TMI Blog2016 (4) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... ome received from the civil contract by the assessee. In the present matter even after the deduction on account of partner salary, interest and depreciation, it still has led to a final net profit rate of approximately 7.9 per cent. which is much above the net profit rate as it has been found after regular assessment made of the same assessee. The said figure is also not in accord with the other decision of the Tribunal in the case of similarly situated contractor. Thus, on a consideration of the above circumstances, although there has been a concurrent finding of the authorities before us but the said finding is certainly not based upon any evidence and without taking into account relevant materials and thus it has to be held to be perverse. - Decided in favour of the assessee and against the Revenue. - Miscellaneous Appeal No. 276 of 2010 - - - Dated:- 28-4-2016 - Ramesh Kumar Datta And Sudhir Singh, JJ. For the Appellant : Ajay Kumar Rastogi For the Respondent : Rishi Raj Sinha, Senior Standing Counsel and Mrs. Archana Prasad, Junior Standing Counsel JUDGMENT Ramesh Kumar Datta, J. 1. Heard learned counsel for the appellant assessee and learned seni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt contract. 5. Learned counsel for the appellant before us submits that the order of the Tribunal is perverse by relying upon the 10 per cent. rate taken by the Assessing Officer and without any application of mind to the question of profits of the Government contracts and merely on his say so accepted the proposition that in Government contracts in general net profit is 10 per cent. It is submitted that it is well known that Government contracts are given out on the basis of public tender to the lowest bidders and thus the rate of profit in each of the contracts would vary and there cannot be any such proposition that there would be a 10 per cent. profit in a Government contract. 6. It is further submitted by learned counsel for the appellant that the Department itself is in possession of the assessment being made on different Government contracts and before laying down such a broad proposition in respect of Government contract, it was obliged to find out that such is the figure which is to be found in the assessment generally which are generally made with respect to the Government contract but there is nothing in support of the same, rather the assessee had produced befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Kerala v. C. Velukutty [1966] 60 ITR 239 (SC) which decision has also been relied upon by learned counsel for the Revenue. The last paragraph at page 243 of the said judgment is quoted below : What is the scope of section 12(2)(b) of the Act ? The expression 'to the best of his judgment' in the said clause is presumably borrowed from section 23(4) of the Income-tax Act. The said expression in the Income-tax Act was the subject of judicial scrutiny. The Privy Council in CIT v. Laxminaraian Badridas [1937] 5 ITR 170, 180 (PC) has considered those words. Therein it observed : 'He (the assessing authority) must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the mat ter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate ; and though there m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich it has been held as follows (page 548) : The Tribunal has applied a net profit rate of 6 per cent. as it was in consonance with the past history of the assessee. At the time of initial hearing, we had called upon counsel for the appellant-Revenue to apprise the court about the net profit rate applied to the assessee in years previous and subsequent to the assessment year in dispute. Counsel for the appellant fairly concedes, on instructions that in the preceding as well as the following year a net profit rate of 6.75 per cent. and 5 per cent., respectively, was applied by the Assessing Officer and has also placed on record the order for the assessment year 2009-10 where a net profit rate of 5 per cent. has been applied to the assessee. We, therefore, find no error in the discretion exercised by the Tribunal in applying a net profit rate of 6 per cent. 12. Further learned counsel relies upon the decision of the Supreme Court in the case of Union of India v. Paras Laminates Pvt. Ltd. [1990] 186 ITR 722 (SC). In the last but one paragraph of the said judgment it has been held as follows (page 727) : In our view, the Bench of two members acted within their power in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Judicial Com mittee as early as 1937 in CIT v. Laxminarain Badridas [1937] 5 ITR 170, 180. Therein Lord Rusell of Killowen, speaking for the Judicial Committee, observed : The Officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information . . .' (Already quoted above) In Raghubar Mandal Harihar Mandal v. State of Bihar [1957] 8 STC 770, 778 (SC), a case arising under the Bihar Sales tax Act, 1944, the law relating to 'best judgment' assessment was examined at length by this court. Therein, S.K. Das J., speaking for the court, observed : 'No doubt it is true that when the returns and the books of account are rejected, the Assessing Officer must make an estimate, and to that extent he must make a guess ; but the estimate must be related to some evidence or material and it must be something more than mere suspicion. To use the words of Lord Rusell of Killowen again, he must make what he honestly believes to be a fair estimate of the proper figure of assessment. and for this purpose he must take into consideration such materials as the Assessing Officer has before him, including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after giving benefit of partner salary, interest and depreciation came to 4.46 per cent., that is, when the assessment was made under section 143(3) of the Act. 23. We may ignore the assessment figures for the subsequent assessment years as placed before us by the appellant although they would also go to show that regular assessment of the assessee has been made. This figure of 4.46 per cent. was definitely a relevant material to have been taken into consideration by the Assessing Officer and the appellate authorities up to the Tribunal while considering the figure of 10 per cent. simply introduced on his say so by the Assessing Officer. 24. Moreover, the Tribunal has given a complete go-by to several decisions of the Tribunal itself fixing the final net profit rate of 6 per cent. in the case of other similarly situated assessees who were also in civil contract works of the Government. Taking the same into consideration, it can be said that no reasonable man would have put a figure of net profit at more than 8 per cent. of the estimated income received from the civil contract by the assessee. In the present matter even after the deduction on account of partner salary, intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
