TaxTMI 
TaxTMI 
2026 (5) TMI 1337
X X X X Extracts X X X X
X X X X Extracts X X X X
....aised the following grounds of appeal : 1. The order of the learned CIT(A) NFAC Delhi, in so far as it is against the appellant, is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT(A) erred in not condoning the delay in filing the appeal which was due to genuine and bona fide reasons against an arbitrary ex-parte assessment Order. 3. The learned CIT(A) erred in dismissing the appeal without passing a reasoned and a speaking order and without duly considering the detailed submission made by the appellant. 4. The LD CIT(A), ignoring the details furnished by the appellant about the jurisdiction, erred in dismissing the appeal without appreciating that the FAO has passed an ex-parte Assessment Order in pursuance of a notice issued U/s 148 by a non-Jurisdictional Assessing Officer and therefore, any Assessment Order passed in consequence, is void ab initio and non-est in the eyes of law. 5. The Ld CIT(A) erred in dismissing the appeal without appreciating that the FAO has passed an arbitrary order U/s144 of the I T Act in violation of the decisions of Jurisdictional Karnataka h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....our years was already lapsed from the end of the assessment year under consideration, the necessary sanction to issue notice u/s 148 of the Act was solicited from the Principal Commissioner of Income Tax, Bengaluru-1, Bengaluru as per provisions of section 151(1) of the Act. 3.1 In response to notice u/s 148 of the Act as well as reminder letter dated 12.11.2021, the assessee did not file his return of income for AY 2013-14. Subsequently, the notice u/s 142(1) of the Act was issued along with specific questionnaire. Thereafter, two reminder letters dated 17.01.22 & 31.01.2022 were also issued. Further, another notice u/s 142(1) was also served by the designated verification unit on 16.02.2022 through speed post. However, the assessee neither filed his return of income nor filed any reply to the aforesaid notices. The AO was of the opinion that as the assessee has been given ample opportunities vide notices u/s 148 and notices/reminders u/s 142(1) of the Act along with the show cause notices but the assessee did not furnish any reply to any of the notices issued and accordingly, the AO has left with no option but to complete the assessment proceedings ex-parte under the provision....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in of 15% on the turnover by the AO is arbitrary in nature and without any valid basis. In this regard, the assessee relied upon the various decisions of the coordinate bench of the Tribunal. 3.5 The reply of the assessee was considered carefully by the AO but not found acceptable on merit since the assessee had neither filed his ITR originally nor in response to notice u/s 148 of the Act. Further, during the course of assessment proceedings, the assessee had also not furnished any details/documents as called for. In view of the above, the AO held that once the profit is determined on estimated basis, the assessee is not entitled to any further deduction as per provisions of section 30 to 43D of the Act. Therefore, the claim of depreciation as made by the assessee was rejected. Further, the AO observed that the assessee himself shown net business income of Rs. 1,75,45,719/- before depreciation and the said net profit comes @10.16% of gross receipts. However, in the absence of any details and ITR, the profits declared by the assessee cannot be acceptable. Therefore, considering the above facts, the net profit of assessee was estimated @ 15% of gross contractual receipts and accor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2) The assessee failed to produce the original self-assessment challan before the AO. 3) There is mismatch between the turnover in 26AS and turnover declared by the assessee. 4) The AO could not verify the claim owing to noncompliance and non-production of books. In absence of proper return, supporting documents and reconciliation, the ld. CIT(A)/NFAC held that AO was justified in not granting the credit. 6. Again aggrieved by the order of the ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal. The assessee has also filed voluminous paper books comprising 351 pages containing therein the various documents/records in support of his case. Further, the assessee by way of another paper book has also submitted the synopsis of written submissions along with the various case laws relied upon by the assessee. 7. Before us, at the outset, the ld. A.R. of the assessee vehemently submitted that there was sufficient cause in filing the appeal belatedly by 957 days before the ld. CIT(A)/NFAC. Further, the ld. AR submitted that the assessee is a civil contractor and working with the Government departments/PWD. It is also submitted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lly conversant with the intricacies of tax laws, he was fully dependent & relied on his brother in law who was managing the accounts & tax compliances matters. Unfortunately, due to the family disputes followed by Covid 19 pandemic as well as declining health of his elderly parents, there was a communication gap between the assessee & his brother in law. Further, all the communications related to tax proceedings were directed to the email-id of his brother in law & due to the family disputes, his brother in law did not communicate with the assessee regarding the notices issued & assessment order passed against the assessee. The assessee became aware of the passing of the assessment order only when his bank account was attached by the Department. 