9911796707
TMI Blog2017 (2) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... of estimation of GP. 3. In response of notice of hearing none has come present on behalf of the assessee. With the assistance of the ld.DR, we have gone through the record carefully and proceed to decide the appeal ex parte qua the assessee. 4. Brief facts of the case are that the assessee at the relevant time was engaged in trading of iron scrap. She has filed her return of income on 30.9.009 declaring total income at Rs.2,49,092/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 20.8.2010 which was duly served through registered post. Thereafter, the ld.AO has issued various notices, but the assessee did not submit requisite details. Accordingly, the ld.AO has estimated the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook of accounts by the AO is not as per law and accordingly the addition also cannot be sustained." 6. We have heard the ld.DR and gone through the record carefully. Section 145 of the Income Tax Act is the relevant provision for this issue, therefore, it is pertinent to take note of this section. It reads as under : "145. (1) Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time [accounting standards] to be followed by any class of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e book result and the assessee's income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. 8. For exercising the best judgment, section 144 of the Income Tax Act provide the guidance to the ld.AO. This section reads as under: "144. [(1)] If any person- (a) fails to make the return required [under sub-section (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]" 9. It is pertinent to note that that section 144 would suggest that in order to estimate income, learned Assessing Officer has to exercise his discretion which should be in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment assessment, the Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) is not sustainable. Total addition cannot be deleted. As observed in the foregoing paragraphs that income even after rejection of books can be estimated on some guess work. It is to be estimated keeping in view surrounding facts and circumstances. In the present case, the assessee herself has shown GP at 4.21% in the immediately preceding year. Therefore, the AO ought to have adopted GP nearby this figure and not at 20%. The assessee in her submission before the ld.CIT(A) has expressed the rate of at 4.25%. Thus, taking into consideration written submissions filed by the assessee before the ld.CIT(A) and other material, we deem it appropriate that ends of justice would be met, if the gross profit is being calculated at the rate of 5.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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