Kalyan Mukherjee, Hooghly V. ITO, Ward - 2(2), Burdwan

ITA 1615/KOL/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3120 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 20-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 14-09-2009
• Court: TRIBUNAL
• Assessee Lawyers: SARNATH GHOSH
• Keywords: Unexplained cash credit
• Section: 143(3); 68; 69; 145; 144

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . . . . . . . , !' /AND #! $'# , ) [BEFORE SHRI K. K. GUPTA, AM & SHRI MAHAVIR SINGH, JM] '% '% '% '% / I.T.A NO. 1615/KOL/2009 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEAR: 200 5- 0 6 KALYAN MUKHERJEE VS. INCOME-TAX OFFICER, WD-2(2 ), ASANSOL (PAN:ADZPM2292C) (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 14.05.2013 DATE OF PRONOUNCEMENT: 18.06.2013 FOR THE APPELLANT: S/SHRI SOMNATH GHOSH & SARNA TH GHOSH, ADVOCATES FOR THE RESPONDENT: SHRI JAVED KHAN, SR. DR (ORIGINALLY) AND SHRI L. K. S. DEHIYA, CIT., DR (CLARIFICATION) / / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), ASANSOL IN APPEAL NO. 262/CIT(A)/ASL/WARD-2(2)/ASL/2007-08 DATED 30.06.20 09. ASSESSMENT WAS FRAMED BY ITO, WARD-2(2), ASANSOL U/S. 143(3) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DA TED 31.12.2007. 2. THE ASSESSEE IN THIS APPEAL HAS RAISED MODIFIED GROUNDS IN TERMS OF RULE 11 OF INCOME- TAX APPELLATE TRIBUNAL RULES, 1963 AND THE RELEVANT GROUNDS RAISED READ AS UNDER: 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ASANSOL ACTED UNLAWFULLY IN UPHOLDING THE PURPORTED DISALLOWANCE MADE BY THE LD INCOME TAX OFFCER, WARD 2(2), ASANSOL IN THE SUM OF RS. 7,60, 963/- BEING 10% OF THE EXPENSES CLAIMED UNDER HEAD PURCHASE AND ALSO ERRED IN RESOR TING TO ENHANCEMENT BY WAY OF DISALLOWING A FURTHER SUM OF RS. 67,02,331/- THEREB Y RESTRICTING THE EXPENDITURE TO THE SUM OF RS 1,45,333/- THAT BEHALF ARE ABSOLUTELY ARB ITRARY, UNWARRANTED AND PERVERSE. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ASANSOL ACTED LLEGALLY IN UPHOLDING THE IMPUGNED DISALLOWANCE MADE BY THE LD. LNCOME TAX OFFICER, WARD 2(2), ASANSOL IN THE SUM OF RS. 2,56,145/- BEING 10 % OF THE EXPENSES CLAIMED UNDER HEAD WAGES AND THEREAFTER ERRED IN RESORTING TO EN HANCEMENT BY WAY OF DISALLOWING A FURTHER SUM OF RS.23,11,313/- WHICH RESULTED IN EXC ESS OF THE ENTIRE CLAIM OF EXPENDITURE MADE UNDER THAT HEAD AND THE PURPORTED ACTION RESORTED TO ON THAT BEHALF IS WHOLLY CAPRICIOUS, UNREASONABLE AND PERVERSE. 