M/S. Kachwala Gems, Jaipur v. Joint Commissioner Of Income Tax, Jaipur

Case: M/S. KACHWALA GEMS, JAIPUR versus JOINT COMMISSIONER OF INCOME TAX, JAIPUR [[2006] SUPP. 10 S.C.R. 992] (2006) मेससकछवालाजेम्स, जयपुर बनाम संयुक्तआयकरआयुक्त, जयपुर १४। 2006 दिसम्बर [न्यायमूर्तसएस.बी.र्सन्हाऔरन्यायमूर्तसमाकंडेयकाटजू] आयकर, 1961: अर्िर्नयम िारा 144 - सवसश्रेष्ठर्नर्सयमूलयांकन - करिाताकेखातोंकीपुस्तकोंकोिोषपूर्सबताकरखाररजकरदियाजाताहै - करअर्िकाररयोंनेफजीखरीिकेर्नष्कषसिजसदकए - इसतरहकेर्नष्कषसकोतत्कालअपीलनहींदकयाजासकताहै - कीकोकरनेकेठोसदिएगए - मेंहस्तक्षेपखातोंपुस्तकोंअस्वीकारर्लएकारर्हैंसवोत्तमर्नर्सयमूलयांकनमेंहमेशाएकर्नश्चितमात्रामेंअनुमानलगायाजाताहै, लेदकनआयकरअर्िकाररयोंकीओरसेहस्तक्षेपकीकोईमनमानीनहींहोतीहै। अपीलकतास-करिाताकेबही-खातोंकोिोषपूर्सपायागयाऔरदिखाईगईखरीिकोआकलनअर्िकारीद्वाराफजीमानागया।उन्होंनेतुलनीयमामलोंकेआिारपरआयकरअर्िर्नयमकीिारा 144 केतहत 40% कीिरसेकरिाताकेसकललाभकाआकलनदकया, (अपील) घटाकर 35% श्चजसेआयुक्तद्वाराऔरआयकरअपीलीय 30% करदियागया।न्यायार्िकरर्द्वारा मौजूिाअपीलमेंकरिातानेफजीखरीिऔरबही-खातोंकोखाररजदकएजानेकोचुनौतीिीहै।अपीलकोखाररजकरतेहुए, अिालतनेकहा: 1. फजीखरीिथीयानहीं, यहकाहै, औरयहअपीलहुईतथ्यर्नष्कषसन्यायालयतत्कालमेंनहींकरसकताहै।जहांतकबही-कोदकएजानेकासंबंिहै, आयकरहस्तक्षेपखातोंअस्वीकारप्रार्िकाररयोंद्वाराऐसाकरनेकेर्लएठोसकारर्दिएगएहैंऔरअलगदृष्टिकोर्अपनानेकाकोईकारर्नहींहै। [994 - एफ - जी] 2. इसमेंकोईसंिेहनहींहैदकसंबंर्ितअर्िकाररयोंकोसवोत्तमर्नर्सयमूलयांकनमेंभीआयकाएकईमानिारऔरर्नष्पक्षअनुमानलगानेकीकोर्शशकरनीचादहए, औरपूरीतरहसेमनमानेढंगसेकायसनहींकरनाचादहए, लेदकनइसतरहकेमामलेमेंआवश्यकरूपसेकुछअनुमानलगानेकाकामशार्मलहैऔरयहहैजोिोषीहैउसनेलेखानहींदकयाहै।आयकरस्वयंर्निासररतीक्योंदकउर्चतप्रस्तुतअर्िकाररयोंकीओरसेइसमामलेमेंकोईमनमानीनहींकीगई। [994 - एच; 995 - ए] अपीलीय: 2006 कीअपील 5809।र्सष्टवलक्षेत्रार्िकारर्सष्टवलसंख्या डी.बी.आई.टी.ए. सं. 80/2004 मेंजयपुरबेंच, जयपुरमेंराजस्थानकेर्लएउच्चन्यायालयकेदिनांक25.8.2004 केऔरआिेशसे।अंर्तमर्नर्सय अपीलकतासकीओरसेपंकजजैन, अभयजैनऔरकेसीिुआ। प्तवािीकेर्लएडॉ. ए. ई. चेर्लया, अररजीतप्रसार, बी. वी. बलरामिासऔरवेनंथाकुमारचेर्लया। न्यायालयकार्नर्सयन्यायमूर्तसमाकंडेयकाटजूद्वारासुनायागयाथा अपील की अनुमर्त िी गयी। यहअपील 2004 कीआयकरअपील 80 केदिनांक 25.8.2004 संख्यामेंराजस्थानउच्चन्यायालयकेआक्ेपतर्नर्सयकेश्चखलाफिायरकीगईहै। केवकीलोोोंकोऔरररकॉडसकाअवलोकनदकया।पक्षकारोंसुना मामलेकेएकअपीलकतासकरिाताकीमतीऔरअिसकीमतीकातथ्यसंश्चक्षप्तकम्पासमेंहैं।पत्थरोंकारोबारकरताहै।मूलयांकनकेिौरानकरर्निासरर्अर्िकारीनेकरिाताकेबही-खातोंमेंर्नम्नर्लश्चखतिोषिेखे: 1. करिातानेकरिाताद्वाराकारोबारदकएगएमालकेर्लएकोईमात्रात्मकष्टववरर्/स्टॉकरश्चजस्टरनहींरखाहै। 2. करिाताद्वारादिखाएगएक्लोश्चजंगस्टॉककेमूलयांकनकेआिारकोसत्याष्टपतकरनेकेर्लएररकॉडसयािस्तावेजपरकोईसबूतनहींहै।करिाताबही-खातों, खरीिष्टबलोंऔरष्टबक्रीचालानोोोंकीमििसेभीइसतरहकेष्टववरर्तैयारकरनेमेंसक्षमनहींहै। 3. इसमामलेमेंिारा 145 (3) केप्राविानस्पिरूपसेआकष्टषसतहोतेहैं। 4. 42 लाख (लगभग) कीसीमातकखरीिकीदकसीसंिेहकेनहींरुपयेवास्तष्टवकताष्टबनासाष्टबतहोतीहै। 5. आकलनवषसकेिौरानकरिाताद्वाराघोष्टषत 13.49% कीजीपीिरष्टपछलेमूलयांकनवषोंमेंघोष्टषतसेमेलनहींखातीहै।पररर्ाम 6. इसीतरहकेसामानोंकीस्थानीयष्टबक्रीमेंलगेमैससजेमप्लाजानेआकलनवषस 1997098 केअपनेआकलनसे 35% कीिरकीकी।