TMI Blog2006 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. 17 (Gauhati) of 1997. The appeal was admitted by this court by the order dated February 7, 2003. By the order dated June 27, 2006, the question of law formulated at the time of admission of the appeal was recast as "Whether, in the peculiar facts and circumstances existing in the NE States during the relevant year of assessment, the Tribunal is justified in confirming rejection of the books of account by the Assessing Officer and computing the net income of the assessee on the basis of 6 per cent. of the net receipts following the principles of best judgment assessment ?" 2 We have heard Mr. C. K. Joshi, learned senior counsel for the appellant, and Mr. U. Bhuyan, learned standing counsel for the Revenue. 3 The appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account maintained by the appellant and completed the assessment on the principles of best judgment vide order dated February 14, 1996, under section 143(3) of the Act determining the net profit at Rs. 35,14,978 from contract works and income from other sources like bank interest, sale of stock, etc., at Rs. 2,41,642. The Assessing Officer estimated the net profit at the rate of 8 per cent. 4 On appeal, the CIT (Appeals) was of the view that the provisions of section 145 were wrongly applied without a finding that the books of account maintained were incorrect and profit could not be deduced from the same. The CIT (Appeals) directed the Assessing Officer to accept the net profit as disclosed in the books of account while disposin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 44AB and also produced other relevant documents. The decision of the Tribunal, according to Mr. Joshi, is that of an arbitrator and not of an appellate authority. 6. Mr. Bhuyan, learned counsel for the Revenue submitted that the identity of the sundry creditors could not be confirmed for want of particulars and the appellant also could not assist the Assessing Officer in this respect. According to Mr. Bhuyan, the learned Tribunal considered the matter in depth and estimated the net profit at 6 per cent. of the total receipt. According to learned counsel, some amount of guess is always there in the matter of best judgment and no infirmity is found in the order of the learned Tribunal. That apart, according to Mr. Bhuyan, there is no qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The explanation given by the assessee that they had to execute the work in the State of Assam in a disturbed situation and raw materials like stone chips, sand, ballast, stone gravel, stone boulders, bricks, etc., were purchased from different sundry creditors has not been duly considered by the Assessing Officer and the learned Tribunal. Though the learned Tribunal did not notice any serious infirmity in the profit and loss account, yet it applied the doctrine of equity and good conscience in estimating the profit at the rate of 6 per cent. merely on guess. In our considered opinion, on surmises and guess, the learned Tribunal should not have disturbed the finding of the learned CIT (Appeals). 8. A Division Bench of this court in Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence and pleadings, and he is entitled to Act on material which are not acceptable in evidence in a court of law, but while making the assessment under the principles of best judgment, the Income- tax Officer is not entitled to make a pure guess without reference to any evidence or material. There must be something more than a mere suspicion to support the assessment. He must take into consideration local information and repute in regard to the assessee's circumstances, and his own knowledge of previous returns and of other matters necessary to assist him in arriving at a fair and proper estimate. Low profit in a particular year is itself cannot be a ground for invoking the powers of best judgment assessment without support of any materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been pointed out hereinabove, the Assessing Officer abruptly came to a conclusion that the accounts do not disclose correctly the transactions in respect of purchase of raw materials without any enquiry as to whether such materials commensurate with the volume of the works done. Failure of the assessee to give details of the sundry creditors may be a ground for raising suspicion, but suspicion alone is not enough for invoking the powers of best judgment assessment without the support of the materials. The Assessing Officer relied upon a part of a transaction for the preceding year while rejecting the other. This is not permissible in law. Without pointing out any error in the profit and loss account and the audited report, the powers o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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