2 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ASANSOL ERRED IN UPHOLDNG THE IMPUGNED DISALLOWANCE MADE BY THE LD. INCOME TAX OFFLCER, WARD 2(2), ASANSOL AGGREGATING TO AN AMOUNT OF RS. 1,22, 976/- BEING 20% OF THE EXPENSES CLAIMED UNDER HEADS TRAVELLING & CONVEYANCE OTHER I NDIRECT EXPENSES, ENTERTAINMENT AND TELEPHONE & MOBILE AND FURTHER ER RED IN RESORTING TO ENHANCEMENT BY WAY OF DSALLOWING THE ENTRE CLAM OF EXPENSES MADE UNDER THOSE HEADS ALONG WITH THE EXPENDITURE CLAIMED UNDER THE HEADS SALARY & BO NUS AND INTEREST ON LOAN AND THE PURPORTED ACTION RESORTED TO ON THAT BEHALF IS TOTA LLY BIASED, FLAWED AND PERVERSE. 4. FOR THAT THE LD. COINMSSIONER OF LNCOME TAX (AP PEALS) ASANSOL MISREAD EVIDENCES, CONSIDERED IMPROPER ISSUES, FAILED TO CO NSIDER PROPER POSITION IN LAW, MISPLACED ONUS OF PROOF IN UPHOLDING THE IMPUGNED A DDITION IN THE SUM OF RS.1,04,529/- MADE BY THE LD. INCOME TAX OFFICER, W ARD 2(2), ASANSOL ON ACCOUNT OF UNEXPLANED INVESTMENT BY INVOKING THE PROVISIONS O F S. 69 OF THE LNCOME TAX ACT, 1961 AND THE SPECOUS FINDING ON THAT BEHALF IS ABS OLUTELY WRONG, ERRONEOUS, FLAWED AND CONTRARY TO THE STATUTORY PRESCRIPTION. 5. FOR THAT THE LD. COMMISSIONER OF LNCOME TAX (APP EALS) ASANSOL GRAVELY ERRED IN UPHOLDNG THE MPUGNED ADDITON OF RS. 4,08,960/ - MADE BY THE LD. INCOME TAX OFFCER, WARD 2(2), ASANSOL ON ACCOUNT OF ALLEGED U NDISCLOSED DRAWINGS AND THE IMPUGNED FINDING ON SUCH WRONG ASSUMPTION IS WHOLLY ARBITRARY, UNREASONABLE AND PERVERSE. 6. FOR THAT NONE OF THE CONDITIONS PRECEDENT EXISTE D AND/OR HAVE BEEN COMPLIED WITH AND/OR FULFILLED FOR THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) ASANSOL TO ASSUME JURISDCTION U/S. 251 OF THE LNCOME TAX ACT, 1961 IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE AND THE SPECIOUS ACTION ON THAT BEHALF IS ALTOGETHER ARBITRARY, UNREASONABLE AND PERVERSE. 7 FOR THAT THE LD. COMMISSIONER OF LNCOME TAX (APPE ALS) ASANSOL ERRED IN RESORTING TO THE IMPUGNED ENHANCEMENT IN THE SUM OF RS.60,63,926/- BY INVOKING THE PROVISIONS OF S. 68 OF THE LNCOME TAX ACT,1961 UNDE R THE SCOPE OF S. 250(4) OF THE LNCOME TAX ACT, 1961 WITHOUT JUDICIOUSLY APPLYING H IS MIND ON THE ISSUE IN CONSIDERING THE SOURCE OF SUCH DEPOSIT HAVE BEEN P ROVED ON RECORD AND THE PURPORTED ACTION ON THAT BEHALF S ULTRA VIRES, AB NITO VOI D AND PERVERSE. 3. BRIEF FACTS LEADING TO THE ABOVE APPEAL ARE THAT THE ASSESSEE IS AN ELECTRICAL CONTRACTOR CARRYING OUT GOVERNMENT AS WELL AS PRIVATE CONTRACT S. THE TYPE OF WORK INCLUDES SEVERAL ELECTRICAL PROJECTS GETTING TEMPORARY AND PERMANENT ELECTRIC CONNECTION FROM WEST BENGAL STATE ELECTRICITY BOARD (WBSEB) AT DIFFERENT SITES ALL OV ER THE WEST BENGAL. THE ASSESSEE TO CARRY OUT THE ABOVE PROJECTS AND IN PURSUANCE OF THIS WOR K PURCHASE MATERIAL, EMPLOY LABOUR ON WAGES AT SPECIFIED SITES ETC. THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS MADE VARIOUS DISALLOWANCES AND ADDITIONS AS UNDER: (I) 10% OF EXPENSES CLAIMED UNDER THE HEAD PURCHASE S WERE DISALLOWED AT A SUM OF RS.7,60,963/-. (II) 10% OF EXPENSES UNDER THE HEAD WAGES AT RS.2,5 6,145/-. 