र्लएमेंस्वेच्छाघोषर्ा 7. मैसस, एककरिाताजोसमानकामकरताहै, लेदकनिड्डाएक्सपोर्टसअन्यवस्तुओंमेंर्नयासतव्यवसायकररहाहै, नेआकलनवषस 1997-98 में 43.8% कीजीपीिर (र्नयासतप्रोत्साहनकेमूलयपरष्टवचारदकएभी) कीकी।ष्टबनाघोषर्ा इसकेबािकरर्निासरर्अर्िकारीनेकरिाताकेबही-खातोंकोखाररजकरदियाऔरउसनेआयकरअर्िर्नयमकीिारा 144 केतहतसवसश्रेष्ठर्नर्सयमूलयांकनकासहारार्लया।आकलनअर्िकारीनेआकलनआिेशमेंकुछतुलनीयमामलोंकाउललेखदकयाऔरउनकामाननाथादककरिाताकेमामलेमेंकमोबेशवहीजोमैससजेमकेमामले, जहांसकललाभ 35.48% केगयाहै।आकलनतथ्यहैंप्लाजामेंहैंरूपमेंर्लयाअर्िकारीनेकरिाताकेसकललाभकाअनुमान 40% केरूपमेंलगाया। आकलनअर्िकारीनेआगेकहादककरिातानेसकललाभकोकमकरनेकेर्लएफजीखरीिदिखाई है। अपील, आयकर (अपील) नेआकलनकेकोबरकराररखा, मेंआयुक्तअर्िकारीअर्िकांशर्नष्कषोंलेदकनसकललाभको 40% सेघटाकर 35% करदिया। आगेकीअपील, नेकोऔरराहतिीथीऔरसकललाभिरकोघटाकर 30% मेंदिब्यूनलर्निासररतीकरदियाथा। करिाताकेवकीलनेहमारेदकयाहैदकआयकरनेगलततरीकेसेकहासमक्षप्रस्तुतअर्िकाररयोंहैदकअपीलकतासनेफजीखरीिदिखाईहै, औरखातोंकीपुस्तकोंकोगलततरीकेसेखाररजकरदियागयाथा। हमारीरायमें, फजीखरीिहुईथीयानहीं, यहतथ्यकार्नष्कषसहै, औरहमइसअपीलमेंउसीमेंनहींकरसकते।जहांतकबही-कोकरनेकासंबंिहै, आयकरहस्तक्षेपखातोंअस्वीकारप्रार्िकाररयोंद्वाराऐसाकरनेकेर्लएठोसकारर्दिएगएहैंऔरहमेंअलगदृष्टिकोर्अपनानेकाकोईकारर्नजरनहींआता। Case: M/S. KACHWALA GEMS, JAIPUR versus JOINT COMMISSIONER OF INCOME TAX, JAIPUR [[2006] SUPP. 10 S.C.R. 992] (2006) A MIS. KACHWALA GEMS, JAIPUR v. JOINT COMMISSIONER OF INCOME TAX, JAIPUR DECEMBER 14. 2006 B (S.B. SINHA AND MARKANDEY KA TJU, JJ.] Income Tax Act, 1961: C . s. I 44-Best judgment assessment-Books of accounts of assessee rejected as being defective-Tax authorities recording finding of bogus purchases-Held, such finding cannot be interfered with in instant appeal-Cogent reasons given for rejection of books of accounts-In best judgment assessment there is always a certain degree of guess work, but there is no arbitrariness on part of income tax authorities warranting interference. D Books of accounts of the appellant-assessee were found defective and the purchases shown were held to be bogus by the Assessing Officer. He assessed assessee's gross profit u/s 144 of Income Tax Act at the rate of 40% on the basis of comparable cases, which was reduced to 35% by Commissioner (Appeals) and further to 30% by Income. Tax Appellate E Tribunal. In the present ap.peal the assessee challenged the finding of bogus purchl;lses and rejection of books of accounts. Dismissing the appeal, the Court F HELD:l. Whether there were bogus purchases or not, is a finding of fact, and this Court cannot interfere with the same in the instant appeal. As regards the rejection of the books of accounts, cogent reasons have been given by the Income Tax Authorities for doing so, and there is no reason to take a different view. [994-F-G] G 2. No doubt, the authorities concerned should try to make an honest and fair estimate of the income even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily some amount of guess work involved