. As far as sales are concerned the same were duly supported by a statement in Form No. P-5 issued by the State Excise authorities. It is pur forth that a written note of the submissions was filed before the appellate authority stating in detail the method of estimating the income on the basis of licence fees. It is put forth that the Tribunal has followed its own decision passed in the earlier years which have been brought on record as annexures R 3 and R 4, a perusal of which would go to show that the assessee has been maintaining accounts by following a consistent method of accounts for the past several years and when the accounts maintained by following such methods were accepted on the earlier occasions, the Tribunal set aside such order and particularly the method of estimating the sales on the basis of licence fees and then applying the net profit rate. The Tribunal had found, as a matter of fact, that the book result on the basis of the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel has drawn our attention to the earlier orders which have been brought on record to show how the approach was made and how the obtaining factual matrix was relevant for the said assessment year. It is urged by him that the approach could have been different, had a detailed discussion been adverted to by the Tribunal. To bolster his submission he has placed reliance on the decisions rendered in the cases of Awadesh Pratap Singh Abdul Rehman v. CIT [1994] 210 ITR 406 (All) and CIT v. Bhadra Enterprises (No.2) [1997] 228 ITR 717 (Ker). Mr. Choudhary, learned counsel for the respondent, sounding a contra note, has contended that when the Tribunal has followed its own previous decision in respect of the self-same assessee on the self-same facts it cannot be said that there is a perversity of approach. It is urged by him that the colossal complaint made by the Revenue that the order of the Tribunal is a cryptic one has no legs to stand upon inasmuch as the Tribunal on many an earlier occasion dealt with similar issues and based its orders on sound and cogent reasons germane to the issue. It is contended by him that the consistency has to be maintained and when a particular metho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 717 (Ker), highlighted that in the aforesaid case the Income-tax Officer after rejecting the books of account had estimated the income. The High Court held that the Tribunal was wrong in observing that the Income-tax Officer did not reject the books of account but made certain disallowance of expenses because of the absence of vouchers. He has pointed out that the High Court of Kerala in the aforesaid case has recorded a finding that the observation of the Tribunal can be categorised to be one where material has been ignored and the court in reference proceedings under section 256 of the Act can interfere. Learned counsel also commended us to a Division Bench decision of the Allahabad High Court rendered in the case of Awadhesh Pratap Singh Abdul Rehman [1994] 210 ITR 406, wherein the Bench while dealing with the concept of rejection of books of account held as under: "...that in the instant case, the account books were rejected because admittedly no stock register was maintained nor were the sales found verifiable in the absence of cash memo. The vouchers of expenses were also not forthcoming and the income returned was ridiculously low as compared to the exorbitant turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistency the Revenue could not be permitted to rake up stale issues merely because the scope of appeal is wider than reference. Mr. Choudhary has also commended us to a Division Bench decision of Gauhati High Court rendered in the case of CIT v. Doom Dooma India Ltd. [1993] 200 ITR 496, wherein the Bench while dealing with the concept of section 145 of the Act has held as under: "It is for the assessee to adopt any recognised method of accounting for his business. The income shall be computed in accordance with the method of accounting regularly employed by the assessee. In other words, it is open to the assessee to opt for such method of accounting as he deems reasonable and appropriate. He may opt to adopt the manufacturing cost price method or the market price method provided the method is followed in regard to both the opening stock and the closing stock. It is not open to him to adopt one method for valuing the opening stock and a different method for valuing the closing stock so as to intentionally suppress the income derived or derivable in the particular previous year. Even where an assessee has adopted a particular method for a period of years, there is no provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced reliance on the decision rendered in the case of Jayantilal Kishorilal v. CIT [1985] 154 ITR 821 by the Division Bench of this court. The Bench was considering certificates issued by the Excise official regarding loss and in that context it held that the same constituted primary evidence in respect of loss certificates having not been disputed by the Department. In that context their Lordships expressed the opinion that the onus on the assessee to prove loss stood discharged. In the case of CIT v. Lakhani Footwear Ltd. [2001] 248 ITR 701, the High Court of Punjab and Haryana came to opine that the additional reason for not finding the substantial question of law in appeal was that the Revenue did not challenge the orders passed by the Tribunal for the earlier assessment years in which similar relief was granted to the assessee. In the case of CIT v. Saddruddin Hussain [2003] 263 ITR 677 (Raj), the High Court of Rajasthan came to hold that when the assessee had produced the relevant books of account but had not produced the sale vouchers the Assessing Officer was not justified in invoking the provisions under section 145(2) of the Act. The heart of the matter is whether the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty bottles the assessee was entitled to recover the same from the customers and a separate account should have been kept, but as the same had not been kept the assessee was liable to be assessed as per the P-5 certificate. Before the Tribunal it was contended that the charges for bottles and sealing charges are not separately recovered by the assessee and the Revenue authorities erred in holding otherwise. It was further contended that in the earlier years, the contract to sell the liquor was obtained by Gendalal Rai (Individual) and the net profit disclosed was less than three per cent. and the same was accepted by the Department. In the years under consideration the net profit disclosed by the assessee was higher and, therefore, there was no reason to reject the book results. It was put forth that the assessee had to incur expenses more than as shown in the statement under the P-5 certificate was accepted in the earlier years, i.e., for the assessment year 1983-84. On an appeal being preferred the appellate authority set aside the order of the Assessing Officer and remitted the matter to him with certain directions. He had not enhanced the income nor any direction was issued to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner in the assessee-firm. A comparative chart of the net profit disclosed by Shri Gendalal Rai for the assessment years 1976-77 to 1980-81 has been filed at page 17 of the compilation. The net profit earned by that individual varies from 2.23 per cent. to 2.56 per cent. The net profit disclosed by the assessee-firm during the years under consideration is higher than the net profit of that individual. For that reason also, we are of the opinion that the addition made by the Revenue authorities is not justified." Now we shall proceed to deal with the order passed for the assessment year 1987-88. For the said year the assessee filed a return declaring net loss of Rs. 35,174 on the basis of the books of account which were duly audited. During the course of assessment it was observed by the Assessing Officer that the assessee had not maintained any books of account for its 21 shops at various places and there was no document relating to the individual shops. In view of this the Assessing Officer invoked the jurisdiction under section 145(2) of the Act and asked the assessee to produce P-5 certificate for estimating his gross profit. Eventually, he determined the income of Rs. 6,02,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has placed reliance on the decision rendered in the case of Jayantilal Kishorilal [1985] 154 ITR 821 (MP). On a perusal of the aforesaid decision it is perceptible that the P-5 certificate was accepted by the Tribunal. It is quite perceptible that the assessee has been maintaining the accounts for the past several years and he has not maintained the accounts shop wise. The Tribunal on earlier orders found that the tax documents were well comparable and the P-5 certificate was issued by the Excise authorities. It is submitted by Mr. Arya that in the earlier years, the P-5 statement was not disputed but in the present case it is disputed by the Department. A mere dispute, in our considered view, will not give rise or confer jurisdiction on the Assessing Officer to reject the books of account. On a perusal of the assessment order we find that the Assessing Officer has catalogued similar grounds and rejected the books of account which were, in the earlier years, accepted by the Tribunal. The grounds enumerated by the Assessing Officer are that: (i) no books of account are maintained; (ii) the information has been submitted by the assessee to the Excise authorities and, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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