Commissioner Of Income Tax, Bikaner v. M/S. Jaimal Ram Kasturi And Partners

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR J U D G M E N T D.B. INCOME TAX APPEAL NO.112/2008 Commissioner of Income Tax, Bikaner vs. M/s. Jaimal Ram Kasturi and Partners Date of Judgment : 15.01.2013 PRESENT HON'BLE MR. JUSTICE DINESH MAHESHWARIHON'BLE MR. JUSTICE ARUN BHANSALI Mr. K.K. Bissa, for the appellant. BY THE COURT (PER HON'BLE BHANSALI, J.): The Revenue has preferred this appeal under Section260-A of the Income Tax Act, 1961 ('the Act') against thejudgment and order dated 03.06.2005 passed by the IncomeTax Appellate Tribunal, Jodhpur Bench, Jodhpur ('the Tribunal')in ITA No.161/JDPR/1998 and CO No.49/05 for the assessmentyear 1993-1994, whereby the Tribunal has dismissed the appealof the Revenue and has allowed the cross-objection of theassessee; and in the result, has deleted in toto the impugnedaddition towards country liquor business of the assessee, asmade by the Assessing Officer ('the AO') in the assessment orderdated 15.03.1996, and as partly retained by the Commissionerof Income Tax (Appeals), Jodhpur ('the CIT(A)') in the orderdated 28.01.1998 as passed in the assessee's appeal. The appeal has been admitted on the following questions of law:- “(1) Whether Tribunal was justified in holding thatbest judgment assessment made by theAssessing Officer is not based on cogent andrelevant criteria?best judgment assessment made by theAssessing Officer is not based on cogent andrelevant criteria? (2) Whether Tribunal was justified in upholding theorder passed by CIT (Appeals) when it heldthat Assessing Officer was not justified inapplying the criteria of comparable cases andtaking into account the past history of theassessee himself?”order passed by CIT (Appeals) when it heldthat Assessing Officer was not justified inapplying the criteria of comparable cases andtaking into account the past history of theassessee himself?” The facts relevant for determination of the questionsinvolved in this appeal are that the assessee is engaged in liquorbusiness and during the period relevant to assessment year1993-1994, the profit of the assessee from country liquorbusiness was assessed at Rs.82,17,507/- as against the declaredprofit of Rs.68,77,277/- by adopting a net profit rate of 11.50%towards the total outgoings (total payment made to Governmentfor lifting goods) as against the declared rate of 8.50% afterrejecting the books of accounts of the assessee, under Section145 of the Act. The profit rate was adopted by the AO by takinginto account the past history of the assessee and comparablecase of one M/s. Ramsaran Trilok Singh & Party, Anoopgarh. Feeling aggrieved, the assessee preferred an appeal beforethe CIT(A), which was partly allowed by the order dated28.01.1998. The CIT(A) though upheld the order of the AO forapplying the provisions of Section 145(2) as the sales of theassessee were not supported by vouchers but, came to the conclusion that the addition made by the AO was in factexcessive, keeping in view the past results of the assessee.While observing that when books of accounts are rejected, pasthistory of the case becomes relevant and the same could be aguide for reasonable profit, the learned CIT(A) restricted theaddition made by the AO to Rs.6,40,230/-. Aggrieved by the aforesaid order dated 28.01.1998, theRevenue preferred an appeal before the Tribunal and theassessee took cross-objections therein. By the impugned order dated 03.06.2005, the Tribunal hasallowed the cross-objections taken by the assessee and hasdismissed the appeal preferred by the Revenue; and, in theresult, has deleted the additions altogether while observing andholding as under :- conclusion that the addition made by the AO was in factexcessive, keeping in view the past results of the assessee.While observing that when books of accounts are rejected, pasthistory of the case becomes relevant and the same could be aguide for reasonable profit, the learned CIT(A) restricted theaddition made by the AO to Rs.6,40,230/-. Aggrieved by the aforesaid order dated 28.01.1998, theRevenue preferred an appeal before the Tribunal and theassessee took cross-objections therein. By the impugned order dated 03.06.2005, the Tribunal hasallowed the cross-objections taken by the assessee and hasdismissed the appeal preferred by the Revenue; and, in theresult, has deleted the additions altogether while observing andholding as under :- “21.Our reasonings with regard to the method ofestimation adopted in the order for A.Y. 1991-92 asabove, would apply, mutatis mutandis the year also. Theslight fall in the N.P. Rate on both methods i.e. on salesand the outgoings stand explained by the fact that theassessee had to pay heavier shortfall amounts in the yearas compared to the last year and that there was steeprise in the turnover. Consequently, the results declaredby the assessee have to be accepted. There is noreasonable basis for adhoc sustenance by Ld. CIT(A). TheGround No.(1) of Department's appeal is dismissed andGround No.(1) of CO is allowed.” This court while considering the appeal filed by the Revenue for the assessment year 1991-1992 being D.B. Income Tax Appeal No.145/2006 (Commissioner of Income Tax, BikanerVs. M/s. Jaimal Ram Kasturi and Partners) held as under:- “In our view, ultimately, the matter had been of puttinga estimate on the profit of the assessee while recordingthe findings on facts. The CIT(A) has given cogenta estimate on the profit of the assessee while recordingthe findings on facts. The CIT(A) has given cogent reason for not endorsing the approach of the AO inmaking assessment with reference to the case of anotherassessee after finding it to be not a directly comparablecase and hence, not a safe guide more particularly, whenassessee's past history was available and there was nomaterial difference in the facts pertaining to the relevantassessment year and the past history year. The CIT(A),even while accepting past history as the relevant basisfor assessment, proceeded to retain a part of theaddition to the tune of Rs.10,65,928/- without cogentand sufficient reason therefor. The Tribunal, therefore,while endorsing the basis adopted by the CIT(A), hasfound no reason to sustain any addition and hence,deleted the addition altogether. In the totality of circumstances, the Tribunalcannot be faulted in accepting the profit rate as declaredby the assessee while not approving the rate as appliedby the AO. The order as passed by the Tribunal does notappear suffering from any perversity or from theapplication of any wrong principle so as to call forinterference. Accordingly and in view of the above, the answer to thequestions formulated in the present case is in theaffirmative i.e. against the revenue and in favour of theassessee. Consequently, the appeal fails and is herebydismissed. No costs. ” The reasons forgoing, on all the relevant and materialaspects, equally apply to the present appeal too, which is basedon self same grounds. Thus, following the decision aforesaid andin the same terms, this appeal also stands dismissed. No costs. RM/ (ARUN BHANSALI)J. (DINESH MAHESHWARI)J.