D.b. Income Tax Appeal v. M/S. Dipesh Kumar Mankanwar Sidhawat & Party

D.B. INCOME TAX APPEAL NO.139/2006 (CIT, Jodhpur Vs. M/s. Dipesh Kumar Mankanwar Sidhawat & Party)(CIT, Jodhpur Vs. M/s. Dipesh Kumar Mankanwar Sidhawat & Party) Date of order : 12.12.2006 HON'BLE MR. JUSTICE RAJESH BALIAHON'BLE MR. JUSTICE GOPAL KRISHAN VYAS Mr. Sangeet Lodha, for the appellant. Having heard learned counsel for theappellant we are of the opinion that no substantialquestion of law arise for consideration in thisappeal. The respondent-assessee is a liquorcontractor. The assessing officer found that in viewof the non-vouchable sales and many of the expensesclaimed by the assessee, it is not possible to arriveat a fair determination of the taxable income of theassessee from the books of accounts maintained by theassessee and, therefore, rejected the books ofaccounts of assessee and resorted to best judgmentassessment. The assessing officer applied uniform netprofit ratio of 7% on the total sales by disallowingcertain expenses and made certain additions in theincome shown by the assessee. On appeal, the CIT (Appeals) found that theestimate made by the assessing officer cannot be sustained and entire additions made by the assessingofficer were deleted. The Tribunal found that entire deletion madeby CIT (Appeals) was not justified. At the same time,the Tribunal was also of the opinion that applying theuniform Net Profit rate on retail sales of countryliquor, IMFL and beer is not justifiable. In thetotality of the circumstances, the Tribunal sustainedRs.5 Lakhs additions in the income returned by theassessee. We are of the opinion that ultimately theassessment which is being made while resorting to bestjudgment assessment is founded on estimate and thereis bound to be some guess work. Applying net profitrate is not the only method of best judgmentassessment. The Tribunal has considered that assesseehad to pay substantial amount due to short fall inlifting of country liquor and in guarantee money. Incase the same is taken into account, the gross profitrate disclosed by the assessee comes to be higher thanwhat has been disclosed by other persons in the samebusiness. Considering these aspects, instead ofresorting to applying net profit rate, the Tribunalconsidered it just and proper to sustain a lump sumadditions of Rs.5 Lakhs. We may notice that thisCourt in Murlidhar's case has opined that when theunvouched sales becomes a reason for rejections of arun books of accounts, the very same factors cannot bemade the basis of making estimates. In totality ofcircumstances, it cannot be said that the finding isperverse and gives rise to any substantial question oflaw. The appeal fails and is hereby dismissed. (GOPAL KRISHAN VYAS), J. (RAJESH BALIA), J.