TMI Blog2017 (7) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... Indira Banerjee, CJ And M. Sundar, JJ. For the Appellant : Mr. Karthik Ranganathan JUDGMENT The Hon'ble Chief Justice and M. Sundar, J. This appeal to the High Court by the Principal Commissioner of Income Tax 4, Chennai (hereinafter referred to as 'Revenue' for the sake of brevity) is under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as 'IT Act' for the sake of brevity) 2. Brief facts that are essential for appreciating the controversy / issues are set out under the caption 'Factual Matrix'. 3 FACTUAL MATRIX : 3(a) The Assessment Year, which is the subject matter of this appeal, is 2012-13 (hereinafter referred to as 'said Assessment Year' for the sake of brevity). The sole respondent before us, namely Marg Limited is the Assessee and is hereinafter referred to as 'assessee' for the sake of brevity, clarity and convenience. 3(b) Assessee filed return of Income for said Assessment Year electronically on 01.12.2012. Revenue selected the case for scrutiny. On statutory notice being issued, the Assessee filed initial details. 3(c) To be noted, the Assessee is a public limited company en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessee by estimating gross profit. The power to make such addition on estimate basis is available to the AO under Section 144 of the IT Act. Section 145 enables the AO to invoke the power under Section 144 when certain conditions adumbrated in Sub-section (3) of Section 145 are satisfied. Therefore, it becomes necessary and useful to extract Section 145(3) of the IT Act, which reads as follows: 145 (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in Section 144. 4(c) Therefore, it is sine qua non that the AO to come to a conclusion that the Books of Accounts maintained by the Assessee are incorrect, incomplete or unreliable and reject the Books of Accounts before the proceeding to make his own assessment. In the instant case, there is no reference in the Assessment Order of the AO regarding rejection of Books of Accounts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the impugned addition on estimation of profit even though it is established that the assessee is definitely showing low rate of profits in comparison to the regular civil construction and hence profit can be estimated by the Assessing Officer in the instant case in the absence of regular bills and vouchers? 2. Whether on the facts and circumstances of the case and in law, the ITAT was correct and justified in not following the Hon ble Apex Court s decision in the case of CIT Vs.British Paints India Ltd., 188 ITR 44 (SC), wherein it is held that even if the assessee had adopted a regular systems of accounting it was the duty of the AO u/s.145 to consider whether the correct profits and gains could be deduced from the accounts so maintained by the assessee? 4 (j) We examine whether the aforesaid two questions would qualify as substantial questions of law? Hon ble Supreme Court of India in the Sir Chunilal V. Mehta Sons Ltd. vs Century Spg. Mfg. Co. Ltd. [AIR 1962 SC 1314], while agreeing with and approving a Full Bench Judgment of this Court in Rimmalapudi Subba Rao vs Noony Veeraju And Ors reported in AIR 1951 Mad 969 laid down principles as to when a question of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the highest court or if the general principles to be applied in determining the question are well settled and the only question was of applying those principles to the particular fact of the case it would not be a substantial question of law. This Court laid down the following test as proper test, for determining whether a question of law raised in the case is substantial: (Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] , SCR pp. 557-58) The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e emerging from binding precedents, and, involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the court below has decided the matter, either ignoring or acting contrary to such legal principle. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law . (iii) The general rule is that High Court will not interfere with the concurrent findings of the courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to decision based on no evidence , it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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