Ita/1753/2009 Of M/S.prkash Automobiles v. The Commissioner Of Income Tax, Kannur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 5TH NOVEMBER 2009 / 14TH KARTHIKA 1931 ITA.No. 1753 of 2009() ---------------------- ITA.213/COCH/2001 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: -------------------- M/S.PRAKASH AUTOMOBILES, KASARAGOD. BY ADV. SRI.C.KOCHUNNY NAIR SRI.S.ARUN RAJ RESPONDENT(S): --------------- THE COMMISSIONER OF INCOME TAX, KANNUR. BY ADV. SRI. JOSE JOSEPH, SC FOR IT DEPT. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05/11/2009 ALONG WITH ITA 1754 TO 1756, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR &V.K. MOHANAN, JJ. -------------------------------------------- I. T. A. No. 1753 to 1756 OF 2009 -------------------------------------------- Dated this the 5th day of November, 2009 JUDGMENT Ramachandran Nair, J. Heard counsel for the appellant and standing counsel for therespondent. We do not find any of the questions raised is a question oflaw, much less any substantial question of law. Assessments involvedare for the assessment years 1994-95 to 1997-98. Even thoughassessee is an automobile dealer and obviously registered under theKGST Act, the assessee maintained the stand for several years that it isnot in the habit of keeping books of accounts. Income tax returns werefiled for all these years on estimation basis by the assessee. Since theassessee has no case that it had maintained books of accounts, it hadno right to challenge the assessment based on estimation basis. In theabsence of books of accounts, the assessing officer is free to conductenquiry and estimate income on a rational basis under Section 144 ofthe I.T. Act. In this case, instead of collecting information, theassessing officer adopted the turnover fixed for the year 1988-89 at Rs. 16 lakhs, which has become final, as the basis for completion ofassessments. He made a progressive addition to the turnover at the rateof Rs. 2 lakhs each for every year and estimated the income at 8% ofthe turnover. CIT (Appeals) was very considerate because he reducedthe addition from Rs. 2 lakhs every year to Rs. 1 lakh for every year.On further appeal, the Tribunal still showed leniency and fixed theturnover at Rs. 15 lakhs for all the years, which is less by Rs. 1 lakhfrom the turnover finally assessed for 1988-89. Even though counselfor the appellant contended that the assessee's business was inautomobile and new generation of vehicles have rendered his businessunviable and there was fall in turnover, we are surprised to note thatstill the assessee did not choose to maintain books of accounts probablybecause it suits them. In our view, it would be virtually impossible fora dearler under the KGST Act to carry on business in automobile spareswithout registration and without maintaining books of accountsbecause goods are brought from outside Keraka, and transported acrossthe State for sale . We see no reason why the assessee could notproduce books of accounts maintained before the income tax authorities. We therefore do not find any justification to interfere withthe orders of the Tribunal. Even though counsel for the appellantsubmitted that for sales tax verification certain books of accounts aremaintained and the same should have been relied on, we do not thinkthere is any merit in this claim because accounts are one and the same,whether it be for sales tax or income tax of the assessee. The assesseeadmittedly does not maintain proper books of accounts. We thereforereject these appeals. (C.N.RAMACHANDRAN NAIR)Judge. (V.K. MOHANAN) Judge. kk