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TMI Blog2015 (11) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing substantial questions of law : "(i) Whether the impugned order of the hon'ble Tribunal is per verse in applying the net profit rate of 5 per cent. while accepting the returned income of the assessee whereas the Tribunal has upheld the action of the Assessing Officer, in invoking the provisions of section 145(3) of the Income-tax Act, 1961 ? (ii) Whether the hon'ble Tribunal is right in law in reducing the net profit rate to 5 per cent. as against 10 per cent. applied by the Assess ing Officer and also as against 8 per cent. applied by the Commis sioner of Income-tax (Appeals), and, thus, ignoring the judgment delivered by the jurisdictional High Court in the case of Shivam Con struction Co. (I. T. A. No. 167 of 2007 and I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elelinks v. CIT (supra). After considering the matter in its entirety, it was held as follows (page 161 of 377 ITR) : "The second question of law, namely, factors required to be taken into consideration while applying a net profit rate has come up for consideration, as on the same set of facts the Assessing Officer, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal have applied different rates of net profit. The discretion to determine an adequate net profit rate undoubtedly vests with autho rities under the Act but the discretion so vested is neither unbridled nor unguided as it must be guided by reason, i.e., should be preceded by reasons which, in turn, should be preceded by a perceptible pro cess of reasoni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC). 7. A perusal of the order passed by the Income-tax Appellate Tribunal reveals that though a reference is made to these principles but while recording its opinion that a net profit rate of 5 per cent. should be applied, the Tribunal has not referred to the relevant factors that formed the foundation of its opinion, applying a net profit rate of 5 per cent. It would be appropriate to point out that on the basis of the same material, the Assessing Officer determined a net profit rate of 10 per cent. the Commissioner of Income-tax (Appeals) at 8 per cent. and the learned Tribunal at 5 per cent. The learned Tribunal was, therefore, required to record reasons by reference to relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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