# M/s Rai Wines Ras Bahar Colony v. The Commissioner Of Income Tax

- **Citation:** (2025) 7 ILRA 633
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-07-25
- **Case number:** Income Tax Appeal No. 395 of 2007
- **Bench:** Shekhar B. Saraf, Praveen Kumar Giri
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-rai-wines-ras-bahar-colony-v-the-commissioner-of-income-tax-53621
- **Pages:** 4

## Headnote

legally correct in sustaining the order of the CIT
(Appeals) while making an enhancement to the
income of the appellant to Rs.13,38,780/- over
and above to the assessed income of the
appellant amounting to Rs.25,63,730/- made by
the Assessing Officer?"

Headnotes
A. Income Tax Law - Income Tax Act,
1961: Rule 5 - 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 some
amount of guess work involved in a best
judgment assessment, and it is the
assessee himself who is to blame as he did
not submit proper accounts. (Para 8)

The Tribunal has come to the finding that it is
undisputed
that
the
assessee
had
not
maintained the cash memos and, therefore, the
sale figures of the assessee could not be
determined in any manner whatsoever. It is
further held that rate of sale per liter had been
determined by the authorities by taking into
view the sales made by the shops in the
adjoining areas. Further, the assessee could not
bring any contrary finding to indicate that the
bulk sale rate was less than the figure decided
by the CIT (Appeals) of Rs. 30.70 per liter.
(Para 6)

The Tribunal held that the estimation of the
sales has not been on the basis of license fee
but on the basis of sales on facts of the
assessee's own case in the immediate preceding
year and no contrary facts have been brought
on record by the assessee. Consequently, the
Tribunal did not interfere with the finding of the
CIT (Appeals). (Para 7)

B. When a best assessment is done, it is
for the assessee to bring on record the
facts that may reveal that the findings are
perverse in nature. In the present case, no
such material has been brought on record to
convince us to dislodge the decision of the CIT
(Appeals) and the Tribunal. (Para 9)

Appeal disposed of. (E-4)

Case Law Cited
634 INDIAN LAW REPORTS ALLAHABAD SERIES
Kachwala Gems Vs. Joint Commissioner of
Income
Tax,
MANU/SC/8797/2006;
2006:INSC:1016; [2007] 288 ITR 10 SC (Para 8)

List of Acts
Income Tax Act, 1961.

List of Keywords
Income
Tax;
Assessment;
enhancement;
accounts.

Appearances for Parties

For Appellant: R.S. Agarwal and Mayank Jain

For Respondent: Ashok Kumar and Gaurav
Mahajan

## Text

7 All. M/s Rai Wines Ras Bahar Colony Vs. The Commissioner Of Income Tax
633
laws cited, in the opinion of the Court, the
genuine hardship shall be seen by the concerned
respondent authority as the petitioner is not
getting benefit of concessional rate of tax under
the Act, in respect of delay, therefore, the
impugned order dated 30.01.2024 passed by the
Principal
Commissioner
of
Income
Tax,
Ghaziabad is quashed and the respondent
authority is directed to condone the delay in
filing Form 10-IC and accept the said Form 10IC. The respondent concerned is further
directed to provide consequential relief to the
petitioner by recomputing its tax liability on the
submission of its ITR by taking into account
Form 10-IC.

22. Accordingly, the writ petition is
allowed.
----------
(2025) 7 ILRA 633
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.07.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE PRAVEEN KUMAR GIRI, J.

Income Tax Appeal No. 395 of 2007

M/s Rai Wines Ras Bahar Colony
 ...Appellant
Versus
The Commissioner Of Income Tax
 ...Respondent

Counsel for the Appellant:
R.S. Agarwal, Mayank Jain

Counsel for the Respondent:
Ashok Kumar, Gaurav Mahajan

Issue for consideration
Whether, on the facts and circumstances of the
case, the Income Tax Appellate tribunal was
legally correct in sustaining the order of the CIT
(Appeals) while making an enhancement to the
income of the appellant to Rs.13,38,780/- over
and above to the assessed income of the
appellant amounting to Rs.25,63,730/- made by
the Assessing Officer?"

