TaxTMI 
TaxTMI 
2006 (12) TMI 79
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....al was recast as "Whether, in the peculiar facts and circumstances existing in the NE States during the relevant year of assessment, the Tribunal is justified in confirming rejection of the books of account by the Assessing Officer and computing the net income of the assessee on the basis of 6 per cent. of the net receipts following the principles of best judgment assessment ?" 2 We have heard Mr. C. K. Joshi, learned senior counsel for the appellant, and Mr. U. Bhuyan, learned standing counsel for the Revenue. 3 The appellant is a private limited company engaged in execution of works contracts. During the relevant period of the assessment of 1993-94, the appellant executed civil construction works at Jogighopa under NF Railways an....
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....Rs. 35,14,978 from contract works and income from other sources like bank interest, sale of stock, etc., at Rs. 2,41,642. The Assessing Officer estimated the net profit at the rate of 8 per cent. 4 On appeal, the CIT (Appeals) was of the view that the provisions of section 145 were wrongly applied without a finding that the books of account maintained were incorrect and profit could not be deduced from the same. The CIT (Appeals) directed the Assessing Officer to accept the net profit as disclosed in the books of account while disposing of the appeal vide order dated June 10, 1996. The learned Tribunal, on consideration of the materials, found that the net profit was estimated by the Assessing Officer on the higher side and upon consider....
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....Revenue submitted that the identity of the sundry creditors could not be confirmed for want of particulars and the appellant also could not assist the Assessing Officer in this respect. According to Mr. Bhuyan, the learned Tribunal considered the matter in depth and estimated the net profit at 6 per cent. of the total receipt. According to learned counsel, some amount of guess is always there in the matter of best judgment and no infirmity is found in the order of the learned Tribunal. That apart, according to Mr. Bhuyan, there is no question of law involved in this appeal. 7. We have considered the submission of learned counsel for the parties in depth. The Assessing Officer did not record any finding that the books of account maintaine....
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....cks, etc., were purchased from different sundry creditors has not been duly considered by the Assessing Officer and the learned Tribunal. Though the learned Tribunal did not notice any serious infirmity in the profit and loss account, yet it applied the doctrine of equity and good conscience in estimating the profit at the rate of 6 per cent. merely on guess. In our considered opinion, on surmises and guess, the learned Tribunal should not have disturbed the finding of the learned CIT (Appeals). 8. A Division Bench of this court in Aluminium Industries (P) Ltd. v. CIT (I. T. R. No. 12 of 1990) observed that a lower rate of gross profit declared by the assessee as compared to the previous year would not in itself be sufficient to justify ....
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....e to any evidence or material. There must be something more than a mere suspicion to support the assessment. He must take into consideration local information and repute in regard to the assessee's circumstances, and his own knowledge of previous returns and of other matters necessary to assist him in arriving at a fair and proper estimate. Low profit in a particular year is itself cannot be a ground for invoking the powers of best judgment assessment without support of any material on record. The system of accounting adopted by the assessee cannot be rejected on the ground that the gross profits were low and compared unfavourable with those of others. It is settled law that the tax authorities having relied on one part of the transactions ....