The Commissioner of income Tax vs Avinash Chawla and Company

This is Revenue''s Appeal u/s 260A of the Income Tax Act, 1961 calling in question tenability of an order passed by Income Tax Appellate Tribunal on 13.4.2012 in the matter of permitting certain deduction to the respondent.

Respondent assessee is a firm and had submitted return of income on 29.10.2007 showing a total income of Rs. 22,29,453/-. The matter was taken up in scrutiny and it was found that assessee is engaged in retail sale of Indian made foreign liquor in the District of Balaghat, Bhopal and Raisen and for the year in question certain sales and profits was shown. After taking note of all the circumstances, the Assessing Officer invoke the provisions of Section 145(3) and applying the profit rate of 3% on the estimated sale of Rs. 22,01,74,560/-. The net profit was worked at Rs. 6,60,537/-. Appeals were filed and in an appeal the net profit was worked at Rs. 1.77% of the sale and a sum of Rs. 41,75,784/- was deleted. Challenging this deletion, this appeal has been filed and the only ground raised is that the Tribunal committed error in calculating the profit at 1.77% against 1.43% as assessed by the Assessing Officer and further as the sales were not supported by respective voucher the Assessing Officer disbelieved the books of account which question has been interfered with by the Tribunal. On the ground that Tribunal has unnecessarily interfered into the matter, this appeal is filed.

Having heard learned counsel for the parties and on a perusal of the record it is seen that the Tribunal has found that the Assessing Officer has disbelieved the Account book submitted by the assessee mainly on the ground that sales are not supported by proper vouchers. However, it is found by the Tribunal that the sales are controlled and regulated by Excise Department and as there is no discrepancy in the stock registered maintained and the Excise Department did not find any discrepancy, learned Assessing Officer committed an error in disbelieving the Account book only on the ground that sales vouchers has not proper. The Tribunal dealt with the matter in the following manner:-

Since the quantity of the liquor is regulated by the Excise Department and no discrepancy in stock or quantitative details was found by the Assessing Officer, non maintenance of sales voucher could not alone be a basis to reject the books of accounts. It is also noticed in this case that the appellant had shown net profit of 1.77% which was claimed by the appellant to be reasonable considering the prevailing rate in the trade of country liquor and IMFL. It may also be noted that it is not possible to have constant gross profit or net profit in a trade. Since no material was brought on record to show that the sales were made outside the books of accounts of the appellant or the amount of sale was understated, the sales shown by the appellant cannot be disturbed. I am in agreement with the submission of the appellant that non issuing of cash memo is a general practice in the line of trade and is generally an accepted and prevalent practice. It may be noted that absence of cash memo in a given situation like liquor trade may not per se lead to an interference that the accounts are incorrect or incomplete. Here in the case of appellant, the Assessing Officer had not pointed out any defect or deficiency in the books of accounts and therefore, there was no sufficient ground with the Assessing Officer for invoking provisions u/s. 145(3) of the I.T. Act. Since provisions of Section 145(3) of the I.T. Act are not applicable in this case and the books of accounts have not been validly rejected, the Assessing Officer was not justified in estimating the sales at a higher figure and applying a higher net profit than declared by the appellant.

(Emphasis Supplied)

Keeping in view the aforesaid findings recorded by the Tribunal and finding the approach of the Tribunal to be a reasonable one, we see no substantial question of law involved in the matter warranting reconsideration.

Appeal is therefore, dismissed.