COMMISSIONER OF INCOME TAX Vs. AISWRYA TRADING COMPANY

JUDGEMENT

(1.) HEARD learned senior counsel appearing for the appellant and learned counsel appearing for the respondent assessee.

(2.) THE order under challenge is for the asst. yr. 1994 -95. The assessee was engaged in Abkari business. During the previous year relevant for the assessment year, the assessee had licence to carry on Arrack business in 33 arrack shops and toddy business in 6 toddy shops. The assessee's accounts were not creditworthy and were rejected. In fact, original assessment itself was set aside and remanded by the Tribunal. Order under challenge arises from assessment completed after one round of remand. In fact, in first appeal, the first appellate authority though without issuing specific notice enhanced income, on second appeal by the assessee, the Tribunal though accepted rejection of books of account estimated income based on quantity of Arrack sold by the assessee. The Tribunal has relied on earlier order in the case of the assessee and similar cases of some other Abkari licencees.

(3.) THE contention of the Revenue is that the Tribunal committed a major error in accepting the accounts pertaining to the quantity of Arrack sold by the assessee. We are in complete agreement with this argument because after rejecting books of account for want of creditworthiness, the Tribunal has no justification to accept the accounts with regard to the quantity of Arrack sold. In fact, on going though the orders we do not find that any of the authorities has considered the relevant materials for estimation of income after rejection of books of account. An assessee, who has paid compounding fee on various occasions for unaccounted sale of Arrack cannot in the first place canvas for acceptance of books of account. Moreover, this is a case where the assessee has conceded sale of Arrack through toddy shops. Obviously, the assessee cannot legally account the said transaction as it is in violation of licence condition warranting even cancellation of licence besides prosecution. In fact, it is common knowledge that the major liability for the assessee in Abkari business is the Kist paid for obtaining the licence. None of the authorities has considered the Kist, sales -tax, Abkari welfare fund dues, etc. paid which are liabilities incurred by the assessee to carry on the business. There was no difficulty to estimate the turnover and profit by taking into account the cost involved and by providing reasonable margin. We are of the view that after rejecting books of account of the assessee, which in this case is inevitable the Tribunal should have estimated profit by taking into account cost involved, volume and turnover of business estimated, etc. The Tribunal's order is illegal and untenable because after upholding rejection of accounts it accepted quantity of Arrack from the accounts for the estimation of profit. The assessment for each year is separate and therefore, there was no justification for the Tribunal to estimate income based on the pattern of assessment for another year. We, therefore, set aside the order of the Tribunal and remand the case back to the Tribunal for deciding the matter afresh after hearing the parties. We make it clear that the Tribunal being the final fact finding authority should estimate the income on rationale basis and since the assessment relates to 1994 -95, unnecessary remand should be avoided to achieve finality in the matter. The Income -tax appeal is disposed of as above.