TaxTMI 
TaxTMI 
2014 (12) TMI 1162
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.... and in law the ld. CIT(A) erred in restricting the disallowance at 3% i.e. at Rs. 29,42,380/- as against the 10% i.e. at Rs. 1,02,63,160/- made by the assessing officer relying on the assessee's records for subsequent year. The Ld. CIT (A) erred in appreciating the fact that the assessment is made a best judgment u/s. 144 of the IT Act, and the assessee itself is to be blamed for not submitting proper accounts. It is to be noted that every assessment is sui generis and no res-judicata is applicable and accordingly earlier or subsequent assessment will have no binding effect on the assessment made for the year under consideration unless and until the facts are same or similar. 2. On the facts and in the circumstances of the case in l....
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....Rs. 1,02,63,160/-. While doing so, the AO compared the audit accounts of the year under consideration with that of the immediately preceding year and thereafter observed that the cost of goods sold had increased to 97% of the sales during the year under consideration as compared to that at 83.41% in the last year for which no explanation was offered by the assessee. The AO noted that the assessment in the immediately preceding year was made in similar circumstances and on appeal, the Ld. CIT(A) had directed the AO to take 10% of the turnover as income of the assessee. The AO observed that the business activities of the assessee remained the same during the year under consideration. He accordingly estimated the income at the rate of 10% of t....
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....Rs. 1,02,63,160/- assessed by the AO at the rate of 10% of the turnover. The relevant part of the order of the Ld. CIT(A) is reproduced as under: "5. I have considered the dispute. The appellant company is engaged in the business of trading in 2nd hand vehicles as stockists in which it buys and sales such vehicles; and on consignment basis in which the purchase and sale take place through the suppliers of the vehicles. The consignment business does not require much capital as it does not involve investment in stock-in-trade, after sales service and registration of vehicles. The AO has merely relied on the assessment completed last year and the %age profit adopted consequent to order of the CIT(A). It is to be noted that earlier assessmen....
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....the sales which again comprises mainly consignment sales. In other words, the facts of the subsequent year are similar to those of the current year. Still the AO made assessment almost accepting the book profit of Rs. 0.86% on sales as declared in the return. It is thus clear that the AO has made estimation in the current year on assumptions and surmises without bringing any material to justify that the appellant would have earned a huge income of Rs. 1,02,63,160 as against Rs. 10,50,780 disclosed in the return of income. 5.3 It is well-settled that in a best judgment assessment there is always a certain degree of guess work. No doubt the AO concerned should try to make an honest and fair estimate of the income even in a best judgment as....