TaxTMI 
TaxTMI 
TaxTMI 
2006 (8) TMI 443
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the specific bar in admission of appeal provided under the provisions of section 249(4)(a) of the Income-tax Act, 1961. (3) On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the income determined by the Assessing Officer in accordance with the accountancy principles and on the basis of information gathered such as work-in-progress, sale consideration, expenses incurred, land cost, etc., and directing the Assessing Officer to estimate the profit at 15% of the total receipts including on money receipts. (4) Without prejudice to ground No. 1 on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in failing to appreciate that the basis adopted by the Assessing Officer for determining the income of the assessee was in tune with the decision of the Hon'ble Supreme Court in the case of P.M. Mohd. Meera Khan v. CIT 73 ITR 735 ." 2. In ground No. 1, the department is aggrieved on account of the learned CIT(A)'s having admitted appeals whereas these appeals were already dismissed in limine for non-compliance of provisions of section 249(4)(a). Ground No. 3 challenges the validity of the order of the CIT(A) in ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5. On 9-8-2006, the learned DR strongly objected to again fixing the appeals for hearing, when the Tribunal had pronounced its order on 8-8-2006. We do not find any substance in this objection of the DR. The appeals were heard and the order was pronounced on the basis of totally incorrect facts as informed to the Bench. The learned counsel for assessee has stated that he could not bring the correct factual position to the notice of the Tribunal as he did not have relevant files with him at the time of hearing on 8-8-2006 as the person, who was carrying the files was late in arriving due to heavy rains. In our view, the order was pronounced on 8-8-2006 without taking into account, the material facts which are already part of the record and go to the very root of the matter. It would be totally unjustifiable to decide these appeals on the basis of the incorrect facts that the assessee never filed fresh appeals, as this would be a travesty of the judicial system. In our view, the order pronounced on 8-8-2006 suffers from a mistake apparent from record and, therefore, we recall our oral order and we proceed to hearing both the sides in the light of the correct factual position as menti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the returned income for all the four assessment years and filed fresh appeals on 17-1-2003. The delay in filing these appeals has been condoned by the learned CIT(A) on the ground that because of financial crisis, the assessee-firm could not pay taxes earlier. The learned CIT(A), therefore, admitted the appeals as according to him, there was sufficient cause for delay in filing the appeals. In our view, the learned CIT(A) has acted in accordance with the provisions of law. The learned CIT(A) has not renewed his earlier order but has entertained the fresh appeals filed by the assessee after fulfilling the requirements of section 249(4). He has condoned the delay for sufficient reasons. The only requirement of section 249(4) is that taxes due on returned income must be paid at the time of filing the relevant appeal. There is no time-limit prescribed for payment of such taxes. Therefore, if an appeal is filed beyond time-limit but after payment of taxes as stipulated in section 249(4), it cannot be said that the requirements of section 249(4) are not complied with. The only defect in such appeal is that the appeal has been filed beyond prescribed time-limit. In such a case, the appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e relevant factors and circumstances proved therein and which determine the character of the transaction." 10. In the present case, the question is as to whether in the case of a builder net profit rate of 15 per cent applied by the learned CIT(A) for each assessment year is reasonable or not ? We fail to understand the relevance of the decision of Hon'ble Supreme Court referred to in ground No. 4 of the appeal. Reverting back to ground No. 3, the facts are that the assessee-firm is a builder developer. A survey under section 133A was carried out on 17-1-2000. During the course of survey, papers, diaries and evidence of receipt of on money were found. It was observed that the assessee had not maintained regular books of account and only financial statements in respect of financial years 1995-96, 1996-97, 1997-98 were found, which included balance sheet, Profit and Loss Account and capital accounts of partners. Certain files were also found containing details of expenditure incurred by the assessee. The Assessing Officer has stated in the assessment orders that the financial statements were not supported by any books of account and were, therefore, not reliable. However, the Assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lar accounts and therefore, the Assessing Officer is entitled to have recourse to section 144 for the purpose of making assessment. The learned DR pointed out that under section 144, the total income is to be determined by the Assessing Officer to the best of his judgment. The learned DR argued that it is the Assessing Officer alone, who can determine the total income to the best of the judgment and the appellate authorities should not normally intervene or modify such best judgment assessment. For this proposition, the learned DR relied on the decision of Hon'ble Supreme Court in the case of CST v. H.M. Esufali [1973] 90 ITR 271 and Hon'ble Madras High Court decision in the case of CIT v. Rayala Corpn. (P.) Ltd. [1995] 215 ITR 883. The learned DR also assailed the orders of the learned CIT(A) on the ground that the learned CIT(A) relied on certain orders of the Tribunal or some other comparable cases, where net profit rate in the case of a builder was approved at 10-15 per cent. The learned DR argued that precedents can be followed only if such precedents decide a question of law and that on factual matters precedents cannot be followed. For the proposition, the learned DR relied ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he situation. It is his best judgment and not any one else's. The High Court cannot be substitute its best judgment for that of the assessing authority." 16. In our view, the aforesaid decision of Hon'ble Supreme Court cannot be applied while considering the powers of the CIT(A) or the powers of the Tribunal, while exercising their appellate jurisdiction. In our view, if the appellate authorities, on the fact and circumstances, conclude that the best judgment assessment made by the Assessing Officer is unreasonable or excessive, the appellate authorities can certainly set right any unjustice done to the assessee by the Assessing Officer. The Assessing Officer is entitled to make a best judgment assessment in the absence of books of account but such assessment cannot be arbitrary and must be reasonable. The assessment should not penalise the assessee because the books of account are not maintained or the same are defective. The duty of the Assessing Officer, in our view, is to make a fair and reasonable estimate of the total income of the assessee chargeable to tax as per the provisions of the Income-tax Act, 1961. Even if a best judgment assessment is made, the assessee cannot be ....