TaxTMI 
TaxTMI 
1993 (3) TMI 26
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....or the assessment year 1982-83 was shown at Rs. 9,46,817 with a gross profit of Rs. 63,628 and the rate disclosed was 6-7 per cent. The Income-tax Officer has found that although the books of account were maintained, no day-to-day stock analysis was found. The Income-tax Officer also cited a comparable case of a dealer who, according to him, had dealt in 1982-83 in powder spices as well as in solid spices and had shown 23.2 per cent. gross profit for powder spices and 22.2 per cent. for solid spices. The Income-tax Officer, basing his judgment on the said case, had rejected the book version of the profit of the assessee and applied a flat rate of 10 per cent. over the total turnover disclosed and added a sum of Rs. 31,056. Against the sa....
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....rading results as per the books. He has submitted that, since the finding was arrived at by the Assessing Officer in violation of natural justice and such finding having been confirmed by the Tribunal, that finding should be set aside. It is true that the Income-tax Officer can rely on such materials but he has to disclose such material to the assessee before he makes any order of assessment ; otherwise, it will be difficult for the assessee to meet the same. In this case, the following question was raised by the assessee : "Whether, on the facts and circumstances of the case, the Tribunal is correct in justifying the action of the learned Income-tax Officer for relying on a comparable case which was not discussed or brought to the kn....
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....action of the Income-tax Officer is violative of the legal requirement as contained in section 142(3) of the Act if indeed the comparable instance guided the estimate of profit. The said sub-section reads as follows : (3) The assessee shall, except where the assessment is made under section 144, be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under sub-section (2) or any audit under sub-section (2A) and proposed to be utilised for the purposes of the assessment. It is patent that, in this case, the assessee was not confronted with the comparable instance by the Income-tax Officer. It is seen from the order of the Tribunal that this aspect of the matter was specifically brought to ....
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....therefrom. Another aspect is also notable in the circumstances of the case. The assessee merely rests at contending against the Assessing Officer's failure to disclose the comparable case before completion of the assessment but even when the case came to the knowledge of the assessee, and the assessee was in appeal before the Deputy Commissioner (Appeals), no attempt was made to show the general trend in the market. Even before the Tribunal, the contention of the assessee was only limited to not having an opportunity to challenge the comparative case but no challenge was, in fact, made to the said comparable instance though by then within the know-ledge of the assessee. We would have been impressed with the contentions if the assessee....