1994 (2) TMI 106 - AT - Income Tax

Assessment Order, Capital Gains, Interest Payable To Assessee, Mistake Apparent From Record, Rectification Of Mistakes, Rectification Proceedings

Summary

Issues:
1. Condonation of delay in filing an appeal for the assessment year 1983-84.
2. Estimation of net profit for the assessment year 1984-85 in a civil contractor's case.

Detailed Analysis:
1. Condonation of Delay:
The appeal for the assessment year 1983-84 pertained to the delay of 30 days in filing the appeal, which the appellant attributed to the delay in the Chartered Accountant's office. The Chartered Accountant filed an affidavit explaining that the delay was due to staff problems in his office and that the appellant was not responsible for it. The CIT(A) refused to condone the delay, finding the explanation insufficient. The appellant cited the Supreme Court's decision in Mrs. Sandhya Rani Sarkar's case and Collector, Land Acquisition v. Mst. Katiji to argue for a liberal approach in condoning the delay. The tribunal held that the CIT(A) should have adopted a liberal approach, considering the Chartered Accountant's affidavit and the absence of negligence on the appellant's part. The tribunal set aside the CIT(A)'s order and directed to entertain and decide the appeal on merits.

2. Estimation of Net Profit:
For the assessment year 1984-85, the appellant, a civil contractor, contested the estimation of net profit at 12% of gross receipts by the Assessing Officer, without a separate deduction for depreciation. The CIT(A) upheld the estimation based on the appellant's profit disclosure in the succeeding year. The tribunal, after hearing both parties, estimated the net profit at 11.5% of the receipts of approximately Rs. 25 lakhs. The tribunal considered the appellant's turnover, experience gain, and the need for separate deduction for depreciation due to varying nature of contracts. It directed the Assessing Officer to quantify the correct amount of depreciation and granted a separate deduction for depreciation, emphasizing the importance of uniform estimation of profit.

In conclusion, the tribunal allowed the appeal for the assessment year 1983-84 and partly allowed the appeal for the assessment year 1984-85, emphasizing the importance of a liberal approach in condoning delay and ensuring a fair estimation of net profit in civil contractor cases.