3 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 (III) 20% OF EXPENSES CLAIMED UNDER THE HEAD TRAVEL LING AND CONVEYANCE , OTHER INDIRECT EXPENSES, ENTERTAINMENT AND TELEPHONE AND MOBILE AT RS.1,22,976/-. (IV) FURTHER ADDITION OF RS.1,04,529/- BEING UNEXPL AINED INVESTMENT U/S. 69 OF THE ACT. (V) FURTHER ADDITION OF RS.4,08,960/- ON ACCOUNT OF UNDISCLOSED DRAWINGS. 4. THE DISALLOWANCES MADE BY AO AND ENHANCEMENT MAD E BY CIT(A) IS AS UNDER: EXPE NSES ACCOUNTS HEAD EXPENSES DEBITED AS PR P&L A/C DISALLOWED BY AO PERCENTAGE ENHANCED BY CIT(A) TOTAL EXPENSES DISALLOWED OPENING STOCK & WIP PURCHASE WAGES TRAVELLING & CONVEYANCE OTHER INDIRECT EXPENSES ENTERTAINMENT EXPENSES TELEPHONE & MOBILE EXPENSES SALARY & WAGES INTEREST ON LOAN OTHER EXPENSES 617,052.00 7,608,627.00 2,561,458.00 186,970.00 85,685.00 215,685.00 125,636.00 187,540.00 280,588.00 359,292.00 12,228,533.00 760,963.00 256,145.00 37,394.00 17,137.00 43,137.00 25,127.00 NIL NIL - ------------- 1,139,903.00 10% 10% 20% 20% 20% 20% 6,702,331.00 2,311,313.00 149,576.00 68,548.00 172,548.00 100,509.00 187,540.00 280,588.00 - ------------ 9,972,953.00 7,463,294.00 2,567,458.00 186,970.00 85,685.00 215,685.00 125,636.00 187,540.00 280,588.00 - -------------- 11,112,856.00 FROM THE ABOVE DISALLOWANCES AND ENHANCEMENT, IT IS TO BE FIRST NOTED THAT THE TOTAL CONTRACT RECEIPTS DURING THE YEAR RECEIVED BY ASSESSEE ARE A T RS.1,15,38,537/- AND CLOSING STOCK AND WORK IN PROGRESS IS AT RS.12,70,356/-. AGGRIEVED A GAINST ENHANCEMENT AND CONFIRMATION OF ADDITIONS AND DISALLOWANCES, BY CIT(A), ASSESSEE CA ME IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE PERUSED THE MATERIAL PLACED BEFORE US INCLU DING ASSESSEES PAPER BOOK CONTAINING PAGES 1 TO 101. WE FIND THAT THE ASSESSEES TOTAL CONTRACTUAL RECEIPTS ARE AT RS.1,15,38,537/- AND ASSESSEE HAS CLAIMED EXPENSES ON ACCOUNT OF PUR CHASES FOR EXECUTING HIS ELECTRIC JOBS/CONTRACTS AT RS.76,08,627/-. SIMILARLY, THE A SSESSEE HAS INCURRED WAGES EXPENSES AT RS.24,61,458/-. SIMILARLY, ASSESSEE HAS CLAIMED EX PENSES ON ACCOUNT OF TELEPHONE AND MOBILE AT RS.1,25,636/-, ON ENTERTAINMENT AT RS.2,15,685/- , ON TRAVELLING AND CONVEYANCE AT RS.1,86,970/- AND FURTHER RS.85,685/- AS OTHER EXPE NSES. AS NOTED ABOVE IN THE CHART, THE AO HAS MADE DISALLOWANCE OF 10% EXPENSES ON ALL THESE ITEMS AND ALSO MADE ADDITION ON UNDISCLOSED RD AT RS.1,04,529/- AND PERSONAL DRAWIN GS AT RS.4,08,960/-. THE CIT(A) ENHANCED THESE EXPENSES. THE ASSESSMENT WAS FRAMED BY AO U/S. 143(3) OF THE ACT AND 4 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 