in such a case and it is the assessee himself who is to·blame as H KACHWALA GEMS, JAIPUR t•. JOINT COMMNR. OF INCOME TAX, JAIPUR [MARKANDEY KATJU, J. J 993 he did not submit proper accounts. There was no arbitrariness in the instant A case on the part of the Income Tax Authorities. [994-H; 995-A) CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5809 of2006. From the final Judgment and Order dated 25.8.2004 of the High Court of Judicature for Rajashthan ·at Jaipur Bench, Jaipur in D.B. LT.A. No. 80/2004. B Pankaj Jain, Abhay Jain and K.C. Dua for the Appellant. Dr. A.E. Chelliah, Arijit Prasar, B.V. Balaram Das and Venanthakumar chelliah for the Respondent. The Judgment of the Court was delivered by MARKANDEY KAT JU, J. Leave granted. c This appeal has been filed against the impugned judgment of the Rajasthan High Court dated 25.8.2004 in Income Tax Appeal No.80 of2004. D Heard learned counsel for the parties and perused the record. The facts of the case are in a short compass. The appellant assessee deals in precious and semi precious stones. In the course of assessment the Assessing Officer noticed the following defects in the books of accounts of E the assessee : "I. The assessee has not maintained and kept any quantitative details/ stock register for the goods traded in by the assessee. 2. There is no evidence on record or document to verify the basis of F the valuation of the closing stock shown by the assessee. The assessee is not able to prepare such details even with the help of books of accounts maintained, purchase bills & Sale Invoices. 3. Provisions of Section 145(3) are clearly attracted in this case. 4. The genuineness of purchases to the extent ofRs.42 lakhs (approx.) G is not proved without any doubt. 5. The GP rate declared by the assessee at 13.49% during the assessment year is not a match to the result declared by the itself in the previous assessment years. H A 6. Mis. Gem Plaza, engaged in local sales of similar goods declared voluntarily rate of 35% in its assessment for the assessment year 1997098. 7. Mis. Dhadda Exports, another assessee dealing in same items, but doing export business declared GP ra~e of 43.8% (even without considering the value of export incentives) in assessment year 1997-98." Case: M/S. KACHWALA GEMS, JAIPUR versus JOINT COMMISSIONER OF INCOME TAX, JAIPUR [[2006] SUPP. 10 S.C.R. 992] (2006) fHA SUS Ss AHA, HU ,(>? &:z,0 14. 2006 WHES CaH YAS 1961: HAAS 144-HE F EPY SIE UB AE-lATSH @US CUBA SAHET JE CTT PS woad fest WHat’- fs IS aA ace BS nHeEIATW Ca fsa ys - Fe Fay BS। fasta oe urs < Ut MNUGdds'-HSGE HS UY Sane” WS |ot feyrepyt gem woe |।BHS 3Ga'sSHa AAT eo yO |‘3 WHS ad Mae Ut OS 144 t Shs TS BS Uw Bias 40% MU vd aS ats, fAA SotHAod UT wet a 35% ag foes farw।(MRIS) MS MI SNS 30% Sa WHS।