9911796707
TMI Blog1992 (2) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ing year ended on 12th July, 1980. The assessee did not file a return of income presumably because there was raid in the residential premises of the assessee on 11th Dec., 1981 and when the books of accounts of the assessee were seized besides other valuables. The ITO issued several statutory notices, letter and summons in this regard but in vain. Therefore, the ITO passed best judgment assessment on 30th March, 1984 i.e. towards the end of the time limit for completion of assessment. In this Ex parte order the ITO estimated the income from cloth business at Rs. 60,000 inclusive of bank commission receipt of Rs. 30,902. He noticed that the turnover this year was Rs. 20,59,503, as against Rs. 26,24,315. He also found that the assessee had ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive. Copies of assessment orders in the past years were filed to show that the income from business was determined at Rs. 8,310 for the asst. yr. 1977-78, at Rs. 22,530 for the asst. yr. 1978-79, at Rs. 35,502 for asst. yr. 1979-80 and at Rs. 40,610 including disallowance of interest of Rs. 15,838 for the asst. yr. 1980-81 but on appeal the addition was deleted by the AAC in his order dt. 27th December, 1987. In other words the income from business was determined at Rs. 23,230. In view of these past assessments he urged that the estimate of business income at Rs. 60,000 made by the ITO was arbitrary and unjustified. Further he submitted that the purchases to the extent of Rs. 81,728 were not ledgerised and if it is done the net profit would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest has been paid by cheque in some cases. In the circumstances it was urged that the loan creditors were all assessed to income-tax and the facts would stand cross verification. He further submitted that the ITO had not issued a specific notice to the assessee to prove the genuineness of the cash credits. 8. Fourthly it was contended that there were contributions made by the members of the assessee family for domestic expenses to the extent of Rs. 23,875 for which the details were furnished. Therefore it was urged that the estimated addition on account of low drawings was not called for. 9. In reply, the learned D.R. vehemently supported the Ex parte order made by the ITO by referring to the various opportunities given by the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , page 2847 for the proposition that by non-co-operation of the assessee the assessee makes giving of such opportunity impossible when the assessment is made under s. 144. In these circumstances he vehemently supported the order of the authorities and justified the assessment. 10. In reply, the learned counsel for the assessee relied on the decision of the Supreme Court in the case of H.M. Esufali Esuali supra and submitted that the estimate made by the ITO was arbitrary inasmuch as the turnover this year had gone down to Rs. 20 lacs as against Rs. 26 lacs in the previous year and the estimate was also unreasonable inasmuch as the ITO had not seen the nature of the cash credits, the manner of receipt and repayment thereof. He further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. The background in which the default occurred is the search and seizure made on 11th December, 1981. After making the adjustments for unledgerised purchases bank commission received, interest paid and commission adjusted the net profit would work out to Rs. 17,015 only as per the statement contained in page 3 of the paper book filed and Trading & Profit & Loss A/cs filed at page 4 of the paper book. The turnover has gone down this year to Rs. 20,59,503.16 as against the turnover of Rs. 26,24,315 in the earlier year 1980-81 for which the income from business was ultimately determined around Rs. 25,000 after appeal effect. Judged from these facts the income from business estimated by the ITO is arbitrary, excessive and unreasonable. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to refer to the principles of natural justice involved in quasti-judicial process when the ITO is making best judgement assessment. The Kerala High Court in the case of T.C.N. Menon held that "the decision can be arrived at best, or as correctly as possible, even under s. 144 only if the assessee is given an opportunity to say why on the materials gathered by the ITO, the income should not be assessed in the manner proposed to be done by the officer." The learned Judge observed that "there was nothing in the provisions of s. 142(3) to militate against the observance of the principle of natural justice even in assessment under s. 144 of the Act." The Madras High Court in the case of Dhanalaxmi Pictures held that even in assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