ASSESSEE HAS PRODUCED ALL REGULAR BOOKS OF ACCOUNT LIKE CASH BOOK, LEDGER AND BANK STATEMENTS ETC. HOWEVER, HE FAILED TO PRODUCE, ON REQUISITION MADE IN RESPECT OF VARIOUS PARTIES, FROM WHOM PURCHASES WERE MADE AND TO WHOM THE PAYMENTS W ERE MADE DURING THE RELEVANT PERIOD. IN THE ABSENCE OF THE SAME, THE AO DISALLOWED 10% O F WAGES, PURCHASE AND SOME EXPENSES. THE AO ALSO MADE ADDITION ON ACCOUNT OF UNDISCLOSED RECURRING DEPOSIT AND ASSESSEES CLAIM WAS THAT THIS AMOUNT WAS TRANSFERRED BY CHEQUE FROM CURRENT ACCOUNT NO. CC1033 MAINTAINED WITH ORIENTAL BANK OF COMMERCE, ASANSOL BRANCH. A COPY OF CURRENT ACCOUNT WAS SUBMITTED BEFORE THE AO AND ASSESSEE TRIED TO EXPLAIN THE SAM E THAT THIS IS OUT OF EXPLAINED SOURCES. AS REGARDS TO ADDITION MADE ON ACCOUNT OF PERSONAL DRA WINGS BY THE AO AT RS.4,08,960/- ASSESSEE EXPLAINED THAT THIS AMOUNT OF RS.6,20,757/- WAS TRA NSFERRED IN THIS ACCOUNT IS NOT CORRECT. ACTUAL AMOUNT TRANSFERRED IS RS.4,45,460/- TO THIS ACCOUNT FROM CURRENT ACCOUNT NO.094010200011060 AND SUBSEQUENTLY IT WAS TRANSFER RED TO HIS CURRENT ACCOUNT. OTHER CASH DEPOSIT WAS MADE BY WITHDRAWN OF CASH FROM ORIENTAL BANK OF COMMERCE, ASANSOL BRANCH VIDE A/C NO. CC1033. THAT ASSESSEE IS AN ELECTRICA L CONTRACTOR OF WBSEB AND OTHER GOVERNMENT ORGANIZATION, SO HE HAS TO PERFORM HIS J OB ALL OVER WEST BENGAL IN DIFFERENT SITES. SINCE ORIENTAL BANK HAS NO INFRASTRUCTURE FOR IMMED IATE TRANSFER OF FUNDS IN DIFFERENT AREA, ASSESSEE WAS CONSTRAINED TO DEPOSIT CASH IN THIS AC COUNT AND MADE PAYMENT TO PARTIES FOR IMMEDIATE TRANSFER OF FUNDS. AS SUCH THERE WAS NO CONCEALMENT OF ACCOUNT FROM ANY PART OF THE ASSESSEE. CIT(A) APART FROM CONFIRMING THE ADDITIO NS ENHANCED THE ASSESSMENT ON ACCOUNT OF DISALLOWANCE OF EXPENSES AT RS.9,59,309/- UNPROVED PURCHASES WAS ADDED IN ENTIRETY THAT AT RS.67,02,331/-. EVEN THE CIT(A) HAS ENHANCED THE A DDITION ON ACCOUNT OF UNPROVED WAGES EXPENDITURE AT RS.23,11,313/- THAT MEANS THE ENTIRE WAGES ARE DISALLOWED. THE CIT(A) ALSO ENHANCED UNEXPLAINED CASH CREDITS/DEPOSITS OR CREDI T BY TRANSFER AS UNPROVED AND MADE ADDITION OF THESE TRANSFERS AT RS.60,63,926/-. 6. GOING INTO THE ENTIRETY OF THE CASE AND FACTS BE FORE US, WE FIND THAT THE ASSESSEE IS A CONTRACTOR CARRYING OUT GOVERNMENT AS WELL AS PRIVA TE CONTRACTS. THE GROSS CONTRACT RECEIPTS OF THE CONTRACTOR ARE AT RS.1,15,38,537/- . CAN THE A SSESSEE CARRY OUT CONTRACT WORK OF ELECTRICAL AND OTHER UNDERTAKINGS FOR INFRASTRUCTURE PROJECTS WITHOUT PURCHASE OR WITHOUT INCURRING ANY WAGES? THE ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNT BEFORE THE AO BUT WITHOUT SUPPORTING VOUCHERS. EVEN THE UNEXPLAINED CREDITS/ TRANSFER ENTRIES/DEPOSITS