canMUST TehAHeSS gest fest VA CU AST Ugeasdin MS yAdtag 2yTfsyt amy fesrear UsHA ats A fas J Ut ypie, a ness BAS AMS Yess A ad. od&J yageadeat:,z' f=g SH aldo.IS Sol J) [994-FG) ?anya Sodl, HaU3 wfoast aAਸadel wdtet J Ea edi foge t Hwa feu FTWuUged Ud os, ugBIdngd SJ 'Sagvd dane fev ATHS AH UT MSHS S'S Mid AHMS fed J ct rye omy oT YBa Ade’ d fa dE dT KSWH SCs Crt sI 3d als Sd MH ad:;J >$O। ਉB At Sot HoH feu Ut 3dsan ‘3S ot for 2S St MMHeS CaHA “fuera [994-“N: 995-et fAeSs UST woarg YSg: Hes MUS [eTEST 5809 U 2006! 3 Ut vifsy fogs 13 ~ragd fst 25.8.2004 8 tt Gu wees 8 fo ost oH fea nud dv, nud feu stat 3.Sh.2. forest 80/20041 | Uda Ho, WS Ho MS AA er Bet ct uniwags 3. 2a deM, MidHls UA, Set YSTH WH US SHsqH' VENT Asad Bel <= f6dg=' t uo yee At fsetedg ats HJa!O cd"‘len, 71. |= 3 fest JT | I wuts J ford ws ote fega Ut ge fogs Ue aHAeS Gu wees fist25.2 2004 feu WHS Can MRIS Sug MHEG2 20041 men THe AST Bet et UTE ws uly ct tarda HHS tsa Jo a Se aun feul Nisags Hien wT HBAS age’ d feu ast WSwg atHst usd feu ct adh HBtaE UT, HBAS “fast SfeH ate Ut Jo [BY SaH feu ctfasg' Pus tu HBS: "1, @HBaE Age’ J Sot Vest Thimr ws gfinr adt J WsagsnHa edeyHea DHE Se MHS eudals feu ae tl HBias aged. | 2. ad odt J fsras ‘SAYS Ae word Ut UAct age Set CASH Ut yetaE U Ut Aeas wt fas Hee fear farr as ct yeas ade’ dil HSE ade Ja J odt Uafayrg ad fad edge Hae Ut Hee ad ufant ey fase oT at gin, udefs WS feag] vos! 3, feenast UNOS T 145(3) Jo AUHe Sa 'S fer feu fs aA 4. 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FT HBASufoard feu dt usids wad w fad ots" PE JSasHa AAS HU few CIdMAaAeado fal35.48% Hide wfgard Is uw gHs STi Ss Ud usar aged wor VP gu fed =“ HAS Bal IS feo WMHES ag ats Hous) 3 feresd Haas Shir Bate ct yeWend, Ud wenn fom ets AS BSTLOX SF 35% Jd Mus feu, fefaeas 5 HBAs 6 dd TIS fest As wetter fer AS Bs 30%&J &0। HOSE U eAIS S WS WINE UH ats J fa oan can witerct Tes sta ows wus:CI wuisags' J fear fom ariet udteed, us fase Cus HS Wes sda oS Guagd.&ੱ$>। We feos feu. ata St ustee Ss HS A Sct 3 SS SA aa ye wet fA feo Tew actMNT OH ads fe Ss Te Jal ad fod J EH Se, nS MT adh Sa args BS SUTSoory। fe vat sg Hes J fa Fa ear fogs U vetae feu Hr Ra oH frat etd tHewuged UI oS, ud CA J ng Sd Sas Ut Jat MoH oH WHS feu eum fogsHBids, WS fl Ju wus wy usias ade J fa de J} CH fre Gd 3d ats Oct Act AHI om feuHHME Sa ot AHS J WS Ae fan dd Gen Stl PHSHS Odi AIST A Hae AStea Jeg yoMAG Old ADO.Set EH 6 Sdrtd fest Wet! Wr UT. MUS Udy ad fest Ajit Singh Case: M/S. KACHWALA GEMS, JAIPUR versus JOINT COMMISSIONER OF INCOME TAX, JAIPUR [[2006] SUPP. 10 S.C.R. 992] (2006) आगेकीअपील, नेकोऔरराहतिीथीऔरसकललाभिरकोघटाकर 30% मेंदिब्यूनलर्निासररतीकरदियाथा। करिाताकेवकीलनेहमारेदकयाहैदकआयकरनेगलततरीकेसेकहासमक्षप्रस्तुतअर्िकाररयोंहैदकअपीलकतासनेफजीखरीिदिखाईहै, औरखातोंकीपुस्तकोंकोगलततरीकेसेखाररजकरदियागयाथा। हमारीरायमें, फजीखरीिहुईथीयानहीं, यहतथ्यकार्नष्कषसहै, औरहमइसअपीलमेंउसीमेंनहींकरसकते।जहांतकबही-कोकरनेकासंबंिहै, आयकरहस्तक्षेपखातोंअस्वीकारप्रार्िकाररयोंद्वाराऐसाकरनेकेर्लएठोसकारर्दिएगएहैंऔरहमेंअलगदृष्टिकोर्अपनानेकाकोईकारर्नजरनहींआता। यहअच्छीतरहसेतयहैदकएकसवोत्तमर्नर्सयमूलयांकनमेंहमेशाएकर्नश्चितदडग्रीकाअनुमानकामहोताहै।