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Issues:
Appeal against Commissioner of Income-tax order, Reopening of assessment under section 147, Application of section 44AD for income estimation, Validity of income estimation without books of account, Reopening assessment without proper justification. Analysis: 1. The appeals and cross-objections were filed against the order of the Commissioner of Income-tax. The assessees, road contractors, estimated their income at 9% of gross receipts, which was initially accepted by the Assessing Officer under section 143(1)(a). However, the Assessing Officer later reopened the assessments under section 147, citing that the income offered was less than 8% of the turnover, and no books of account were maintained. 2. The Departmental Representative argued that in the absence of maintained books of account, the Assessing Officer can estimate the income guided by section 44AD, even if the turnover exceeds Rs. 40 lakhs. The representative emphasized the need for upholding the reassessment under section 147, citing legal precedents supporting estimation when turnover is suppressed. 3. The assessee's counsel contended that the income was consistently estimated in previous and subsequent years, and the Assessing Officer had no basis to reopen the assessments merely to adjust the percentage of net profit declared. The counsel cited legal judgments emphasizing the necessity of a valid basis for estimating income and allowing deductions like depreciation and interest on borrowed capital. 4. The Tribunal analyzed the arguments and legal precedents presented by both parties. It emphasized that the Assessing Officer must prove the inaccuracy or incompleteness of the income offered by the assessee when estimating income without maintained books of account. The Tribunal highlighted the importance of following CBDT Circulars and legal precedents in estimating income and allowing deductions like depreciation and interest. 5. The Tribunal concluded that the reassessment based on the difference between 8% of turnover and the income offered by the assessee was not valid. It held that the reassessment was not initiated to tax escaped income but to apply a different percentage of income, which was impermissible in reassessment proceedings. Consequently, the reassessment was set aside, and the appeals were dismissed while allowing the cross-objections.
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