TaxTMI 
TaxTMI 
2001 (9) TMI 90
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....n of contracts for construction. For the assessment year 1988-89, the assessee filed a return declaring an income of Rs.48,810. During the accounting period, it had received a total amount of Rs.48,39,648. Out of this, a sum of Rs.9,17,104 was paid to sub-contractors. Resultantly, the assessee had received gross payments of Rs.39,22,544. On a consideration of the matter, the Income-tax Officer found that there were defects in the maintenance of accounts. The provisions of section 145 were invoked. The book results were rejected. The taxable income was worked out by applying a net profit rate of 10 per cent. Certain additions and deductions were made. The total taxable income was fixed at Rs.3,91,340. The assessee appealed to the Commi....
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....tion on account of depreciation was disallowed by different orders of the Tribunal. Aggrieved by the orders, the assessees have filed these three appeals. Mr. R. P. Sawhney, counsel for the Revenue, contended that the taxable income having been determined by applying the principle of net profit, all admissible allowances should be deemed to have been taken into consideration. The claim made on behalf of the Revenue was controverted by Mr. A. K. Mittal, counsel for the assessees. It is undoubtedly true that if the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, he can proceed to make best judgment assessment. However, even while doing so, the Assessing Officer is bound to take i....
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.... was directed that "even where best judgment is made, the above procedure should be adopted provided the required particulars have been furnished by the assessee". Section 119 makes it mandatory for the income-tax authorities to follow the orders, instructions and directions issued by the Board. The directions given in the circular do not fall within the exceptions embodied in the proviso to sub-section (1) of section 119. It was not even suggested that these are contrary to any statutory provision. Thus, these were binding on the authorities. These had to be followed. Since the instructions of the Board had not been observed, the contention raised on behalf of the Revenue cannot be accepted. The rule in this behalf has been clearly enun....
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....le income has to be computed after taking into consideration the provisions contained in sections 30 to 43. Under section 32, the assessee is entitled to claim depreciation. Under section 144, the Assessing Officer is bound to take into consideration the entire material on the record. Thus, in a case where the assessee makes a specific claim for depreciation and gives the information as required under section 32, the Assessing Officer is bound to take the claim of the assessee into consideration. This consideration of the material should be apparent from the order. There is no room for any assumption. In this context, it deserves notice that with effect from April 1, 1994, Parliament has made a special provision for computing profits and....