TMI Blog2005 (3) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... gure he likes although he is not bound by strict judicial principle, he should be guided by rules of justice, equity and good conscience. The limited power of the Assessing Officer are implicit in the expression 'best of his judgment' though there is an element of guess work, in best judgment assessment, it shall not be wild one, but shall have reasonable nexus to the available material and circumstances of each case. The Hon'ble Rajasthan High Court in the case of CIT v. Gotan Lime Khanij Udyog [ 2001 (7) TMI 19 - RAJASTHAN HIGH COURT] observed that mere rejections of books of account not necessarily lead to additions to the returned income or different figure of income than what has been disclosed by the assessee. Even after invocations of provisions of section 145, ipso facto does not mean that the rejection of books of account, the assessee must yield to a higher rate of gross profit than the declare one and different conclusion to be drawn in the computation of income returned by the assessee. Therefore, notwithstanding the rejections of the books of account, the material disclosed by the assessee along with material that may be collected by the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inventory for tractors and spare parts to objectively to prove on record and tally of 1:1 correlation amongst opening stock, purchases, sales, consumption and resultant closing stocks of spares parts. He further stated that the assessee failed to place on record which method of costing (viz. FIFO, LIFO etc.) was followed for valuation of the inventory. He, therefore, rejected the book results by invoking the provisions of section 145(1) and made ad hoc addition of ₹ 2 lakhs. The Assessing Officer further stated that in the audited Balance Sheet, quantity of trucks sold were 321 numbers, whereas as per the details furnished during the course of assessment proceedings, the figure of sales of trucks were 322, thus, there is a difference of one truck in the quantitative tally. During the course of appellate proceedings before the CIT(A), the assessee reconciled the difference of sale of one truck and the same was sent by the CIT(A) to the Assessing Officer in compliance of rule 46A. However, the Assessing Officer objected for the acceptance of additional evidence and stated that the assessee had made paper work for the goods return to avoid implication of furnishing inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the I.T. Act. He drawn our attention to page Nos. 32 to 38 of the paper book containing month-wise details of purchase and sales of each and every items, in which no defects was found by the Assessing Officer. 8. We have considered the rival contentions and carefully gone through the orders of the lower authorities and found from the record that the major defects pointed by the Assessing Officer in the books was regarding the difference in sale of one tractor, which was duly reconciled before the Commissioner (Appeals) and the same were sent by the Commissioner (Appeals) to the Assessing Officer for his examination. As per the reconciliation statement, we found that difference in sale of one tractor was due to sale return and the same was duly accounted for in the books of account and satisfactorily explained during the course of appeal proceedings. With respect to quantitive details of spare parts, having not maintained by the assessee, the same cannot be a ground for rejection of books of account. The Hon'ble Punjab High Court in the case of Pandit Bros. v. CIT [1954] 26 ITR 159 observed that the fact that there is no stock register only cautions the Assessing Officer again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the matter. In the instant case, the Commissioner (Appeals) himself has looked into reconciliation of shortage of one tractor, which was due to sales return of one tractor. He has also sent reconciliation statement to the Assessing Officer for his comment. However, on verification of material placed on record, we find that the difference of one tractor was duly reconciled and other defects pointed by the Assessing Officer did not justify rejection of the books of account so as to attract the provision of section 145(1) of the I.T. Act. Even after the rejection of books of account, the Assessing Officer cannot act vindictively and capriciously because he must exercise judgment in the matter. In making a best judgment assessment, the Assessing Officer does not possess absolute and unbridled powers to the assessee any figure he likes although he is not bound by strict judicial principle, he should be guided by rules of justice, equity and good conscience. The limited power of the Assessing Officer are implicit in the expression 'best of his judgment' though there is an element of guess work, in best judgment assessment, it shall not be wild one, but shall have reasonable n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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