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2016 (3) TMI 25 - PUNJAB AND HARYANA HIGH COURT

2016 (3) TMI 25 - PUNJAB AND HARYANA HIGH COURT - [2016] 387 ITR 587 - Best judgment assessment - justification of estimation of seats - Held that:- Due to mechanical defect, accidents, over speed challan, and other traffic violations, the buses might not be plied throughout the year. Even otherwise, the tax had to be calculated on net income. The Assessing Officer and the CIT(A) had estimated the occupancy of seats to the extent of 24 and 19 per bus respectively. The Tribunal deemed it appropri .....

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Officer to take recourse to Section 144 of the Act in framing the Best Judgment assessment. - A perusal of the chart that only an addition of ₹ 4,75,030/- has been made against the income of ₹ 1,10,940/- declared by the assessee. However, in view of the factual matrix noticed hereinabove and more particularly when learned counsel for the assessee-appellant has not been able to satisfy this court that the approach of the Tribunal is arbitrary or irrational, no advantage flows to t .....

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te Tribunal, Chandigarh (in short, the Tribunal ) for the assessment year 2001-02. It was admitted on 16.3.2009 to consider following substantial questions of law:- i) Whether the Assessing Officer made an assessment by estimation of income arbitrarily without any reasons or findings? ii) Whether the Hon'ble Tribunal was right in estimation of income which is 22 seats per bus without any formula and basis? iii) Whether the findings of the Assessing Officer totally based on assumption and pre .....

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1-02 and declared total income of ₹ 1,10,940/- and agriculture income of ₹ 1,03,000/- alongwith the audit report. The case was selected for scrutiny as per Board's instructions. Statutory notices under section 143(2) and 142(1) of the Act were issued to the assessee. During the assessment proceedings, the assessee was issued notice under Section 142(1) of the Act on 23.2.2004 and 15.3.2004 to furnish certain details/information/clarification. The assessee did not produce and/or f .....

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us which was taken as 26 seats per bus. The total receipt from all the buses came to ₹ 1,05,90,840/- as against declared receipt of Rs. 77,13,524/-. It was gathered from the transport department that the said department allows breakdown of three days per month. The rebate out of bus fare equal to 36 days (12x3) was allowed and the total receipts were thus assessed at ₹ 95,46,264/-. Accordingly, an addition of Rs. 18,32,740/- was made to the returned income. Aggrieved by the assessmen .....

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timated the occupancy of seats at 22 per bus. The Assessing Officer issued demand notice dated 17.12.2008, Annexure P.4 of ₹ 1,84,797/- giving effect to the impugned order for recovery of the tax. Hence the instant appeal by the appellant-assessee. 3. We have heard learned counsel for the parties. 4. Law in respect of best judgment assessment is well settled. The assessing authority while making the best judgment assessment should arrive at its conclusion without any bias and on rational b .....

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and to furnish certain information called for. The final notices dated 23.2.2004 and 15.3.2004 were issued to the assessee to which there was no response from the assessee and accordingly, the Assessing Officer passed 'Best Judgment Assessment' under Section 144 of the Act on 29.3.2004. The assessee as per profit and loss account declared total annual receipt from the bus fare at ₹ 77,13,524/-. The average receipt from all the buses on daily basis worked out to ₹ 21,133/-. In .....

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e assessee, the CIT(A) directed the Assessing Officer to adopt the occupancy of 19 seats of each bus. The revenue challenged the order passed by the CIT(A) before the Tribunal. It was categorically recorded by the Tribunal that the moot question was the justification of estimation of seats. Due to mechanical defect, accidents, over speed challan, and other traffic violations, the buses might not be plied throughout the year. Even otherwise, the tax had to be calculated on net income. The Assessi .....

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tional approach in arriving at the conclusion. Moreover, the assessee had failed to furnish the requisite information compelling the Assessing Officer to take recourse to Section 144 of the Act in framing the Best Judgment assessment. 6. Additionally, Annexure P.4 has been appended alongwith the appeal which is an order dated 17.12.2008 passed by the Assessing Officer giving appeal effect to the order of the Tribunal dated 25.9.2008 which reads thus:- 1. Income as returned by the assessee ₹ .....

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after appeal effect ₹ 4,75,024/- Say ₹ 4,75,030/- A perusal of the above shows that only an addition of ₹ 4,75,030/- has been made against the income of ₹ 1,10,940/- declared by the assessee. 7. Learned cousnel for the appellant-assessee relied upon plethora of judgments in Commissioner of Sales Tax vs. H.M.Esufali H.M.Abdulali, (1973) 90 ITR 271, State of Kerala vs. C.Velukutty, (1966) 60 ITR 239 (SC), Anand Rice & Oil Mills vs. Commissioner of Income Tax, (1977) 108 .....

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