2010 (4) TMI 274 - HC - Income Tax

Estimated profit - Books of account were destroyed in flood assessment u/s 143(3) - The assessee-appellant was subjected to survey under Section 133A of the Act and his case was eventually selected for scrutiny. - in the absence of books of account, net profit at the rate of 8% was applied on the contract receipt because the Assessing Officer was not satisfied about the correctness and completeness of the account. - Before the CIT(A), the assessee-appellant was asked for furnishing details of receipts and expenditure based on his bank statements. But the assessee-appellant expressed its inability. The Tribunal has noticed that the assessee through his counsel had admitted and accepted that the net profit on contract payment may be computed by applying the rate of 8% and FDR interest was ordered to be added separately. Held that - The assessee-appellant has conceded through his counsel for addition of profit at the rate of 8% on the income of Rs. 21,12,719/-. There is no permission given by any of the Appellate Court for adducing of additional evidence appeal dismissed

Summary

Issues:
Challenge to assessment order invoking profit rate, Addition of profit at 8%, Availability of additional evidence.

Analysis:
The appeal under Section 260-A of the Income-tax Act, 1961 contested the order passed by the Income Tax Appellate Tribunal regarding the Assessment Year 2005-06. The assessee, a government contractor executing railway contract work, declared income of Rs. 9,73,734/- in the return. The Assessing Officer applied an 8% profit rate on an amount of Rs. 21,12,719/- due to the absence of books of account, as they were reportedly destroyed in a flood. The CIT(A) and the Tribunal upheld this decision. The Tribunal noted the assessee's admission through counsel that profit could be computed at 8% on contract payments and ordered the addition of FDR interest separately. The assessee was unable to provide details based on bank statements. The counsel for the assessee attempted to reopen the case citing provisions of the Act, claiming the possibility of presenting additional evidence.

The Court carefully considered the arguments presented by the counsel and concluded that the appeal lacked merit. The assessee had agreed, through counsel, to the addition of profit at 8% on the specified income. No permission was granted by any Appellate Court to introduce additional evidence that could contradict the Assessing Officer's findings upheld by the previous courts. The decision was based on the admission made by the assessee through counsel, leading to the dismissal of the appeal.

This judgment highlights the importance of evidence and the consequences of admission made during legal proceedings. It underscores the significance of adhering to established findings and the limitations on introducing new evidence after previous decisions have been made.