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Issues:
1. Justification of deleting additions under section 145 proviso 2. Validity of best judgment assessment 3. Application of NP and GP rates in assessing income Analysis: 1. The appeal challenged the Tribunal's order deleting additions made under the proviso to section 145 of the Income Tax Act. The assessing officer rejected the books of account due to unvouched retail sales, leading to best judgment assessment. The Commissioner (Appeals) reduced the additions, citing the assessing officer's inappropriate application of NP and GP rates. The Tribunal, however, deleted all additions, emphasizing the lack of material justifying the rates applied. The court found the Tribunal's decision contradictory, as it accepted the results based on rejected turnover without proper evidence, leading to remittance of the case for fresh consideration. 2. The validity of the best judgment assessment was a key issue. The assessing officer resorted to best judgment due to unvouched retail sales, resulting in additions to the assessee's income. While the Commissioner (Appeals) upheld the rejection of books, he criticized the inappropriate application of NP and GP rates. The Tribunal, in contrast, deleted all additions, highlighting the assessing officer's failure to provide sufficient material for the rates used. The court, echoing a similar case, emphasized the need for a proper basis for best judgment assessments and remitted the case for reconsideration. 3. The application of NP and GP rates in assessing income from liquor sales was contentious. The assessing officer used NP rate for country liquor and GP rate for Indian made foreign liquor without adjusting allowable expenditures. The Commissioner (Appeals) found the rates inappropriate, leading to reduced additions. The Tribunal, however, deleted all additions, citing the lack of supporting material for the rates applied. The court, drawing parallels with a previous case, emphasized the necessity of a clear basis for such assessments and remanded the case for a fresh decision in accordance with the law.
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