TaxTMI 
TaxTMI 
TaxTMI 
2014 (8) TMI 108
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The only issue arising in the instant appeal is the maintainability in law of estimation of net profit at 4.25% of the turnover by the ld. CIT(A), as against at 20% thereof by the Assessing Officer (A.O.), in the facts and circumstances of the case. 3. It would be relevant to recount the background facts of the case. The assessee, a firm in the business of manufacturing and trading in gold ornaments, returned its income for the year on 28.10.2007 at Rs. 14,38,390/- (on a turnover of Rs. 451.11 lacs). The assessee, though furnished its audited final accounts in the verification proceedings, initiated by the service of notice u/s. 143(2), did not furnish any other details (refer para 2 of the assessment order). A notice was accordingly issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the current year. The ld. CIT(A) was of the view that the A.O. had, in proceeding to frame the assessment u/s.144, acted in haste in-as-much as the assessee had attended in response to notices u/s.143(2) and 142(1), furnishing information, so that there was no intentional non-compliance (on other dates). Further, even so, the assessee had made out a strong case for reduction in the rate of net profit; that in the case of M/s. Shyam Jewellers being on a turnover of Rs. 813.61 lacs, i.e., nearly twice that of the assessee. The assessee's return of income, in his view, however, called for a marginal increase from that returned. He, accordingly, estimated the same at 4.25% of the turnover, as conceded to by the ld. AR before him (refer para....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er, agreeable to the matter being restored back to the file of the A.O. to examine those evidences. The ld. AR, on the other hand, vehemently opposed the said proposition. The A.O. mis-states the facts when he says that there had been no compliance before him, adverting to the affidavit dated 01.01.2010, cited supra, wherein averments to this effect have been made (PB pgs.22-25). In fact, it is only on account of this that penalty proceedings u/s. 271(1)(b) have been since dropped by the A.O. himself. On merits, the A.O. had proceeded with his estimation without rejecting the assessee's books of account u/s.145(3), and which was not permissible in law, as held in CIT vs. Shakti Industries [2013] 36 taxmann.com 16 (Guj). Even so, the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essing authority to, under the circumstances specified therein, make an assessment in the manner provided in section 144, i.e., to the best of his judgment. In a case, as in the instant case, where there has been no production of books of account as well as the underlying vouchers, there is no question of their examination and, thus, of being not satisfied therewith, and neither has the Revenue invoked section 145(3). The plea by the assessee in this regard is misplaced. No doubt, the ld. CIT(A) states of the A.O. having acted in haste in proceeding to frame the assessment on best judgment basis, but then he does not strike it down on that or on any other basis, and which would rather preclude him from adjudicating on the A.O.'s estimate or....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... An estimate - assuming existence of grounds for the exercise of that power by the assessing authority - has to be an honest and fair estimate, taking into account all the relevant material, which the A.O. is in fact obliged to gather, shorn of arbitrariness and capriciousness. Though the same represents trite law, case law on which is legion, we may toward the same refer to a couple of decisions, as in the case of Brij Bhushan Lal, Parduman Kumar vs. CIT [1978] 115 ITR 524 (SC) and Kachwala Gems vs. Jt. CIT [2007] 288 ITR 10 (SC). The profit rate for AY 2009-10, since confirmed per regular assessment, i.e., by making an ad hoc addition of Rs. 0.26 lacs only (PB pgs. 109-110), not only proves the arbitrariness of the AO's estimate, but als....