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TMI Blog2016 (5) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year are unjustified. Consequently, the nature of inference leads to believe that in this year the severity and nature of defects in the books of account are different than earlier years. We thus find merit in the contentions of the ld. DR that principles of res judicata do not apply to ITAT proceedings and principles of consistency are also not applicable as facts are distinguishable. It is settled law that estimate based on best judgment assessment due to rejection of books of accounts, should not be ordinarily interfered by appellate authorities, unless there are demonstratively cogent reasons to do so. In this case, the assessee has failed to point out that order of the ld. CIT(A) as to estimation of net profit rate is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect profits. In the impugned year, the assessee declared turnover of ₹ 15,31,53,579/- and net profit rate of 1.94% thereon. Finding various discrepancies and deficiencies in the books of accounts, which were not made good by the assessee, ld. AO rejected the books of accounts by observing that the assessee himself has accepted deficiencies pointed out in the books of account which included the freight payment of ₹ 8,00,21,464/-. Most of the payments made were in cash. The relevant records were not produced before the AO and even complete vouchers in this behalf were not maintained. The AO observed that the names and address of the recipients of such cash transportation charges were also not maintained. Thus assessee's freigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of net profit of 2% as upheld by Hon'ble ITAT in A.Y. 2006-07 and 1.75% in A.Y. 2007-08 and 1.19% in A.Y. 2008-09. However, the facts and circumstances of the current year undergone material change. The position in the current year is as under:- (i) it is seen that freight receipts have been reduced from ₹ 21.48 crores in A.Y. 2007-08 to ₹ 17.26 crores in A.Y. 2008- 09 to ₹ 15.31 crores in the current year. (ii) A large part of the expenditure in the form of freight payment of ₹ 8 crores, repairs and maintenance of ₹ 1,05,90,161/- , trip expenses of ₹ 92,01,739/- , tyre expenses of ₹ 59,76,562/- are not amendable to verification, out of turnover of ₹ 15,31,53,579/- which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .M. Esufali H.M. Abdulali (90 ITR 271), the Hon'ble Supreme Court while holding that the Assessing Officer was the best judge of the situation and the High Court could not substitute its best judgement for that of the assessing authority, held that in the case of best judgement assessments, the Courts will have to first see the accounts maintained by the assessee were rightly rejected as unreliable. If they come to the conclusion that they were rightly rejected, the next question that arises for consideration is whether the basis adopted in estimating the turnover has reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis even though the Courts may think that it is not the most appropriate b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the average net profit of the respective years should be adopted. It is further contended that it has be held by Hon'ble Jurisdictional High Court that past history of the assessee is the best guide for applying a particular rate while assessing income in case books of account are being rejected. Such view was held in the case of CIT vs. Saddruddin Hussain, (2003) 263 ITR 677 and Inani Marbles, 175 Taxman 56 by the Hon'ble Rajasthan High Court. Keeping in view the said judgements the addition so made by the AO may kindly be deleted. 2.5 The ld. DR on the other hand contends that:- (i) The assessee deliberately does not maintain proper books of account and proper records and on or other reasons gets the books of account rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar is separate entity of assessment. Since the facts are held to be distinguishable in this year, principle of consistency is also not applicable. The assessee has failed to demonstrate that distinguishing features pointed out by the ld. CIT(A) are in any way are unjustified. The ld. DR thus relied on the order of the ld. CIT(A). 2.6 We have heard the rival contentions and perused the materials available on record. We find merit in the contentions of the ld. DR that the assessee has not maintained proper records and books of account. The assessee's non-explanation of huge expenses around ₹ 1.00 crore and wayside expenses of ₹ 92,01,739/- cannot be taken lightly as they are incurred in cash. It is the burden on the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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