TMI Blog2019 (5) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the facts that regular books of accounts were maintained which is duly audited and in view of fact no discrepancy in any manner in the quantitative details maintained was found by the AO has held that there was no justification in rejection of books of accounts and application of provisions of Section 145(3). ITAT also held that estimation of sales at higher figures are not justified and held that Net Profit Rate of 1.77% was reasonable. We find that similar type of business has been carried out i.e. sale of liquor. Purchases are not doubted at any stage as they are through Excise Department controlled by the Government. Quantitative details have been filed for all the purchases. Books of accounts are duly audited. Better Net profit rate has been declared i.e. 3.47% as against 3.17% in the immediately preceding financial year. In these given facts and circumstances of the case we find no inconsistency in the well reasoned finding of fact by CIT(A) applying net profit rate of 3.5%. We accordingly confirm the view of Ld. CIT(A) of deleting the addition of suppressed sales and dismiss revenue s Ground No. 1 2. Addition towards undervaluation of closing stock - H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of suppression of sale to ₹ 31,968/- allowing relief of ₹ 3,09,63,422/- without taking into consideration that suppression of sales has been logically derived by AO by taking into consideration the duties on purchases and other factors as mentioned in assessment order. (3) Whether on the facts and in the circumstances of the case, Ld.CIT (A) was justified in deleting the addition of ₹ 13,97,442/- made on account of undervaluation of closing stock without appreciating the fact that huge breakage of bottles is not possible as the assessee has mainly purchased goods in plastic bottles and as such there cannot be breakage of such a large number of bottles and no supporting evidence given by the assessee for the claim. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. ITA No.490/Ind/2017in the case of Shri Jaswinder Singh Oberoi 1.Whether on the facts and in the circumstances of the case, Ld.CIT(A) was justified in not upholding the rejection of books of accounts inspite of specific defects pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the issues and facts raised in these two appeals are same, therefore in order to adjudicate the common issue, we will take up the facts of Smt. Gurucharan Kaur Oberoi (ITA No.489/Ind/17). 5. Brief facts of the case as culled out from the records are that assessee is an individual deriving income from sale and purchase of liquor. Assessee filed her e-return of income declaring income of ₹ 38,94,610/- on 01.10.2013. Case selected for scrutiny and notice u/s 143(2) and 142(1) were duly served. During the course of assessment Ld. A.O observed that the assessee has disclosed the net profit @ 3.4% of the total turnover as against 3.17% shown in the immediately preceding assessment year. On examining the books of accounts as well as the documents placed before him he noticed that various purchases and sale bills were not produced, no regular sale bills are issued which makes the verification of sale difficult. In absence of sale bills Ld. A.O took the basis of MSP (Maximum Sale Price) and MRP (Maximum Retail Price) mentioned on the label of bottles to compute the sales. Quantity of liquor was taken from the document of Excise Department showing the goods purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 174 2800 4,87,200 Beer 149 1000 1,49,000 Total stock of Country Liquor 6,36,200 The total valuation of the closing stock is worked out at ₹ 19,23,761/(6,36,200+12,87,561), while the assessee has shown valuation of ₹ 5,26,319/only. As such the difference of Rs, 13,97,442/- (1923761- 526319) is added to the income of the assessee. 8. Accordingly income assessed at ₹ 3,63,83,850/- after making addition for suppressed sales at ₹ 3,09,95,390/-, addition for under valued closing stock at ₹ 13,97,442/- and addition for excess purchase of ₹ 96,405/-. 9. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded. 10. Now revenue is in appeal before the Tribunal challenging the addition for suppressed sales of ₹ 3,09,63,442/- and for deletion of addition of under valuation of closing stock at ₹ 13,97,442/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehouse as per requirement. The assessee is required to pay for the goods purchased at a fixed rate. (h) On delivery of the goods, 8 is paid as transport fees. (i) The duty payable for basic license fees and the license fees is divided as: 30 for April, May, June; 20 for July, August, September and 25 for next two quarters. 3. During the course of the assessment the assessee filed complete mono-wise details of purchases and sales (attached with the assessment order as Annexure-A). The purchases are all verifiable since they are all made from the Govt. agencies after payment through bank. The necessary tax is collected by the Government supply agencies. For sales the sale bills are not maintained since it is not possible to issue the sale bills in the rush hours. This fact is in existence for all the dealers. The MRP and MSP are printed on the bottles. The sale rate is fixed as per the market condition and the marriage season. The prices are normally lesser in the rainy season and at the time of harvesting. In the village area when the stocks are piled up the same is required to be cleared by selling the liquor below the MSP price, sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discrepancy in the quantitative details of sale and purchases. He further considered the various cases of the Hon'ble Tribunal wherein the NP rate of 1.5 was adopted. In the similar type of cases the rate was adopted by the Ld. CIT(A) at 3.5. The assessee has shown a better profit, as such the Ld. CIT(A) deleted the addition of ₹ 6,16,66,374/-. Regarding the addition of valuation in stock, the Ld. CIT(A) observed that the breakage and shortage is 0.54 which is quite reasonable and he therefore deleted the addition. 