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TMI Blog2024 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the present case. The findings recorded by the CIT(A) and the ITAT for applying the net profit rate of 8% on the gross receipts under the contract, cannot be said to suffer from any apparent illegality in the facts and circumstances of the present case. Thus, applying the principles of best judgment assessment and the net profit rate, we do not find any illegality in the impugned order of the ITAT. Decided in favour of the assessee. - HON BLE JUSTICE SURYA PRAKASH KESARWANI And HON BLE JUSTICE RAJARSHI BHARADWAJ Appearance: For the Appellant : Mr. Tilak Mitra, Adv. For the Respondent : None 1. Mr. Tilak Mitra, learned standing Counsel appears for the appellant. 2. This appeal was admitted by order dated 28.06.2018 on the following substantial question of law: whether the Commissioner (Appeals) or the Appellate Tribunal have any authority to make a rough-and-ready assessment as to the quantum of tax and what percentage of the net income would be demanded as tax when there are no statutory guidelines in such regard ? 3. Learned Counsel for the revenue/appellant submits that certain purchases disclosed by the assessee were found not variable and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of no reply received from eleven parties pursuant to notices under Section 133 (6) of the Act, 1961: Rs. 4,89,43,299/-. iv) Penalty amount not disallowed by the assessee while computing its income: Rs. 41,047/-. Total Rs. 9,29,49,804/-. 7. The CIT(A)-VI, Kolkata in appeal no. 264/CIT(A)-VI/Cir-6/11-12/Kol disposed of the appeal by a detailed order dated 9.11.2012 while determining the total income at Rs. 1,79,98,687/- by appellant and net profit rate of 8% on the contract received of Rs. 22,49,83,589/-. While affirming the best judgment assessment and after detailed discussion and reference to various judgments of Hon ble Supreme Court, different High Courts and Tribunal in paragraphs 11 to 20 of its order, concluded in paragraph 21 and 22 as under: It is well-settled that in a best judgment assessment there is always a certain degree of guess work. No doubt the authorities concerned should try to make an honest and fair estimate of the income even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily some amount of guess work involved in a best judgment assessment and it is the assessee himself who is to blame as he did not submit p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing Officer will take that all the allowances, deductions, exemption, if any has been availed by the appellant during the year and then the net profit chargeable to tax is Rs. 1,79,98,687/-. The net profit is to be assessed as income at Rs. 1,79,98,687/-. Ground No. 10 that without prejudice the ground of appeal the Assessing Officer ignored the fact presumptive basis of taxation i.e. profit of 8% of the total turnover is allowed by accepting net profit @ 8% as discussed (Supra). The other grounds of appeal are decided as discussed in the order. 8. Aggrieved with the order of the CIT, the revenue filed an appeal being ITA/296/Kol/2013(assessment year 2009-10) [DCIT, Circle-6 Vs. M/s. Sikaria Infraprojects (P) Ltd.] The ITAT considered various aspects of the matter and concluded as under: From the aforesaid discussion we find the AO has disallowed the various expenses as these were not verified in response to the notice issue under section 133 (6) of the Act. But the Id. CIT(A) has treated the income of the assessee @ 8% of the gross receipt. So the Revenue is in appeal before us. Now the question before us arises for adjudication is as to whether the action of the Id. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment record was held proper Tribunal directed the Assessing Officer to recomputed the income applying 6% of net profit on gross contract receipts. 4. In the case of Prawn Pandurang Patil, Islampur in ITA No. 850 it has been held that in the AY 2005-06, the assessee is engaged contract business with others business segments. AO reject books of account invoking the provisions of Section 145 (estimated net income from the contract business @ 8%. As failed to produce the labour payment vouchers and purchase verify the expenses purchase and closing stock. Ld. CIT, estimated, the income from regular contract business at 8% contract receipts and 4% in so far sub-contracting is concerned, lordship of Tribunal, directed to estimate the income @ 6% from contract business sand so far as profit on sub-contract business road roller hiring is concerned uphold the estimation as adoptee Commissioner of Income Tax (Appeals) to meet the end of justice. 5. In the case of the ACIT Gandhidham Circle Vs. M/s. Construction Co. Gandhidham ITA No. 1140/RJT/2009 it has AO made addition for unexplained purchase, sub-contract expenses and under valuation of work-in-progress. The Ld. CIT (A) estimated the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the Assessing Officer exercising his judgment cannot act arbitrarily or capriciously. The assessment must proceed on judicial considerations in the light of the relevant material that may be brought on record. In the instant case, the Income-tax Appellate Tribunal while sustaining the order passed by the Commissioner of Income-tax (Appeals) has taken into account comparable cases which were brought to its notice...In the situation with which the Income-tax Appellate Tribunal was confronted, it cannot be disputed that there can be no rigid tailor-made formula which can be applied to every case. Everything would depend on the facts and circumstances of each case. The finding in a given case about the applicability of a particular rate of net profit on the sales disclosed or estimated is one of fact...In every case of best judgment, the element of guess work cannot be eliminated. So long as the best judgment has nexus with the material on record and the discretion in that behalf has not been exercised arbitrarily or capriciously, it is not open to scrutiny in these proceedings to give rise to a question of law or to a mixed question of law and fact. 10. It has not been dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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