2017 (4) TMI 170

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....less than Rs. 10 lakhs. The instructions have been made applicable with retrospective effect, meaning thereby, these instructions are applicable on pending appeals also. In the present case, total addition deleted by the ld.CIT(A) is of Rs. 13,00,000/- which was challenged by the Revenue in the present appeal. In accordance with the above CBDT Circular the tax effect on the impugned deletion of addition would be less than Rs. 10 lakhs, and therefore, the present appeal of the Revenue deserves to be dismissed being treated to be filed in violation of CBDT Instructions. Further, the case does not fall within the ambit of exceptions provided in the instructions. It is further observed that since, while hearing the appeals, such factors could not be cross-verified, therefore, in case, on reverification at the end of the AO, it came to the notice that the tax effect is more or it falls within the ambit of exceptions provided in the Instruction, then the Department will be at liberty to approach the Tribunal for recall of this order. Such application should be filed within time limit. In view of the above, the appeal of the Revenue is dismissed. 4. Now, we take the appeal of the asses....

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..... A. C.I.T. 58 ITD 428, (Ahd). Hence reliance is placed on the decision of Hon'ble jurisdictional I.T.A.T in the case of Vijay Proteins Ltd. (Supra), wherein it has been held that owing to non-verifiability of claimed expenditures, 25% of the claim can be reasonable amount of disallowance. 9.9 Thus, considering the totality of facts and circumstances of the case and in view of the decision of Hon'ble jurisdictional I.T.A.T., Ahmedabad in the case of Vijay Proteins Ltd.(supra), it would be fair and reasonable to disallow 25% of the expenditure claims of 63,18,996/- as shown in respect of the above discussed concerns on account of unverifiable expenditures. The dis allowance on this account works toRs.15,79,749/- being 25% of the aggregate. The same is , therefore, disallowed and added back to the taxable income of the assesse on account of being unverifiable and unsubstantiated. 9.10 Thus, from the above discussion, it is evident that the assessee has furnished inaccurate particulars by inflating and over-reporting the expenditures deductible in business. The ensuing income has been under reported by this functioning of inaccurate particulars. Therefore, satisfied on account o....

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....rectness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) [or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee], the Assessing Officer may make an assessment in the manner provided in section 144.]" 9. A bare reading of Section 145 would reveal that it provide the mechanism how to compute the income of the Assessee. According to sub-section 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....

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....sessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]" It is pertinent to note that that section 144 would suggest that in order to estimate income, learned Assessing Officer has to exercise his discretion which should be 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, bu....