Headnotes
A. Income Tax Law - Income Tax Act,
1961: Rule 5 - 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 some
amount of guess work involved in a best
judgment assessment, and it is the
assessee himself who is to blame as he did
not submit proper accounts. (Para 8)

The Tribunal has come to the finding that it is
undisputed
that
the
assessee
had
not
maintained the cash memos and, therefore, the
sale figures of the assessee could not be
determined in any manner whatsoever. It is
further held that rate of sale per liter had been
determined by the authorities by taking into
view the sales made by the shops in the
adjoining areas. Further, the assessee could not
bring any contrary finding to indicate that the
bulk sale rate was less than the figure decided
by the CIT (Appeals) of Rs. 30.70 per liter.
(Para 6)

The Tribunal held that the estimation of the
sales has not been on the basis of license fee
but on the basis of sales on facts of the
assessee's own case in the immediate preceding
year and no contrary facts have been brought
on record by the assessee. Consequently, the
Tribunal did not interfere with the finding of the
CIT (Appeals). (Para 7)

B. When a best assessment is done, it is
for the assessee to bring on record the
facts that may reveal that the findings are
perverse in nature. In the present case, no
such material has been brought on record to
convince us to dislodge the decision of the CIT
(Appeals) and the Tribunal. (Para 9)

Appeal disposed of. (E-4)

Case Law Cited
634 INDIAN LAW REPORTS ALLAHABAD SERIES
Kachwala Gems Vs. Joint Commissioner of
Income
Tax,
MANU/SC/8797/2006;
2006:INSC:1016; [2007] 288 ITR 10 SC (Para 8)

List of Acts
Income Tax Act, 1961.

List of Keywords
Income
Tax;
Assessment;
enhancement;
accounts.

Appearances for Parties

For Appellant: R.S. Agarwal and Mayank Jain

For Respondent: Ashok Kumar and Gaurav
Mahajan

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. This is an appeal under Section 260A of the Income Tax Act, 1961. The
substantial question of law admitted by the
High Court is as follows:

"(iv). Whether, on the facts and
circumstances of the case, the Income Tax
Appellate tribunal was legally correct in
sustaining the order of the CIT (Appeals)
while making an enhancement to the
income of the appellant to Rs.13,38,780/-
over and above to the assessed income of
the appellant amounting to Rs.25,63,730/-
made by the Assessing Officer?"

2. We have heard Mr. R.S. Agarwal,
learned counsel for the appellant as well as
Mr. Gaurav Mahajan, learned counsel for
the Income Tax Department.

3. It is to be noted that the findings
recorded by the Commissioner of Income
Tax (Appeals) (hereinafter referred to as
"CIT Appeals") and the Income Tax
Appellate Tribunal are concurrent findings.

4. Mr. Agarwal has argued that the
Tribunal has not gone into the aspect of
enhancement of income by the CIT
(Appeals) in any detail whatsoever and has,
in a simplistic manner, justified the
approach of the CIT (Appeals).

5. However, after perusing the order
passed by the Income Tax Appellate
Tribunal, we find that in paras 3 and 4 of
the order, which are delineated below, the
Tribunal has discussed the issue in detail.
Paras.
3
and
4
are
being
quoted
hereinbelow:

"3. The matter was appealed
before Ld. CIT (Appeals) who examined the
issue in detail after considering the
submissions and material available on
record. Ld. CIT (Appeals) considered the
rate of sales made by different assessee's in
the vicinity. The assessee in the immediate
preceding year had shown the selling rate
of Rs. 31.30 per liter, which was accepted
by the department while finalizing the
assessment of that year. The Id. CIT
(Appeals) considered the matter in the light
of the facts that during the marriage and
festival season, the rates are higher and
towards the closing year will be slightly
lower, but there would not be much
variation in the selling rates. He, therefore,
adopted the selling rate of Rs. 30.70 per
liter as against 39.70, which is lower than
the selling rate of Rs. 31.30 declared by the
assessee in immediate preceding year. Ld.
CIT (Appeals) allowed the margin of 60
paisa per liter to take care of the increase
in quota and contract money in the current
year. Accordingly, he estimated the sale of
country liquor at Rs. 3,85,21,40/- as
against Rs. 3,56,12,160/- shown by the
assessee and Rs. 4,98,13,853/- estimated by
the Assessing Officer.

4. He further observed that rate
of 5% after comparing assessee's case with
7 All. M/s Rai Wines Ras Bahar Colony Vs. The Commissioner Of Income Tax
635
certain other case applied by the Assessing
Officer was not in order. The entire
difference between the estimated sales and
sales shown by the assessee in the books
was required to be added to the net profit
shown by the assessee. This would
automatically give the net profit of the
assessee. If it was done, then the difference
in sales of Rs. 29,08,880/- was to be added
to the net profit of Rs. 9,93,625/-. This
resulted in enhancement of enhancement
notice. He compared the cases where sales
were estimated on basis of license fee. Ld.
CIT (Appeals) after considering the reply
of the assessee and various decisions
referred to in appellate order came to
the conclusion that income of assessee
was to be estimated at Rs. 39,02,510/-
as against estimated by Assessing
Officer at Rs. 25,63,730/-. Thus, he
enhanced
the
income
by
Rs.13,38,780/-."