इसमेंकोईसंिेहनहींहैदकसंबंर्ितअर्िकाररयोंकोसवोत्तमर्नर्सयमूलयांकनमेंभीआयकाएकईमानिारऔरर्नष्पक्षअनुमानलगानेकीकोर्शशकरनीचादहए, औरपूरीतरहसेमनमानेढंगसेकायसनहींकरनाचादहए, लेदकनसवोत्तमर्नर्सयमूलयांकनमेंआवश्यकरूपसेकुछअनुमानलगानेकाकामशार्मलहै, औरयहर्निासररतीखुिहैजोिोषीहैक्योंदकउसनेउर्चतलेखाप्रस्तुतनहींदकयाहै।हमारीरायमेंवतसमानमामलेमेंआयकरअर्िकाररयोंकीओरसेकोईमनमानीनहींकीगईथी।इसप्रकार, इसअपीलमेंकोईबलनहींहै, औरइसेतिनुसारखाररजकरदियाजाताहै।कोईकीमतनहीं। अपीलखाररज। इलािेओल, एडवोकेट Case: M/S. KACHWALA GEMS, JAIPUR versus JOINT COMMISSIONER OF INCOME TAX, JAIPUR [[2006] SUPP. 10 S.C.R. 992] (2006) H A 6. Mis. Gem Plaza, engaged in local sales of similar goods declared voluntarily rate of 35% in its assessment for the assessment year 1997098. 7. Mis. Dhadda Exports, another assessee dealing in same items, but doing export business declared GP ra~e of 43.8% (even without considering the value of export incentives) in assessment year 1997-98." B Thereafter the books of accounts of the assessee were rejected by the Assessing Officer and he resorted to best judgment assessment under Section 144 of the Income Tax Act. The Assessing Officer in the assessment order C mentioned some comparable cases and was of the view that the case of the assessee is more or less having similar facts as that of Mis. Gem Plaza where the Gross Profit has been taken as 35.48%. The Assessing Officer estimated the Gross Profit of the assessee as 40%. D The Assessing Officer further held that the assessee has shown bogus purchases in order to reduce the Gross Profits. In appeal, the Commissioner of Income Tax (Appeals) upheld most of the findings of the Assessing Officer, but reduced the Gross Profit from 40% to 35%. E . In further appeal, the Tribunal had given further relief to the assessee and reduced the Gross Profit rate to 30%. The counsel for the assessee has submitted before us that the Income Tax Authorities wrongly held that appellant has shown bogus purchases, and F the books of accounts were wrongly rejected. In our opinion, whether there were bogus purchases or not, is a finding of fact, and we cannot interfere with the same in this appeal. As regards the rejection of the books of accounts, cogent reasons have been given by the Income Tax Authoritie!; for doing so, and we see no reason to take a different G view. It is well settled that in a best judgment assessment there is always a certain degree of guess work. No doubt the authorities concerned should try to make an honest and fair estimate of the income even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily H • KACHWALA GEMS, JAIPUR v. JOINT COMMNR. OF INCOME TAX, JAIPUR [MARKANDEY KATJU, J.] 995 some amount of guess work involved in a best judgment assessment, and it A is the assessee himself who is to blame as he did not submit proper accounts. In our opinion there was no arbitrariness in the present case on the part of the Income Tax Authorities. Thus, there is no force in this appeal, and it is dismissed accordingly. No costs. Appeal dismissed. B RP.