TMI Blog2006 (8) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... l infirmity and, therefore, we reject the grounds of appeal Nos. 1 and 2 raised by the department. Best judgment assessment - In our view, if the appellate authorities, on the fact and circumstances, conclude that the best judgment assessment made by the Assessing Officer is unreasonable or excessive, the appellate authorities can certainly set right any unjustice done to the assessee by the Assessing Officer. The Assessing Officer is entitled to make a best judgment assessment in the absence of books of account but such assessment cannot be arbitrary and must be reasonable. The assessment should not penalise the assessee because the books of account are not maintained or the same are defective. The duty of the Assessing Officer, in our view, is to make a fair and reasonable estimate of the total income of the assessee chargeable to tax as per the provisions of the Income-tax Act, 1961. Even if a best judgment assessment is made, the assessee cannot be saddled with a unjustifiable tax liability. Whether the net profit rate of 15 per cent directed by the learned CIT(A) causes any grievance to the revenue - HELD THAT:- In our view, the learned CIT(A) has rightly directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s adopted by the Assessing Officer for determining the income of the assessee was in tune with the decision of the Hon ble Supreme Court in the case of P.M. Mohd. Meera Khan v. CIT 73 ITR 735 ." 2. In ground No. 1, the department is aggrieved on account of the learned CIT(A) s having admitted appeals whereas these appeals were already dismissed in limine for non-compliance of provisions of section 249(4)( a ). Ground No. 3 challenges the validity of the order of the CIT(A) in admitting the appeals filed out of time. On these issues, the appeals were heard by this Bench on 8-8-2006. During the course of hearing on that day, the learned DR argued before us that the learned CIT(A) had already dismissed the appeals vide his consolidated order dated 27-12-2002 for all the four assessment years on the ground that the assessee had not paid the taxes due on the returned income and, therefore, the appeals were not maintainable by virtue of section 249(4)( a ). The learned DR contended that by another order dated 27-2-2003, which is the subject-matter of the appeals before us, the learned CIT(A) admitted the appeals on the ground that taxes have been paid later. The learned DR co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material facts which are already part of the record and go to the very root of the matter. It would be totally unjustifiable to decide these appeals on the basis of the incorrect facts that the assessee never filed fresh appeals, as this would be a travesty of the judicial system. In our view, the order pronounced on 8-8-2006 suffers from a mistake apparent from record and, therefore, we recall our oral order and we proceed to hearing both the sides in the light of the correct factual position as mentioned above. 6. The learned DR argued before us that the fresh order passed by the learned CIT(A) amounts to review of his own order, whereas he has no such power vested under the Income-tax Act, 1961. It is also argued that the learned CIT(A) condoned the delay without any sufficient reasons. The learned DR invited our attention to the provisions of section 249(4) as reproduced below : "249. (1) and (2)** ** ** (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 249(4). He has condoned the delay for sufficient reasons. The only requirement of section 249(4) is that taxes due on returned income must be paid at the time of filing the relevant appeal. There is no time-limit prescribed for payment of such taxes. Therefore, if an appeal is filed beyond time-limit but after payment of taxes as stipulated in section 249(4), it cannot be said that the requirements of section 249(4) are not complied with. The only defect in such appeal is that the appeal has been filed beyond prescribed time-limit. In such a case, the appellate authority must consider the assessee s request for condoning the delay in filing the appeal. If he is satisfied that the delay was attributable to reasonable and sufficient cause, the appellate authority must condone the delay and entertain the appeal. In our view, the order of the learned CIT(A) does not suffer from any legal infirmity and, therefore, we reject the grounds of appeal Nos. 1 and 2 raised by the department. 9. Ground Nos. 3 and 4 raised by the department are inter-connected and the department is aggrieved by the direction of the learned CIT(A) to estimate the net profit at the rate of 15 per cent of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of receipt of on money were found. It was observed that the assessee had not maintained regular books of account and only financial statements in respect of financial years 1995-96, 1996-97, 1997-98 were found, which included balance sheet, Profit and Loss Account and capital accounts of partners. Certain files were also found containing details of expenditure incurred by the assessee. The Assessing Officer has stated in the assessment orders that the financial statements were not supported by any books of account and were, therefore, not reliable. However, the Assessing Officer concluded that some information in the financial statement can be used for the purpose of making assessments. For example, the Assessing Officer considered the value of work-in-progress as reflected in financial statements as correct and as same was authenticated by a valuer. The Assessing Officer was of the view that the assessee s income for each assessment year should be determined on the basis of the work-in-progress and the quantum of on money received as reflected in the papers and further the expenses about which evidence was found during the course of survey should be deducted. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Esufali [1973] 90 ITR 271 and Hon ble Madras High Court decision in the case of CIT v. Rayala Corpn. (P.) Ltd. [1995] 215 ITR 883. The learned DR also assailed the orders of the learned CIT(A) on the ground that the learned CIT(A) relied on certain orders of the Tribunal or some other comparable cases, where net profit rate in the case of a builder was approved at 10-15 per cent. The learned DR argued that precedents can be followed only if such precedents decide a question of law and that on factual matters precedents cannot be followed. For the proposition, the learned DR relied on the decision of Hon ble Supreme Court in the case of State of Punjab v. Surender Kumar [1992] 194 ITR 434 and Hon ble Gujarat High Court decision in the case of CIT v. Cadila Chemicals (P.) Ltd. [1998] 230 ITR 885. 13. The learned DR contended that the total income for the assessment years under appeal has been determined by the Assessing Officer on the basis of relevant material gathered during the course of survey and therefore, such income has been determined in accordance with the provisions of section 145(3) read with section 144. 14. The learned counsel for assessee support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set right any unjustice done to the assessee by the Assessing Officer. The Assessing Officer is entitled to make a best judgment assessment in the absence of books of account but such assessment cannot be arbitrary and must be reasonable. The assessment should not penalise the assessee because the books of account are not maintained or the same are defective. The duty of the Assessing Officer, in our view, is to make a fair and reasonable estimate of the total income of the assessee chargeable to tax as per the provisions of the Income-tax Act, 1961. Even if a best judgment assessment is made, the assessee cannot be saddled with a unjustifiable tax liability. The learned DR also relied on the Hon ble Madras High Court decision in the case of Rayala Corpn. (P.) Ltd. ( supra ). In that case, the Tribunal admitted additional evidence during the course of an appeal against best judgment assessment, the Hon ble Madras High Court observed that the Tribunal had taken into account additional evidence brought before the Tribunal for the first time, which was not correct. The matter was therefore, remanded to the Tribunal with the directions that the contemptuous conduct of the assessee sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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