9.1 Having the heard the ld. Counsel for the assessee as well as the ld. D.R., it is perceived that the explanation offered in the condonation application is plausible and sufficient cause being shown by the assessee which prevented him from filing the appeal within the prescribed period. In our opinion, it cannot be said that the assessee is very callous in his approach in filing the appeal before the ld. CIT(A)/NFAC. Further, when subs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee also submitted that had he not included the interest cost paid to bank which can also be added back to arrive at the cash profit margin (after adding back depreciation & interest) will go over to 12%. Thus, the assessee wanted to convey to the AO that by declaring net profit of Rs. 1,05,45,500/- (6.06% of the Turnover), he had in fact declared cash profit margin of over 12% from such contracts. The AO, surprisingly understood that the assessee is requesting to allow deduction of depreciation on assets and accordingly held that when the net profit rate to gross receipts is determined on estimation basis, no further deduction is to be allowed & therefore the claim of the depreciation made by the assessee was rejected. We are of the considered opinion that in the absence of books of account, information, evidences, the AO had no option but to conclude the assessment best of his judgment u/s 144 of the Act. However, we are also of the considered opinion that the estimation made by the assessee should not be a blunt arrow, fluke & blind guess & the estimation must be fair, reasonable and based on nature & type of business as well as industry margin. We are also of the considerati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, would be material: "No doubt it is true that when the returns and the books of account are rejected, the assessing officer must make an estimate, and to that extent he must make a guess; but the estimate must be related to some evidence or material and it must be something more than mere suspicion." Again in Stale of Kerala v. C. Velukutty [1966] 60 ITR 239 (SC), which was a case under the Travancore-Cochin General Sales Tax Act, Subba Rao J. (as he then was), speaking for this court, observed at page 244 of the report thus: "The limits of the power are implicit in the expression 'best of his judgment'. Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guesswork in a 'best judgment assessment', it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case." 10.2 The Hon'ble Karnataka High Court in the case of Jayanthilal R. Tunk v. Commissioner of Income Tax & Anr. Reported in (1982) 028 CTR 0010 (Karn-HC) has held a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Officer. A fair estimate of the income has to be made. Further, the Jurisdictional High Court held that Guesswork is inevitable; but, it cannot be wild guess; the guesswork should have a reasonable nexus to the available material and the circumstances of each case. 10.4 Now coming to the present facts of the case, we find force in the contention of the AR of the assessee that the assessee is a civil contractor and the entire contract receipts were from government departments/PWD as can be verified from form 26AS and all the proceeds were received through proper banking channels on which the tax had been deducted at source. On perusal of the assessment order, we also noticed that in absence of any details/evidences filed by the assessee, the AO has estimated the income of the assessee @ 15% by holding that once the profit is determined on estimated basis, the assessee is not entitled to any further deduction as per provisions of section 30 to 43D of the Act by relying on the various orders of the Co-ordinate Bench of Tribunal & Hon'ble High Courts. The AO also held that when the net profit rate to gross receipts of the assessee is determined on estimation basis, no further ded....
X X X X Extracts X X X X
X X X X Extracts X X X X
....insurance which is eligible for deduction U/s 80C of the I.T. Act to the extent of Rs. 1,00,000. Thus, the assessee claimed Chapter VI-A deductions of Rs. 1,10,000/- in his statement of income filed, however the AO while passing the assessment order did not allow the eligible deduction while computing the net taxable income of the assessee. 11.1 Further, the ld. AR of the assessee contended that in the computation sheet served along with the assessment order, the AO had taken the prepaid taxes as Nil, whereas during the course of assessment proceedings, the assessee had submitted the statement of income along with copy of 26AS in which the total TDS of Rs. 26,51,922/- & Self assessment tax paid of Rs. 7,00,000/- on 28/03/2016 is clearly reflected. 12. We are of the considered opinion that as the assessee could not represent his case before the AO & submit all the necessary evidences such as copy of premium paid towards Max New York Life Insurance, Copy of SB passbook/statement evidencing SB Interest, Copy of the self assessment challan as well as copies of TDS Certificates/Form 26AS along with reconciliation if any, we deemed it fit & proper to remit this issue to the file of....