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TMI Blog2014 (2) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts and directing him to estimate income at Rs.2,35,996/ - being 5% of net profit on total sales as against loss of Rs.10,93,667/- declared by the Appellant without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.2,35,996/ - is unjustified and hence, the same may be deleted. 2. Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to set off the losses of earlier years against the income, directed by him to be estimated, for the impugned assessment year. 3. The Ld. CIT(A), further, erred in not allowing carry forward of unabsorbed loss of Rs.10,93,667/- incurred by the Appellant for the impugned assessment year without appreciating the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had adopted stand of non-cooperation. The assessee had filed the return for the year under consideration with the registered address falling under his jurisdiction and thus legally bound to comply with all the statutory proceedings initiated in his charge till the request for transfer was fulfilled. The AO further observed that the assessee's request for transfer was received by him on 23.08.2010 and the request was immediately forwarded to the CIT-8, Mumbai who has been the competent authority to pass the necessary orders for transfers of cases. The AO further held that pending such transfer, the assessee could not be adamant that it would not comply with the assessment proceedings pending in his charge. Till the case was transferred a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assumption of income by the AO on the basis of alleged discrepancies was erroneous and not in accordance with the law. He thereafter relying upon various case laws of the Hon'ble Supreme Court as well as Hon'ble High Courts held that the AO had neither provided any basis for making the estimation nor he provided any method of arriving at the figure of income so estimated by him. He further observed that the additions made by the AO were on conjectures and surmises and thus not sustainable in the eyes of law. He further held that an estimation was required to be made in arriving at profit earned by the assessee for the year under consideration. The ld. CIT(A) further noted that the total sales affected by the assessee in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is concerned, we find that such an estimation is quite reasonable. Moreover, the Hon'ble Madras High Court in the case of 'C.Packirisamy vs. ACIT' (2009) 315 ITR 293 (Mad) has held that in case of Best judgment assessment, estimation of net profit at 5% of total sales is in accordance with the established principles. Accordingly, we do not find any infirmity in the order of the ld. CIT(A), so far estimation of the income of the assessee at the rate of 5% of the net profit of total sales is concerned. 7. However, we may observe that the authorities below have not given any finding as to why the earlier year losses should not be allowed to be set off against the income of the relevant assessment year and after set off if the net result is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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