6. It is humbly submitted that in this trade of dealing in liquor the assessee is required to pay the fixed amount to the Government by way of license fees. Whether the sales are effected or not the minimum payment is required to be made on a stipulated date. In the mofussil /villages the quantity of the liquor is not easily saleable. The assessee is required to pay the minimum tender price irrespective of the fact whether the sales are effected or not. To minimize the loss the assessee is required to sell the goods below the MSP and clear the stock. This practice is being adopted in this trade by many traders. The assessee has filed instances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arable cases. It is to be mentioned here that in the cases of Naman Traders and Navin Traders, in the A Y.2009-10, the department had estimated the net profit 0f 5% as against 3.76% and 3.1 5% respectively shown by these parties. The facts of the case of these parties are not known. Moreover, from perusal of the assessment order, it transpires that the AO has not conl1'onted similar type of cases to the appellant during the course of assessment proceedings. 4. I .2 Further, the appellant during the course of appeal proceedings, through a written submission has brought to my notice that, the department, in the assessment year 2006-07, had accepted the net profit of 1.94% to 1.80% in most of the cases. It has also been contended that the results of assessment year 2005-06 should not have been compared with the results of other assessment years in the case of appellant. The contention of the appellant has merit. Therefore, prima-facie these are not comparable cases particularly when the estimated rates have been applied by the department. In view of above discussion, it is observed that if the net profit arrived by the AO is consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment of the Ujjain and Dhar about the facts whether the liquor contractor in the area sale liquors below MSP andG if such sale below MSP is found what is the action taken against such contractor and the Excise Department has provided information about violation of such condition in case of one . of the contractor viz Maxima Traders 8hopal Pvt. Ltd. Ujjain, in whose case on coming to know about such irregularity a penalty was imposed, which was later on set aside in appeal by the Commissioner of Excise. Similar information about a dealer in Dhar has also been received from State Excise Department in which case also a nominal penalty of ₹ 10,000/- has been imposed for sale below MSP. Therefore, the appellant s contention is correct that the sale of liquor at the price below MSP is not unusual but the liquor contractors do sale the liquor at the prices below the MSP. In view of this factual and legal position about the practice of liquor contractors of selling liquor below MSP, no allegation about suppression of sales on the ground of recording of sale below MSP could be made by AO without brining on record positive and cogent material to prove beyond doubt that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rejection of books of accounts of the assessee. 4.1.4 Therefore, in view of the above settled position, the rejection of books of accounts in the instant case only on the basis of absence of cash memos is contrary to the judicial opinion. The AO is not justified in estimating the turnover of the appellant on presumptive basis. Net Profit Rate of 4.2 in case of Smt. Gurucharan Kaur Oberoi in appeal no. U-11/2014-15 and 3.56 in appeal no.U- 17/2013-14 was upheld. In case of Ramavtar Jaiswal in appeal no.U-298/2012- 13 for assessment year 2010-11 the CIT(A) Ujjain had applied rate of 3.5%. The appellant during the year under consideration has declared the net profit rate of 3.47%. It will be appropriate to adopt net profit rate @ 3.5% in this year also. Therefore, the net profit of the appellant comes to ₹ 39,45,372/-. The appellant herself declared the net profit at ₹ 39,13,404/-. Therefore, the addition to the extent of ₹ 31,968/(₹ 39,45,372/- _ ₹ 39,13,404/-) is Confirmed. The appellant will get the relief of ₹ 3,09,63,422/-. Therefore, the appeal on this ground is partly allowed 16. We observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO has held that there was no justification in rejection of books of accounts and application of provisions of Section 145(3) of the Act. The ITAT also held that estimation of sales at higher figures are not justified and held that Net Profit Rate of 1.77% was reasonable. 18. Hon ble jurisdictional High court in the case of ACIT v/s Gendalal Hazarilal and Co 263 ITR 679 laid down the ratio that the doctrine of res judicata is not applicable but consistency has to be maintained unless there is a manifest distinguishable feature. 19. Applying this ratio on the facts of the instant case, we find that similar type of business has been carried out i.e. sale of liquor. Purchases are not doubted at any stage as they are through Excise Department controlled by the Government. Quantitative details have been filed for all the purchases. Books of accounts are duly audited. Better Net profit rate has been declared i.e. 3.47% as against 3.17% in the immediately preceding financial year. In these given facts and circumstances of the case we find no inconsistency in the well reasoned finding of fact by Ld. CIT(A) applying net pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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