6. Subsequently, the Tribunal has
come
to
the
finding
that
it
is
undisputed that the assessee had not
maintained the cash memos and,
therefore, the sale figures of the
assessee could not be determined in
any manner whatsoever. It is further
held that rate of sale per liter had been
determined by the authorities by
taking into view the sales made by the
shops in the adjoining areas. The
Tribunal has further held that the
assessee could not bring any contrary
finding to indicate that the bulk sale
rate was less than the figure decided
by the CIT (Appeals) of Rs. 30.70 per
liter.

7. In light of the same, the
Tribunal held that the estimation of
the sales has not been on the basis of
license fee but on the basis of sales on
facts of the assessee's own case in the
immediate preceding year and no
contrary facts have been brought on
record by the assessee. Consequently,
the Tribunal did not interfere with the
finding of the CIT (Appeals).

8. We are also fortified by the
judgment of the Supreme Court in
Kachwala
Gems
Versus
Joint
Commissioner
of
Income
Tax,
reported in [2007] 288 ITR 10 SC,
wherein the Supreme Court has held
as follows:

"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 some amount
of guess work involved in a best
judgment assessment, and it 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."

9. Upon perusal of the Tribunal's
order, we are of the view that when a
best assessment is done, it is for the
assessee to bring on record the facts
that may reveal that the findings are
perverse in nature. In the present case,
no such material has been brought on
record to convince us to dislodge the
decision of the CIT (Appeals) and the
Tribunal.
636 INDIAN LAW REPORTS ALLAHABAD SERIES

10.
Accordingly,
the
substantial
question of law is answered in favour of the
revenue and against the assessee. The
appeal is accordingly disposed of.
----------
(2025) 7 ILRA 636
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.07.2025
BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE PRAVEEN KUMAR GIRI, J.

Writ Tax No. 3026 of 2025

S.S. Enterprises ...Petitioner
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Petitioner:
Suyash Agarwal

Counsel for the Respondents:
C.S.C.

Issue for Consideration
Matter pertains to the imposition of penalty
under S.129(1)(b) of the CGST/UP GST Act,
2017, treating the petitioner as not being the
owner of the goods and the consequent order of
detention and seizure of goods and vehicle
under S.129(1)(a). Petitioner seeks quashing of
order dated 24.06.2025 passed by the Assistant
Commissioner, Commercial Tax, Mobile Unit,
Khatauli, Muzaffarnagar, and release of goods
and vehicle.

Headnotes
GST - UP GST Act, 2017 - S.129(3) -
Central Goods and Services Tax Act (CGST
Act) - Penalty under S.129(1)(a) or (b) -
Grounds for Imposition of penalty - (a) -
Reply by registered email, (b) - Absence of
activity at principal place of business -
Owner of Goods - Presumption - absence
of business activity at principal place of
business not sufficient to presume that
invoice was fake or that petitioner was
not the owner of goods - Opportunity of
Hearing.
Held: Penalty imposed under S.129(1)(b) of the
CGST Act treating the petitioner as not being
the owner of the goods was held unsustainable,
as replying through registered email without
personal appearance is a "tenuous" ground -
Absence of activity at the principal place of
business cannot, by itself, establish that the
invoice was fake or that the petitioner was not
the owner - Petitioner's name appeared in the
invoice and he sought release of the goods,
Clause 6 of Circular No. 76/50/2018-GST
applied, deeming him the owner - Order dated
24.06.2025 was quashed - Authority was
directed to grant an opportunity of hearing and
pass a reasoned order within eight weeks in
accordance with Halder Enterprises (supra) -
Petition disposed of. (Paras 3 to 8) (E-7)

Case Law Cited
M/s Halder Enterprises v. State of U.P. & Ors.,
2024 (2) ADJ 660 (DB)

List of Acts
Constitution of India; Central Goods and
Services Tax Act, 2017; Uttar Pradesh Goods
and Services Tax Act, 2017

List of Keywords
Penalty - Seizure - Owner of Goods - Invoice -
Principal Place of Business - Suspension of
Registration - GST - Opportunity of Hearing -
Reasoned Order - Detention - Email Reply -
Portal - Tenuous Grounds

Case Arising From

Order dated 24.06.2025 passed by the Assistant
Commissioner, Commercial Tax, Mobile Unit,
Khatauli, Muzaffarnagar under Section 129(3) of
the UP GST Act, 2017

Appearances for Parties

Advs. for the Petitioner:
Suyash Agarwal

Advs. for the Respondents:
C.S.C.

(Delivered by Hon'ble Shekhar B. Saraf, J.
&
Hon'ble Praveen Kumar Giri, J.)