TaxTMI 
TaxTMI 
2016 (10) TMI 922
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....ailable on record. On the last occasion, the appeal was listed on 4.7.2016. Shri Ashwin Parikh who was prosecuting the proceedings before the ld.Revenue authorities below, applied for an adjournment. The application of the tax consultant read as under: "Date : 04.07.2016 To, The Members of The Income-tax Appellate Tribunal Bench-B Ahmedabad. Reg: M/S.Krishan Corporation C/o.M/s.Ashwin Pareikh & Co. Chartered Accountant 401-404, Bonista Rajhans B/gh. Ram Chow Temple Ghod-dod Road, Surat. Appeal: ITA-2200/Ahd/2011 Sub: Hearing of appeal as on 04.07.2016 Before 'B' Bench-Request for adjournment. A.Y. 2008/09 Hon'ble Sir, Hearing in the above cases are fixed on today before "B" Bench. Since office of the assessee is closed, preparation of necessary details requires sometime. I regret to request your honour to kindly allow a time of 15 days and oblige. Thanking you Yours faithfully For Ashiwn Pareikh & Co. Chartered Accountants Sd/" 3. On the request of the assessee, hearing was adjourned for 24.8.2016. But again on 24.8.2016 none has appeared. Faced with t....
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....assessee to show reasons for decline in such GP. In response to the query of the AO, a detailed reply was submitted by the assessee. The ld.AO has summarized the reasons shown by the assessee on page no.9 and 10 of the assessment order. Explanation of the assessee summarized by the AO reads as under: "A summary of the submission of the assessee as clear from above in short is mentioned below:- [a] The assessee now disputes its own GP for A Y 2007-08 (14 %) [b] The assessee is claiming that the Bank Interest component has been wrongly considered the G P working for AY 2007-08 and 2008- 09. [c] The assessee claims that the correct G P working should be Particulars A.Y. 2007/08 A.Y. 2008/09 Sales 5,12,88,475 12,67,59,025 Gross Profit excluding Interest and Income disclosed 91,49,745 1,88,82,876 17.84% 14.90% [d] The assessee accepts that the correct difference in Gross Profit is 2.94% as compared to A.Y, 2007/08. [e] The assessee claims that there is a difference in the sale of shops (Rs. 700 per Sq. Fts) and flats (Rs. 525/- per Sq. Fts) . It claims that there was a sale of shop in A Y 2007-08 which was NIL in AY ....
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.... GP as compared to A Y 2007-08 was at least 2.94%." 8. The ld.AO has rejected book results of the assessee and estimated the GP at the rate of 14% and worked out the GP addition at Rs. 1,37,99,000/-. 9. On appeal, the ld.CIT(A) did not concur with the AO about the rejection of book results. She has accepted the contentions of the assessee that there are no specific defects in the books which can prevent the AO to compute true income of the assessee. Similarly, as far as quantification of the amount at Rs. 1,37,99,000/- is concerned, the ld.CIT(A) has observed that it is an incorrect quantification. According to the ld.CIT(A), the alleged difference between the GP declared by the assessee as well as calculated by the AO could be Rs. 69,90,011/-. The finding of the CIT(A) about pointing out incorrect computation of the amount has been recorded in para 6.3 of the order. It is pertinent to take note of this finding: "6.3. I have carefully gone through the submission of appellant and assessment order. There is a mistake in working of amount of Rs. 1,37,99,000/- on page 20 of the assessment order. The Assessing Officer has worked out the Gross Profit of the year at Rs. 1,77,46,2....
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....on 1, the income chargeable under the head profit and gains of business or profession or income from other source shall be computed in accordance with the method of accountancy employed by an Assessee regularly, subject to sub-section 2 of Section 145 of the Act. Sub-section 2 provides that the Central Government may notify in the official gazette from time to time, the Accounting Standard required to be followed by any class of Assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of accountancy followed by an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time. Sub clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income, on the basis of method of accountancy followed by an Assessee than he can reject the book result and the assess income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects....
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.... in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment assessment, the Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee about his business, the previous history of the assessee or the similarly situated assessee. It is also pertinent to mention that judgment is a faculty to decide matter with wisdom, truly and legally. Judgment does not depend upon the arbitrary, caprice of an adjudicator, but on settled and invariably principles of justice. Thus, in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee. 14. In the light of the above, let us examine the facts of the present case. There is an old dictum falsus in uno, falsus in omnibus. Considering this old dictum, Hon'ble Calcutta High Court in Amal Kumar Chakr....
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....dmitted that shops were sold in this year. The AO further made reference to the amounts mentioned in the statement of the assessee exhibiting the shops sold by it. He made reference to page nos.78 to 83 of the diary impounded during the course of survey. Next reason given by the AO is that the assessee failed to submit primary records exhibiting the details of expenses. While dealing with this aspect, the ld.CIT(A) has made reference to the judgment of Hon'ble Allahabad High Court in the case of Nisar Biri Sikka No.1 Vs. CIT, 174 TAXMANN 51 and also observed that books of accounts cannot be rejected on the ground that labour payment made by self-made vouchers and register bearing thumb impressions of the workers. If this reasoning is being analysised with the finding recorded by the AO, then it would find that the AO has not rejected the books for this reason. The case of the assessee is that the assessee has accepted receipt of money on sale of flats. The sale consideration was unrecorded in the books. Similarly, it has incurred expenditure without recording in the regular books. When the AO has verified the primary details showing the incurrence of expenditure, then the assess....