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2017 (8) TMI 477 - AT - Income TaxReopening of assessment - assessee’s failure to file the return of income u/s 139 - Held that:- As the validity of the notice issued u/s 148 and reassessment order made u/s 143(3) r.w.s 147 are concerned, we find, notice issued and reassessment made should be upheld considering assessee’s failure to file the return of income in time as provided u/s 139(1) of the Act. Regarding grant of adequate opportunity of the Commissioner of Income (Appeals), we are of the view that the said ground is not supported by any evidence. We find that the Commissioner of Income Tax (Appeals) has granted a number of opportunities as detailed above for both the appeals and decided the case of the assessee. Rejecting of claim of loss - ad-hoc estimation of income - Held that:- There is no dispute on the fact that the assessee conducted the hotel business during the year under consideration, assets were put to use, expenditure are required to be incurred for conducting hotel business. Therefore, the Assessing Officer is under obligation to allow the business expenditure as per the provisions of the Act. However, the Assessing Officer is allowed to make additions for want of evidences and the same should be fair and reasonable. Assessing Officer should avoid multiple additions on any account. We find the reassessments under consideration are prima facie unreasonable and unsustainable in the present forum. For example, the Assessing Officer cannot estimate profits of the hotel business on one side and also add entire business expenditure on the other. Considering the same, we are of the view that the matters on the merits of additions on both assessment years should be remanded to the Assessing Officer’s file for fresh reassessment with the following directions. (1) The Assessing Officer shall gather data needed for GP/NP estimation from the comparable hotel industries from the comparable location/area/town and if necessary, resort to estimation provided, the books of account fail to meet the requirement of the law and if they are any way to be rejected; (2) Once estimation of GP/NP is done, Assessing Officer shall not add the expenditure claimed in the profit and loss account; (3) Assessing Officer shall allow the statutory deductions if any, as per the law out of the said estimated profits of business. Assessing Officer shall note that the best judgment assessment involves fair judgment assessment. Further, it goes without saying that the Assessing Officer shall grant reasonable opportunity of being heard to the assessee as per the set principles of natural justice
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