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2010 (12) TMI 65 - HC - Income TaxBest Judgment Assessment – Profit margin - Reliance on declaration made under VDIS scheme - Held that: - The scheme (VDIS) does not contain any provision declaring as inadmissible in evidence against the declarant the particulars contained in the declaration filed for the purpose of proceedings under the Income Tax Act. Thus, in our view, it is not open to the assessee to contend that the declarations filed by him could not have been looked into by the Assessing Officer for the purpose of estimating his income for the assessment year in question - that while making the best judgment assessment, the Assessing Officer should do so on a rational basis and without any bias. The scope of "best judgment" assessment under the Income Tax law came up for consideration before the Judicial Committee as early as 1937 in Commissioner of Incom-tax vs. Laxminarain Badridas. - It cannot be denied that there must be some material before the Income-tax Officer on which to base his estimate, but no hard and fast rule can be laid down by the court to define what sort of material is required on which his estimate can be founded - even assuming for the sake of argument that the assessee's profit and loss account was rightly discarded by the Assessing Officer, it is for this Court to examine whether a rational basis was adopted by the Assessing Officer. The answer is our opinion must be an emphatic no. – CIT(A) and ITAT has corrected set aside the “best judgment assessment” on the ground that AO had "not brought on record any comparable case wherein the net profit declared by a tax payer in the similar business was higher than the one declared by the assessee. - the profit margins of a tax payer as declared by him, could be varied and disturbed only if the profit margins in the case of other assesses engaged in similar business are higher.
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