TMI Blog2010 (10) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit rate. During the assessment proceedings, the Assessing Officer noticed several discrepancies in the books of account and also in supporting evidence. After considering the reply of the assessee, the Assessing Officer concluded that the assessee must have earned profit more than what has been disclosed. The Assessing Officer has listed many discrepancies to support his decision for invoking the provisions of section 145(3) of the Act. All these discrepancies were confronted to the assessee vide order sheet dated November 10, 2008. The assessee was asked to explain why 10 percent profit rate should not be applied because of so many discrepancies confronted to him. As per the order of the Assessing Officer, the assessee agreed to apply 10 percent profit rate subject to depreciation and interest. Accordingly the books of account were rejected by invoking the provisions of section 145(3) and the income of the assessee was computed by applying 10 percent of net profit rate subject to allowing depreciation and interest. While applying 10 percent net profit rate the following observations and findings have been recorded by the Assessing Officer in his order at page 12: "Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et profit rate. It was explained that only on November 10, 2008 the Assessing Officer asked the assessee that why net profit rate of 10 percent be not applied as there are many discrepancies in maintenance of books of account and on the very next day the assessment was completed. Therefore, neither the assessee was allowed any proper opportunity nor has the Assessing Officer considered the past history of the case. The learned Commissioner of Income-tax (Appeals) after considering these submissions and perusing other materials on record, found weight, in the contention of the assessee that net profit rate of 10 percent agreed by the assessee was under pressure and was under undue influence. The learned Commissioner of Income-tax (Appeals) further observed that the Assessing Officer should have taken into consideration the past history of the case. Therefore, he directed the Assessing Officer to apply 8 percent net profit subject to depreciation and interest. However, while directing the Assessing Officer to apply 8 percent net profit rate, rejection of books of account under section 145(3) were upheld. Now the Department is in appeal before the Tribunal. The learned Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was completed on November 12, 2008. Both these dates are mentioned in the order of the Assessing Officer himself. Against the application of 10 percent net profit rate, the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals) before whom it was stated that no proper opportunity was given to the assessee. Neither the Assessing Officer has followed the procedure prescribed under section 144 of the Act while applying net profit rate of 10 percent In view of the procedure prescribed under section 144, a best judgment assessment has to be passed on the basis of comparable cases or on the basis of past accepted history in case of the assessee. From the record it is not borne out that when the Assessing Officer asked the assessee for application of 10 percent net profit rate, whether he has taken into consideration past history or not. This fact was brought to the notice of the learned Commissioner of Income-tax (Appeals). It was explained before the learned Commissioner of Income-tax (Appeals) that in the case of the assessee itself the net profit rate of 8 percent has been approved in the assessment year 2004-05 while deciding the appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been held in many cases that there is no estoppel. It has been held by many Benches of the Tribunal that where the assessee made some commitment but still feels aggrieved of the addition made on the basis of commitment, he can file an appeal before the appellate authority. Some of the cases are decided in the case of Sanjay Tandon (Indl.) v. Asst. CIT [2008] 307 ITR (AT) 281 (Lucknow) ; 119 TTJ 277 and in the case of Raghava Health Care Ltd. v. Deputy CIT [2008] 307 ITR (AT) 133 (Visakhapatnam); 14 DTR 341. In the case of Kalindee Rail Nirman (Engineers) Ltd. v. Joint CIT [2003] 78 TTJ (JP) 653 (TM) the appeal of the assessee was entertained when the application of net profit rate was agreed subject to allowing of interest and depreciation. In the case of CIT v. M. Pyngrope [1993] 200 ITR 106 the hon'ble Gauhati High Court has approved the right of the assessee to prefer an appeal though assessment was made on the basis of return filed. The hon'ble Bombay High Court in the case of Nirmala L. Mehta v. A.Balasubramaniam, CIT [2004] 269 ITR 1 has observed that there cannot be an estoppel against the statute. In the case of CWT v. Apar Ltd. [2004] 267 ITR 705 ; 175 CTR 312, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view is a reasonable direction given by the learned Commissioner of Income-tax (Appeals). We have also taken into consideration the decisions on which reliance has been placed by the learned Departmental representative. Reliance has been placed in the case of CIT v. Rameshwardass Narsinghdass and Co. [1985] 155 ITR 270 (Raj) and in the case of Addl. CIT v. Hemandas Dharajmal [1985] 155 ITR 533 (Raj). In both these cases the hon' ble High Court has held that the value of material supplied by the Government Department to a contractor for being used in the execution of the work is to be excluded from the calculation of turnover of the assessee while estimating the net income or while applying net profit therein. The ratio of both the decisions does not apply to the facts of the present case as neither in this case the estimation of turnover was made nor the addition was made on the basis of material received from the Government Department. Therefore, these case law do not help the case of the Department. In view of the above facts and circumstances, we confirm the finding of the learned Commissioner of Income-tax (Appeals) and dismiss the appeal of the Department. In the result, appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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