2012 (11) TMI 1300 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition on account of suppressed yield u/s 143(3) r.w.s. 254 of IT Act for A.Y. 2005-06.

Summary:
The appeal was filed by the Revenue challenging the deletion of an addition of Rs. 38,93,695 made by the Assessing Officer (AO) on account of suppressed yield for the assessment year 2005-06. The Tribunal noted that in a previous assessment year, the issue had been restored back to the AO by the ITAT "B" Bench Ahmedabad for deciding the estimation of profits after rejecting book results. The AO, in the impugned order, adopted the "yield method" to estimate income by comparing the yield of the assessee for the current year with past years. The AO concluded that the income should be estimated by applying the average yield of polished diamonds, with a 1% difference. However, the Commissioner of Income Tax (Appeals) held that the AO had exceeded jurisdiction by adopting the "yield method" instead of following the directions of the Tribunal to confront comparable cases before adopting the GP rate.

The Tribunal agreed with the CIT(A) that the AO had not followed the directions of the Tribunal given in the previous order. The Tribunal emphasized that the AO was expected to reassess the income as per the Tribunal's directions and proceed with the assessment within those parameters. By deviating from the prescribed method and adopting the "yield method," the AO exceeded its jurisdiction. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision of the CIT(A) to delete the addition on account of suppressed yield.