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2022 (9) TMI 714 - AT - Income TaxBest judgment assessments u/s. 144 - NP estimation - quantification of the estimated net profit - AO to estimate net profit @ 5% of gross receipts - assessee was a truck union not having any trucks of its own but which was formed for the purpose of bringing together the various truck owners with an aim to reduce competition and price cutting between them - HELD THAT:- Best judgment assessment is quasi judicial in nature and the estimation made by the Assessing Officer has to be based on the principles of natural justice, equity and a good conscience. Thus, in common parlance, the words ‘best judgment assessment’ would mean making assessment which is without prejudice or bias and which does not smack of arbitrariness on the part of the AO. It is settled law that even while making best judgment assessment, the past history of the assessee is to be duly considered. To this extent, we are agreeable to the contention raised by the Ld. AR. Applying the profit rate of 12% - AO has ignored the past trends and even the Ld. NFAC, although after having duly reproduced the earlier year data, has not considered this aspect. In our considered opinion, the lower authorities would not have ignored the past trends of the assessee. In the case of ‘Shri Gurunanak Truck Operators Union, Sunam [2021 (3) TMI 826 - ITAT CHANDIGARH] also held the issue in favour of the assessee by directing that instead of estimated net profit rate of 1.5%, the net profit rate of 1% should be applied. In the present case we note that although the AO has applied the rate of 12% and the Ld. NFAC has reduced it to 5%, no cogent reason has been given for such estimation. The past history/trend of the assessee has not been considered by the lower authorities which makes their orders unsustainable. In our considered view, the application of net profit rate of 2.5% of the gross receipts would meet to the ends of justice in as much as any leakage of revenue would be covered as also the assessee’s non production of books of account and vouchers would also be taken care of. Appeal of the assessee is partly allowed.
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