TMI Blog2008 (7) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent. JUDGMENT The judgment of the court was delivered by DEEPAK GUPTA J. - This appeal was admitted on the following substantial questions of law: "1. Whether the Tribunal was correct in law in upholding the addition of Rs. 3,74,387 as made by the learned Income-tax Officer as good though the same has been made without any basis and without any material on record to substantiate the same ? 2. Whether the Tribunal was justified in allowing the appeal of the Revenue solely on the ground that the figures of gross profit as returned in the instant year and the preceding years was not tendered before the income-tax authorities, and without going into other merits of the case?" 2. The brief facts giving rise to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the assessment on estimation basis should have been made on a rational basis and there was no cogent reason why the methodology followed by the Tribunal in the case of Alfa Restaurant should not be followed in the case of the assessee. He submits that a judicial authority exercising discretion must exercise it in a judicious manner. 8. On the other hand, Ms. Vandana Kuthiala has submitted that no substantial question of law arises and that the estimation made by the Tribunal is an estimation based on evidence and, therefore, no question of law much less a substantial question of law arises in the appeal. She has relied upon a judgment of the Assam High Court in Safiullah v CIT. AIR 1957 Assam 18 wherein it was held that the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the case of Baljees' Restaurant large proportion of the sales were in respect of sweet items sold from the counter in which the consumption of the raw material is bound to be on the lower side. The Commissioner of Income-tax, therefore, estimated the sales of the assessee by applying a multiply of 2.5 qua the cost of raw material. 12. The assessee in appeal relied upon the judgment of the Tribunal itself wherein in the case of Alfa Restaurant the multiple applied was 2.2. Ms. Kuthiala has contended that the Tribunal had applied the multiple of 2.2 by accepting the gross profit declared by the assessee and accepted by the Revenue for the previous four assessment years. 13. At the outset we may observe that even while making an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estimation made by the Assessing Officer is correct or not is normally treated as a question of fact. However, when the concerned authority like in the present case, does not follow a uniform practice and applies different yardsticks in similar cases then such action is hit by article 14 and becomes arbitrary and capricious. This itself leads to the inference that the case involves a substantial question of law. 16. In view of the above discussion, the appeal filed by the assessee is allowed. The order of the learned Tribunal is set aside. Since the assessee's appeal against the order of the Commissioner of Income-tax has already been dismissed in default, no further benefit can be granted to the assessee and the order of the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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