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TMI Blog2018 (8) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... ld A. R. of the assessee that net profit for the year under consideration should be estimated at 6% of the gross turnover. We modify the order accordingly. Thus, the grounds of appeal taken by the assessee are partly allowed. - ITA No. 256/CTK/2015 - - - Dated:- 14-8-2018 - SHRI N. S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER For The Assessee : Shri B. N. Behera, AR For The Revenue : Shri Subhendu Datta, DR ORDER Per N . S . Saini, AM This is an appeal filed by the assessee against the order of the CIT(A)-1, Bhubaneswar dated . 3. 2015 for the assessment year 2010- 2011. 2. In Ground Nos. 1 to 5, the grievance of the assessee is that the CIT(A) erred in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further submitted that in the immediately preceding assessment year 2009-2010, the assessee has shown net profit of 5. 15% on gross turnover of ₹ 8, 19, 70, 201. 00 in an assessment made under section 143(3) of the Act vide order dated 7. 9. 2009. Therefore, it was his submission that in the given facts of the assessee s case, estimation of income by applying rate of 8% was excessive and in view of the past accepted results of the net profit at 6% should be applied to determine the income of the impugned assessment year. 6. Ld D. R. on the other hand, supported the orders of lower authorities. 7. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 8% was excessive and in view of the past accepted results of the assessee, the net profit at 6% for the assessment year under consideration be accepted. 10. We find that both the Assessing Officer as well as the CIT(A) has not given any basis for applying the rate of net profit at 8% in estimating the income the year under consideration. It is also trite law that after rejection of book results of the assessee, the Assessing Officer has to determine the income of the assessee on some reasonable basis. Reference is invited to the following decisions on the issue as under: 1 . . As to how the best judgment assessment should be made, the leading decision on the point is the one rendered by the Privy Council in CIT v . Laxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment assessment, no doubt, should arrive at its conclusion without bias and on rational basis . That authority should not be vindictive or capricious . 2 . A best judgment assessment is not by way of penalty of non-compliance as held in Jot Ram Sher Singh v . CIT (1934) 2 ITR 129 (All) . Even though the ITO is not bound by the strict judicial principles, while making the best judgment assessment, he should be guided by rules of equity, justice and good conscience as held in CIT v . Ranichhera Tea Co . Ltd . ( 1994) 207 ITR 979 (Cal) . 3 . As emphasized by the Hon'ble Supreme Court in State of Kerala v . C . Veiukutty (1966) 60 ITR 239 (SC) that though there is an element of guesswork in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emphasized that while making best judgment assessment, the basis of computation should be disclosed by the ITO . In CIT v . Ranichhera Tea Co . Ltd . ( 1994) 207 ITR 979 (Cal), the ITO rejected the loss return and determined the loss at nil on default of the appellant to produce books of account . No basis for computation was disclosed by the ITO . It was held by the Calcutta High Court that the ITO acted illegally . We find that this Bench of the Tribunal in the case of Shreegopal Mundhra vs ITO in ITA No. 437/CTK/2016 for assessment year 2010-2011 order dated 30. 1. 2017 has held as under: I find that the rejection of books of account of the assessee is not under challenge before me . The only submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal in the case of Shreegopal Mundhra (supra) and considering the facts of the present case in its entirety, we are of the considered view that there is force in the arguments of ld A. R. of the assessee that net profit for the year under consideration should be estimated at 6% of the gross turnover. We modify the order accordingly. Thus, the grounds of appeal taken by the assessee are partly allowed. 11. In Ground No. 6 of appeal, the grievance of the assessee is that the CIT(A) erred in not deleting the addition of ₹ 16, 11, 550/-, which is part of business income and for which same is liable to be deleted. 12. We find that the assessee has raised this ground of appeal by way of Ground Nos. 8 11 before the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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