IN THE BANK ACCOUNT ARE INTER DEPOSITS OF BUSINESS AND THESE ARE NOTHIN G SORT OF CASH CREDITS OR UNEXPLAINED CREDITS. WHEN THESE WERE CONFRONTED TO LD. SR. DR, HE COULD NOT EXPLAIN HOW THE ENTIRE ADDITION IS MADE AND WHAT IS THE BASIS OF THE SAME? WHEN SECON D OPPORTUNITY WAS GIVEN, LD. SR. DR 5 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 AGAIN COULD NOT SUPPORT EITHER THE ASSESSMENT ORDER OR ORDER OF CIT(A) BUT ONLY ARGUED THAT SINCE THE BOOKS OF ACCOUNT WERE NOT SUPPORTED BY VO UCHERS THE AO AND CIT(A) HAS DISALLOWED THE EXPENSES, CHARGES AND UNPROVED CREDITS/TRANSFER S/DEPOSITS IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE ASSESSEES TOTAL CONTRACT RECEIPTS AR E AT RS.1,15,38,537/- AND ADDITION INCLUDING ENHANCEMENT BY CIT(A) STANDS AT RS.1,60,36,879/-. IT IS NOT THE CASE OF THE REVENUE THAT THESE DEPOSITS/UNPROVED CREDITS/TRANSFER ARE NOT RELATED TO BUSINESS TRANSACTIONS RATHER THE ASSESSEES COUNSEL HAS FILED A COMPLETE CHART BEFORE US STATIN G THAT THE ENTIRE DEPOSITS/TRANSFERS/CREDITS ARE PROVED AND THESE ARE RELATED TO BUSINESS TRANSACTIO NS ONLY AND OUT OF CONTRACT RECEIPTS. IN SUCH CIRCUMSTANCES, CAN WE UPHOLD THE ASSESSMENT ORDER O R ORDER OF CIT(A)? IN OUR VIEW NO, THE ANSWER TO ABOVE QUERIES IS NEGATIVE. WE FURTHER FI ND THAT THE ASSESSEE BEFORE US HAS PRODUCED COPY OF TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO.1833/K/2007 WHEREIN ASSESSEE HAS CHALLENGED THE NET PROFIT RATE APPLIED BY AO AND CONFIRMED BY CIT(A) AT 5.35% BY REJECTING THE BOOKS OF ACCOUNT IN THE ABSE NCE OF THE VOUCHERS AND FOLLOWING GROUND WAS RAISED BY ASSESSEE: II) FOR THAT ON THE FACTS OF THE CASE THE LD. CIT( A) WAS NOT JUSTIFIED IN SUSTAINING THE ESTIMATE OF NET PROFIT @ 5.35% OF GROSS CONTRACT RE CEIPT MADE BY THE AO, ON AN AD HOC BASIS, REJECTING THE BOOK RESULTS. AND TRIBUNAL CONSIDERED THE APPLICATION OF PROFIT A T 5.35% AT PARA 3 OF ITS ORDER AS UNDER: IN THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. F OUND THAT EVEN BILLS PRODUCED AS EVIDENCE OF PURCHASES DID NOT HAVE ANY REFERENCE OR BILL NUMBERS WHILE EXPENDITURE IN RESPECT OF ITEMS LIKE LABOUR CHARGES ENTERED IN THE CASH BOOK DID NOT TALLY WITH THE VOUCHERS PRODUCED AS EVIDENCE OF PAYMENTS. NO STOCK REGISTER WAS MAINTAINED. NO PAYMENT CERTIFICATES AS EVIDENCE OF EARNEST MONEY A ND SECURITY WERE PRODUCED BY THE ASSESSEE. WHEN ASKED TO EXPLAIN THESE ISSUES, THE A SSESSEE SUBMITTED TO THE A.O. THAT THE ACCOUNTS WERE DULY AUDITED AND THAT THE AUDITOR HAD GONE THROUGH ALL THE BILLS VOUCHERS AND RELEVANT PAPERS. HOWEVER, THE ASSESSEE FOUND IT DIFFICULT TO COLLECT THE RELEVANT PAPERS FROM VARIOUS SITES FOR PRODUCTION B EFORE THE A.O. THE ASSESSEE FURTHER SUBMITTED THAT