1990 (10) TMI 147 - AT - Income Tax

Summary

Issues:
Cross-appeals by the assessee and the Revenue for asst. yr. 1980-81 and an additional appeal by the assessee for asst. yr. 1981-82. Common issue of contention in all three appeals. Admission of three additional grounds of appeal by the assessee regarding the finding of the ITO, lack of jurisdiction under s. 148, and charging of interest under s. 139(8) and s. 217.

Analysis:
The assessee sought admission of three additional grounds of appeal, challenging the ITO's finding that the books were not lost in a fire, questioning the validity of the assessment made under s. 143(3)/148, and contesting the charging of interest under s. 139(8) and s. 217. The Departmental Representative argued against the admission of these grounds, asserting that the assessee's claims lacked a factual basis. The Tribunal dismissed the first ground as the books were not produced, rejected the second ground on lack of jurisdiction under s. 148 due to the absence of a demand for reasons recorded, and upheld the charging of interest under s. 139(8) and s. 217, citing legislative amendments.

The common issue in the appeals pertained to the margin of profit on tobacco sales by the assessee. The absence of books of accounts was acknowledged, with a fire incident leading to the loss of certain books. The Assessing Officer applied a profit margin rate of 4.5% based on comparable cases. The CIT(A) reduced the margin to 3.5% considering various factors. The assessee argued for a 2% margin, emphasizing the unique circumstances and higher establishment costs. The Tribunal upheld the CIT(A)'s margin rate, finding it reasonable given the lack of verifiable evidence.

Regarding the deletion of cash credit and cash purchases, the Tribunal affirmed the CIT(A)'s decisions. The deletion of cash purchases was justified based on exceptional circumstances. The Tribunal concluded that in the absence of books, estimating a reasonable profit margin was appropriate. The plea for the disallowance of car depreciation for personal use was dismissed as the depreciation was allowed based on business rules. Ultimately, both the assessee's and the Revenue's appeals were dismissed.

In conclusion, the Tribunal addressed the issues raised by the assessee and the Revenue, emphasizing the importance of reasonable estimation in the absence of concrete evidence. The decisions regarding profit margin, cash transactions, and depreciation were upheld based on the circumstances and applicable rules.