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Non-compliance of section 142(3) provisions and validity of assessment order under section 143(3). Analysis: The High Court of Kerala was presented with a question regarding the non-compliance of section 142(3) provisions and the validity of an assessment order under section 143(3) for the assessment year 1965-66. The Income-tax Officer had rejected the books of account of the assessee and made an estimate based on the "normal gross profit rate obtainable in such business." This rate was determined by comparing the profit percentages of two other assessees, referred to as comparable cases. The Appellate Assistant Commissioner upheld the estimate based on the assessee's profit margin of 10% from the previous year, despite the contention that the data collected from comparable cases was not disclosed to the assessee, violating principles of natural justice and section 142(3) of the Income-tax Act. In the subsequent appeal to the Tribunal, the same contention was raised, but the Tribunal did not address it directly. Instead, the Tribunal focused on the justifiability of the profit percentage determined by the Appellate Assistant Commissioner. The Tribunal considered the explanation provided by the assessee for the decrease in gross profit rate for the relevant year and concluded that the explanation was insufficient. The Tribunal sustained the addition based on the assessee's own previous year's profit margin of 10%. The Court had to determine whether the question referred to them truly arose from the Tribunal's order. The Court highlighted the importance of considering a question raised before the Tribunal only if it was necessary for deciding the appeal. Citing precedent, the Court emphasized that a question of law can be deemed to arise from the Tribunal's order only if the consideration of that question was essential for disposing of the appeal. In this case, since the Tribunal's decision was based on other material and not on the specific contention raised by the assessee regarding the undisclosed data from comparable cases, the Court concluded that the question did not truly arise from the Tribunal's order. Ultimately, the Court declined to answer the question referred to them and directed each party to bear their respective costs. The judgment would be sent to the Appellate Tribunal, Cochin Bench for further action.
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