THE WORK WAS CARRIED AT VARIOUS LOCA TIONS, PAPERS WERE DESTROYED BY NATURAL CLIMATE OR THE IGNORANCE OF ILLITERATE WO RKERS. SINCE BULK OF THE PAPERS REQUIRED BY THE A.O. HAD BEEN PRODUCED THE ASSESSEE REQUESTED THE A.O. TO CONSIDER THIS AS COMPLIANCE. THE A.O. HOWEVER REJECTED THE A SSESSEE S BOOKS OF ACCOUNT, HAVING FURTHER FOUND THAT THE ASSESSEE WAS NOT EVEN ABLE T O RECONCILE VARIATION IN THE OD BALANCE STATEMENT IN RESPECT OF THE ASSESSEES ACCOU NT. THEREAFTER, THE A.O. COMPARED THE ASSESSEES PROFITS RETURNED IN THE EARLIER YEARS AND PEGGED THE PROFIT FOR THE YEAR IN QUESTION ALSO AT THE SAME LEVEL. AND REJECTED THE CLAIM OF ASSESSEE FOR ACCEPTING TH E BOOK RESULTS AND UPHELD THE APPLICATION OF NET PROFIT RATE AT 5.35%. 6 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 7. IN VIEW OF FACTUAL MATRIX OF THE CASE, WE ARE OF THE VIEW THAT IN THE ABSENCE OF SUPPORTING MATERIAL OF THE BOOKS OF ACCOUNTS I.E., BILLS AND VOUCHERS THE ASSESSING AUTHORITY SHOULD HAVE REJECTED BOOKS OF ACCOUNT AND SHOULD HA VE FRAMED ASSESSMENT IN TERMS OF SECTION 144 & 145 OF THE ACT AND FOR THAT ASSESSING OFFICER MUST ACT HONESTLY AND NOT VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGMENT IN T HE MATTER BUT FROM RECORDS IT IS EVIDENT OTHERWISE. HE MUST MAKE WHAT HE HONESTLY BELIEVES T O BE FAR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT, AND FOR THIS PURPOSE HE MUST BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE AND REPUTE IN REGARD TO THE ASSESSEES CIRCUMSTANCES, A ND HIS OWN KNOWLEDGE OF PREVIOUS RETURNS BY AND ASSESSMENTS OF THE ASSESSEE AND ALL OTHER MATTE RS WHICH HE THINKS WILL ASSIST HIM N ARRIVING AT A FAIR AND PROPER ESTIMATE; AND THOUGH THERE MUS T NECESSARILY BE GUESS-WORK IN THE MATTER, IT MUST BE HONEST GUESS-WORK. IN MAKING A BEST JUDGMEN T ASSESSMENT THE ASSESSING OFFICER DOES NOT POSSESS ABSOLUTELY ARBITRARY AUTHORITY TO ASSES S AT ANY FIGURE HE LIKES AND THAT ALTHOUGH HE IS NOT BOUND BY STRICT JUDICIAL PRINCIPLES HE SHOULD B E GUIDED BY RULES OF JUSTICE, EQUITY AND GOOD CONSCIENCE. A BEST JUDGMENT ASSESSMENT IS NOT BY WA Y OF PENALTY FOR NON-COMPLIANCE AND IT CANNOT BE MADE CAPRICIOUSLY IN UTTER DISREGARD TO T HE MATERIAL ON RECORD. AT THE SAME TIME, THERE IS NOTHING IN THE LANGUAGE OF SECTION 144 OR 145 OF THE ACT FOR HOLDING THAT AN ASSESSMENT MADE BY AN OFFICER UNDER THESE SECTIONS WITHOUT CON DUCTING A LOCAL ENQUIRY AND WITHOUT RECORDING THE DETAILS AND RESULTS OF THAT ENQUIRY C ANNOT HAVE BEEN MADE TO THE BEST OF HIS JUDGMENT WITHIN THE MEANING OF THAT SECTION. THE BE ST JUDGMENT ASSESSMENT OUGHT TO BE BASED ON A FAIR AND PROPER ESTIMATE OF THE ASSESSEES INC OME AND THE INFERENCES TO BE DRAWN FROM THE AVAILABLE