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TMI Blog2023 (6) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... uri Neo Rampal, Sr. Standing counsel for the respondent. ORDER Ritu Bahri, J. The present appeal has been filed under Section 260-A of the Income Tax Act, 1961 (for short 'Act 1961') seeking setting aside of order dated 28.03.2013 (A-3) passed by Income Tax Appellate Tribunal, Chandigarh Bench 'E' passed in ITA-158/Del/2012 dated 22.02.2013 for the assessment year 2008-2009. The case in brief is that the appellant is engaged in business of manufacturing and trading of Rice and trading of paddy. The assessee/appellant filed the return of income on 06.10.2008 (A-1) at an amount of Rs.10,32,186/-, which was processed and proceedings under Section 143 (2) of Act 1961 were conducted. The assessment was completed under Section 143 (3) for the assessment year 2007-2008 on 07.09.2009 (A-2). On 29.11.2010, the proceedings were completed and addition of Rs.1,01,016/- was made and keeping in view the provisions of Section 40 (a) (ia) of the Act 1961 payment of Rs.1,01,016/- made to Satake India Engg (P) Ltd on account of AMC was disallowed. Further Rs.56,650/- incurred on purchase of UPS held to be capitalized and depreciation was ordered to be charged on it. Rs.7650/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utiny that the addition was to be made. No justification have been pointed out by learned counsel for the revenue, the addition of Rs.2,50,000/- maintained by the Tribunal, cannot be sustained. On the other hand, learned counsel appearing for the revenue has referred to a judgment of this Court in a case of S.P. Construction vs. Income Tax Officer, Ward 1 (4), Chandigarh, (2016) 68 taxmann.com 334 wherein on 24.07.2009, a search was conducted and notice under Section 148 was issued to the appellant . In response to this notice, the assessee filed its return. However, the assessee did not produce supporting vouchers for expenses, details of purchases and stocks and copies of partners' bank accounts and the Assessing Officer could not verify various details. The Assessing Officer thus adopted net rate of 10 per cent on gross receipts on estimate basis which was reduced by the Tribunal to 9 per cent. The appellant filed appeal and the same was dismissed. In para No. 5 and 6, it has been observed as under:- 5. A perusal of the impugned order passed by the Tribunal shows that after considering the overall facts and circumstances of the case, the Tribunal had estimated the rate of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le copies of the bank account of the partners and, therefore, the Assessing Officer could not have verified the various payments received by the firm from bankers or payment taken directly from the customer by the partners. The assessee has shown wages payable of Rs. 9,38,500/- which were paid on 5.7.2007 and normally labour will not work for period of three months without receiving their payments. The assessee also did not file the details of purchases in the format given by the Assessing Officer. The assessee was having sundry creditors of Rs. 75,69,505/- and did not file any confirmation even in cases where sundry creditors exceed Rs. 1 lakh. Even regarding sundry debtors no confirmation was filed and as noted by the Assessing Officer even in the balance sheet the names of the sundry debtors to the extent of Rs. 1,66,00,000/- were not shown. No details of opening and closing stock were filed. The Assessing Officer has discussed and summarized this issue at page 5 in the following para:- "From the above discussion, it is clear that purchases made by the assessee are not subject to any verification. Sundry creditors and debtors are also not subject to any verification. Wages, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is neither unbridled nor unguided as it must be guided by reason i.e. should be preceded by reasons which, in turn, should be preceded by a perceptible process of reasoning based upon due consideration of all relevant facts. However, authorities under the Act appear to construe their jurisdiction as a discretion to apply a thump rule dependent almost entirely on the whims of a particular officer. The discretion to determine a net profit rate must necessarily be exercised on the basis of relevant factors which we shall enumerate but before doing so, would clarify that these factors are neither exhaustive nor a final word on relevant factors that may be considered while determining the net profit rate. A few significant factors are the past tax history of the assessee, if available, assessment order that may have been passed and accepted by the department, the nature of the assessee's business, an appraisal of the value of the contract, prevailing economic conditions vis a vis the assessee's business, the price of raw material, labour etc. the rice in price index as notified by the Central Government from time to time if applicable and if the Assessing Officer proceeds t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of learned CIT(A) and estimate the net profit at 9%." 6. The estimation of gross profit rate at 9% could not be held to be arbitrary or unreasonable warranting interference by this Court in the facts and circumstances of the case. The view adopted by the Tribunal is a plausible view and we find no error therein. The judgments cited by the learned counsel for the appellant assessee in ITA No.269 of 2014, decided on 20.11.2014 (Telelinks vs. Commissioner of Income Tax, Bathinda), ITA No.428 of 2014 (Jangir Singh Mahli vs. Commissioner Central Tax, Patiala, decided on 6.5.2015, Aggarwal Engineering Co. vs. Assistant Commissioner of Income Tax, (2011) 336 ITR 332 (P&H) and M/s Deluxe Roadlines Pvt. Limited vs. the Deputy Commissioner of Income Tax, ITA No.213 of 2014 decided on 14.10.2014 (Bangalore) being based on individual fact situation involved therein do not come to the rescue of the appellant. Consequently, no substantial question of law arises. The appeal stands dismissed." Heard learned counsel for the parties at length. The above case of S.P. Construction (supra) is directly applicable to the facts of the present case, as in the present case as well, the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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