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TMI Blog2016 (4) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... ards. The appeal in question relates to the assessment year 2004-05. In the assessment year in question, the books of account of the assessee were rejected and a best judgment assessment was made. The Assessing Officer made the estimate of income from the business of the assessee at 10 per cent. of its gross contract receipts and arrived at the net profit after giving the benefit of partner salary, interest and depreciation according to the table supplied by the petitioner on the gross receipt from civil contract of Rs. 6,75,27,370. The assessed income works out to Rs. 53,81,337 being 7.9 per cent. of the receipt from the said civil contract. The appeal before the Commissioner of Income-tax (Appeal) on the order of the Assessing Officer was dismissed. The similar fate was met with by the further appeal before the Tribunal. 4. The assessee claimed that the income ought to have been 6 per cent. of the gross payment. The ground taken by the assessee that the estimated income of 10 per cent. of the contract value was very high, was sought to be bolstered by filing several orders of the Tribunal with respect to similarly situated Government contractors in which the rate of 6 per cent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om civil contract works at Rs. 5,78,17,423 a final net profit of 2.69 per cent. after all deductions including partner salary, interest and depreciation, was accepted by the Department under section 143(1) of the Income-tax Act. It is also pointed out that in the assessment year 2003-04 again on a comparable receipt of Rs. 7,21,67,037, the income finally determined under section 143(3) of the Act was Rs. 32,20,427 which comes to a mere 4.46 per cent. of the gross receipt. However, in the present year, i.e., assessment year 2004-05 on a total receipt from civil contract Rs. 6,75,27,370, the income finally assessed after giving the benefit of depreciation, interest and partner salary comes to Rs. 53,81,337, i.e., final figure 7.96 per cent. when the net profit of 10 per cent. has been taken. 8. Learned counsel for the appellant submits that although the same trend has continued for the subsequent assessment year also and in the assessment years 2005-06, 2006-07 and 2007-08 the final rate of net profit in assessment under section 143 of the Income-tax Act comes to 3.4, 4.3 and 5.6 per cent. 9. It is, thus, submitted by learned counsel for the appellant that the order of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax authorities, as in making the best judgment assessment the said authorities considered all the available materials and applied their mind and tried their best to come to a correct conclusion. So too, a Division Bench of the Patna High Court in Doma Sahu Kishun Lal Sao v. State of Bihar [1951] 2 STC 37 (Patna) refused to interfere with the best judgment assessment of a Sales Tax Officer as he took every relevant material into consideration, namely, the situation of the shop, the rush of the customers and the stock in the shop and also the estimate made by the Assistant Commissioner in the previous quarters. Under section 12(2)(b) of the Act, power is conferred on the assessing authority in the circumstances mentioned thereunder to assess the dealer to the best of his judgment. The limits of the power are implicit in the expression 'best of his judgment'. Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a 'best judgment assessment.' it shall not be a wild one, but shall have a reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidence, or when the evidence has been misread (see Madan Lal v. Mst. Gopi [1980] 4 SCC 255, Narendra Gopal Vid yarthi v. Rajat Vidyarthi [2009] 3 SCC 287, Commissioner of Customs (Preventive) v. Vijay Dasharath Patel [2007] 4 SCC 118, Metroark Ltd. v. CCE [2004] 12 SCC 505, West Bengal Electricity Regulatory Commission v. CESC Ltd. [2002] 8 SCC 715)." 14. Learned counsel for the Revenue, on the other hand, submits that in matters like the present one the case of each assessee has to be taken on its own facts and another set of model cannot be applied to a different set of model as in the present case. 15. The submission is that the net profit of 6 per cent. in the case of two other civil contractors engaged in the State Government work need not have been applied to the case of the appellant. 16. The further submission of learned counsel for the Revenue is that there is a concurrent finding of facts by all the three authorities and if the authorities have applied their minds then the order ought not to be interfered with by this court. 17. In support of the same, learned counsel for the Income-tax Department relies upon a decision of the Supreme Court as quoted above in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar [1957] 8 STC 770 (SC), which has also been cited with approval in the above case. 19. We have considered the submissions of learned counsel for the parties. 20. It is evident that the dispute, as it appears before us, is on the similar issue as to whether in best judgment assessment, it was open for the Assessing Officer to have taken figure of 10 per cent. merely on the basis of saying that in Government contracts general profit is 10 per cent. without any material in support of the same. 21. As held in the judgments quoted above, it is not necessary for the Assessing Officer to produce materials to show the basis on which he has come to the said conclusion but as repeatedly held by the courts, including the decisions cited above, that the Assessing Officer must be rational and reasonable while assessing the dealer to the best of his judgment and there is an element of guess-work in a best judgment assessment. 22. It has also been held in the judgments relied upon by both the parties that the Assessing Officer must take into consideration the materials which are in his possession, including previous assessment years. It is true that upon the failure of the assessee to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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