MATERIAL SHOULD BE PROPERLY INFERABLE INF ERENCE. THE ASSESSMENT HAS TO PROCEED UPON DEFINITE BASIS OR DATA AS IN THE CASE OF AN ASSESSM ENT AFTER ENQUIRY, BUT THE ENQUIRY IS SUMMARY UNLIKE THE CASE OF A NORMAL ASSESSMENT. THE ASSESSM ENT IS TO BE BASED ON MATERIALS TO THE EXTENT TO WHICH THE MATERIALS ARE DISCOVERED. IN OTHER WOR DS, THE ASSESSING OFFICER, WHILE MAKING A BEST JUDGMENT ASSESSMENT, SHOULD MAKE AN INTELLIGEN T, WELL-GROUNDED ESTIMATE. SUCH ESTIMATE MUST BE BASED ON ADEQUATE AND RELEVANT MATERIALS. IF MORE THAN ONE METHOD OR APPROACH IS POSSIBLE, ANY ALTERNATIVE METHOD CAN BE RESORTED TO ESTIMATE THE QUANTUM IN A BEST JUDGMENT ASSESSMENT. THE QUANTUM TO BE MADE IN A BEST JUDGM ENT ASSESSMENT SHOULD BE RATIONAL AND FAIR IN ALL CIRCUMSTANCES OF THE CASE. 8. FROM THE ABOVE DISCUSSION, WE ARE OF THE VIEW TH AT A REASONABLE ESTIMATE CAN BE MADE AND THE ASSESSEE MIGHT HAVE MADE PURCHASES WITHOUT PROCURING BILLS AND MIGHT HAVE AVOIDED SALES TAX AND OTHER GOVERNMENT DUES. IT MEANS THAT ASSESSEE MIGHT HAVE EARNED A LITTLE HIGHER PROFIT THAN EARLIER YEARS. WE HAVE SEEN THAT TRIBUN AL HAS CONFIRMED THE APPLICATION OF NET PROFIT 7 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 AT 5.35% IN EARLIER YEAR I.E. IN AY 2003-04. KEEPIN G IN VIEW NET PROFIT OF EARLIER YEARS, WE ARE OF THE VIEW THAT A REASONABLE NET PROFIT I.E. @ 8% WILL MEET THE END OF JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO RECOMPUTE THE ASSESSEES INCOME AF TER DELETING ALL THE ADDITIONS AS MADE BY AO AND ENHANCED BY CIT(A) BUT RESTRICT THE ADDITION ONLY AT 8% OF GROSS CONTRACT RECEIPTS. IT IS ALSO MENTIONED THAT THIS NET PROFIT RATE AT 8% CANN OT BE TAKEN AS REFERENCE TO ANY OTHER YEARS, IF FACTS ARE NOT IDENTICAL OR ASSESSEE CLAIMS THAT ASS ESSMENT BE FRAMED ON THE BASIS OF ACCOUNTS, IF ACCOUNTS ARE FOUND CORRECT. WE ORDER ACCORDINGLY. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED PAR TLY, AS INDICATED ABOVE 10. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2013 SD/- SD/- . . . . . . . . , #! #! #! #! $'# $'# $'# $'# , (K. K. GUPTA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED: 18 TH JUNE, 2013 !12 $&34 $5! JD.(SR.P.S.) PRONOUNCED BY SD/- (N.S.SAINI) SD/- (MAHAVIR SINGH) AM JM 8 ITA NO.1615/K/2009 KALYAN MUKHERJEE AY : 2005-06 / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT- SHRI KALYAN MUKHERJEE, C/O, SHRI SOMNATH GHOSH, ADVOCATE, SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA , P. S. CHINSURAH, DIST. HOOGHLY, PIN-712 105 2 -.+, / RESPONDENT ITO, WARD-2(2), ASANSOL 3 . $/& ( )/ THE CIT(A), ASANSOL 4. 5. $/& / CIT ASANSOL 7!>$ -$& / DR, KOLKATA BENCHES, KOLKATA .7 -$/ TRUE COPY, /&?/ BY ORDER, # '4 /ASSTT. REGISTRAR .