2017 (9) TMI 975 - HC - Income Tax

Estimation of turnover - as per Tribunal First Appellate Authority while restricting the gross profit rate at the rate of 9% taken into consideration the overall facts and circumstances of the case - fair and reasonable opportunity availability - Held that - No error of law apparent on the face of the record nor perversity in the order of the Tribunal. The reasoning of the Tribunal s order is not vitiated by the alleged non-consideration of the grievance of the appellant/assessee that fair and reasonable opportunity was denied to it. The Tribunal found from the record that more than adequate and sufficient opportunity was given to produce the records. The estimation had to be done once the assessee was not cooperating. In such circumstances, a substantial relief has already been derived by the appellant/assessee. We do not think that we should reappraise and re-appreciate the same factual materials. We cannot arrive at a different conclusion merely because that would be possible. On the other hand, what we find is that such reappreciation and reappraisal is impermissible in law. More so, when there is no perversity in the findings of the Tribunal. Its view is imminently possible. We do not find any merit in the appeal. It is dismissed.

Summary

Issues:
Challenge to Tribunal's order for Assessment Year 2007-08; Reasonable opportunity for appellant to establish version; Rejection of books of account by Assessing Officer; Estimation of gross profit; Reduction of gross profit by Commissioner of Income Tax (Appeals); Appeal to Tribunal on estimation of gross profit; Tribunal's decision on estimation of turnover; Allegation of denial of fair opportunity to appellant.

Analysis:
The appeal challenges the Tribunal's order for the Assessment Year 2007-08. The appellant asserts that there was no reasonable opportunity provided to establish its version, arising from the peculiarity of its business with a turnover of ?131 crores. The Assessing Officer rejected the books of account, estimating the gross profit at 9.78% compared to 7.43% declared by the appellant. The appellant contends that if given a fair chance, it could demonstrate the estimation's inaccuracy. The resultant addition of ?3,43,51,585 was deemed unjustified, especially when other disallowances were not satisfactorily addressed, necessitating a remand.

The Commissioner of Income Tax (Appeals) reduced the gross profit to 9% from 9.78% but upheld the estimation. The appellant appealed to the Tribunal, seeking a remand similar to other disallowances. However, the Tribunal rejected the appeal on weak grounds. The Tribunal found that the Assessing Officer had provided ample opportunities for the appellant to produce required details, which were not complied with, leading to the estimation under Section 145(3) of the Income Tax Act.

The First Appellate Authority reduced the addition to ?2,06,77,484 after independent scrutiny, resulting in relief of ?1,36,74,101. The Revenue appealed this reduction, but the Tribunal upheld the decision, considering a fair view in estimating the turnover and the increase in appellant's turnover. The Tribunal found no error of law or perversity in its order, stating that adequate opportunities were given to the appellant. The Tribunal's decision was upheld, dismissing the appeal without costs.