Allahabad HC Dismisses Petition Challenging Best Assessment by Income Tax in absence contrary proof [Read Order]

An appeal under Section 260-A of the Income Tax Act,1961 was filed by Rai Wines Ras Bahar Colony challenging the legality of the Income Tax Appellate tribunal in sustaining the order of the CIT (Appeals) while making an enhancement to the income of the appellant to Rs.13,38,780/- over and above to the assessed income of the appellant amounting to Rs.25,63,730/- made by the Assessing Officer?"

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It is to be noted that the findings recorded by the Commissioner of Income Tax (Appeals) ("CIT Appeals") and the Income Tax Appellate Tribunal are concurrent findings. Mr. Agarwal has argued that the Tribunal has not gone into theaspect of enhancement of income by the CIT (Appeals) in any detail whatsoever and has, in a simplistic manner, justified the approach of the CIT (Appeals).

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He further observed that rate of 5% after comparing assessee's case with certain other case applied by the Assessing Officer was not in order. The entire difference between the estimated sales and sales shown by the assessee in the books was required to be added to the net profit shown by the assessee. This would automatically give the net profit of the assessee. If it was done, then the difference in sales of Rs. 29,08,880/- was to be added to the net profit of Rs. 9,93,625/-. This resulted in enhancement of enhancement notice.

He compared the cases where sales were estimated on basis of license fee. CIT (Appeals) after considering the reply of the assessee and various decisions referred to in appellate order came to the conclusion that income of assessee was to be estimated at Rs. 39,02,510/-as against estimated by Assessing Officer at Rs. 25,63,730/-. Thus, he enhanced the income by Rs.13,38,780/-.

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Subsequently, the Tribunal has come to the finding that it isundisputed that the assessee had not maintained the cash memos and, therefore, the sale figures of the assessee could not be determined in any manner whatsoever. It is further held that rate of sale per liter had been determined by the authorities by taking into view the sales made by the shops in the adjoining areas. The Tribunal has further held that the assessee could not bring any contrary finding to indicate that the bulk sale rate was less than the figure decided by the CIT (Appeals) of Rs. 30.70 per liter.

In light of the same, the Tribunal held that the estimation of thesales has not been on the basis of license fee but on the basis of sales on facts of the assessee's own case in the immediate preceding year and no contrary facts have been brought on record by the assessee. Consequently, the Tribunal did not interfere with the finding of the CIT (Appeals).

The court viewed that when a best assessment is done, it is for the assessee to bring on record the facts that may reveal that the findings are perverse in nature. The bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri held that in absence of material brought on record to convince us to dislodge the decision of the CIT (Appeals) and the Tribunal, dismissed the appeal.

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