SHRI AJAY KUMAR BAKLIWAL, Jaipur V. ACIT, Kota

ITA 360/JPR/2012

• Counselvise Citation: 36023114 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 10-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL; D C SHARMA
• Keywords: Rejection of books of accounts; Depreciation; Question of law; Reasonable cause
• Section: 144

Judgement Text

1 ITA 360-12 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : JAIPUR. BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT ITA NO. 360/JP/2012 ASSESSMENT YEAR : 2006-07. SHRI AJAY KUMAR BAKLIWAL, VS. THE ACIT, RANGE-1, C-9, VALLABH BARI, KOTA. KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C. PARWAL RESPONDENT BY : SHRI D.C. SHARMA & SHRI AK KHAN DELWAL DATE OF HEARING : 19.08.2013. DATE OF PRONOUNCEMENT : 20.08.2013. ORDER PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 29 .02.2012 OF LD. CIT (A), KOTA RAISES THE FOLLOWING GROUNDS :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN OBSERVING THAT ASSESSEE HAS NOT PRODUCED VOUCHERS BEFORE HIM WHICH COULD LEAD TO DISALLOWANCE U/S 40(A)(IA) APPROXIMATELY EQUAL TO T HE ADDITION MADE BY A.O. & THEREFORE, IT IS NOT NECESSARY TO FO LLOW THE RATE OF PROFIT UPHELD BY ITAT IN EARLIER YEARS. 1.1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS. 8,14,945/- MADE BY A.O. BY APPLICAT ION OF N.P. RATE OF 9% ON THE CONTRACT RECEIPT BY NOT FOLLOWING THE ORDERS OF HON'BLE ITAT IN EARLIER YEARS. 1.2. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE CLAIM OF INTEREST OF RS. 5,63,269/- FROM THE N.P. R ATE APPLIED BY THE A.O. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE RETURNED INCOME OF RS. 22,83,811/- FROM THE BUSINESS OF CONTRACTORS AND MANUFACTURER OF FLY ASH BRICKS. THE BUSINESS AS A CONTRACTOR 2 IS CARRIED UNDER THE NAME AND STYLE OF M/S. AJAY BA KLIWAL N ASSOCIATES AND M/S. NAV BHARAT NIRMAN COMPANY WHEREAS THE BUSINESS OF MANUF ACTURING FLY ASH BRICKS IS CARRIED UNDER THE NAME AND STYLE OF M/S. SUBHAM FLY ASH PRODUCT, KOTA. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED CONTRACT RECEIPTS AGGREGATING TO RS. 2,94,55,411/- AND PROFIT ON SUCH RECEIPTS BEFORE DE PRECIATION HAS BEEN SHOWN AT RS. 18,36,043/- YIELDING A PROFIT RATE OF 6.23%. THE A SSESSING OFFICER FOUND THAT THE ASSESSEE HAS INCURRED LABOUR EXPENSES AMOUNTING TO RS. 19.42 LACS + RS. 24.16 LACS + RS. 16.37 LACS + RS. 23.07 LACS IN THE TWO PROPRIETARY CONCERNS. ALL THESE EXPENSES HAVE BEEN INCURRED IN CASH AND THE SAME ARE NOT SUBJECT TO PR OPER VERIFICATION. LIKEWISE, PURCHASE OF MATERIALS AND VARIOUS OTHER EXPENSES HAVE BEEN INCU RRED IN CASH AND ARE NOT SUBJECT TO VERIFICATION. THE ASSESSEE HAS ALSO NOT MAINTAINED ANY STOCK REGISTER TO RECONCILE PURCHASE AND UTILIZATION OF MATERIALS VIS--VIS STOCK HELD B Y HIM. THE WORK-IN-PROCESS HAS BEEN ARRIVED ON ESTIMATE BASIS. THE ASSESSING OFFICER, T HEREFORE, REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY PROVISIONS OF SECTION 145(3) OF THE ACT BE NOT APPLIED IN HIS CASE AS THE TRUE AND CORRECT PROFITS CANNOT BE DEDUCED FROM SUC H ACCOUNTS. THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION IN THIS REGARD. THE ASSESSIN G OFFICER, THEREFORE, BEING SATISFIED THAT THE BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE DO NOT REFLECT TRUE AND CORRECT PROFIT, REJECTED THE ACCOUNTS BY APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT AND APPLIED A NET PROFIT RATE OF 9% ON THE GROSS RECEIP TS DECLARED BY THE ASSESSEE SUBJECT TO DEDUCTION FOR DEPRECIATION. IN SO FAR AS ASSESSEE S INCOME FROM BUSINESS CARRIED UNDER THE NAME AND STYLE OF M/S. SUBHAM FLY ASH PRODUCT, THE BOOKS OF ACCOUNT WERE ALSO FOUND DEFECTIVE AS THE EXPENSES WERE FOUND INCURRED MOSTLY IN CASH AND WERE NOT SUBJECT TO PROPER VERIFICATION. THE ASSESSEE DID NOT GIVE ANY JUSTIFICATION AS TO WHY THE BOOKS OF 3 ACCOUNT BE NOT REJECTED. ACCORDINGLY, THE ASSESSIN G OFFICER BEING SATISFIED, THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE DO NOT REFLECT T RUE AND CORRECT PROFITS OF ITS BUSINESS, PROCEEDED TO MAKE A LUMP SUM ADDITION OF RS. 30,000 /- IN THAT BUSINESS AND COMPUTED THE INCOME AT RS. 32,28,755/-. 3. IN APPEAL BEFORE LD. CIT (A), THE ASSESSEE HAS T AKEN FOLLOWING GROUNDS :- 1. LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN E STIMATING THE INCOME BY APPLYING AN ADHOC RATE AT 9% SUBJECT TO D EPRECIATION ON CONTRACT RECEIPT AND AN ADHOC ADDITION RS. 30,000/- IN BRICKS MANUFACTURING BUSINESS BY INVOKING THE PROVISIONS O F SECTION 145(3) OF THE IT ACT, 1961. 2. LEARNED ASSESSING OFFICER HAS NOT FOLLOWED THE L INE & LENGTH AS DECIDED BY THE HON'BLE APPELLATE TRIBUNAL IN THE AS SESSEES OWN CASE IN THE PRECEDING YEARS. 4. THE APPELLANT DID NOT PRESS GROUND NO. 1 IN APPE AL BEFORE THE LD. CIT (A). THE ASSESSEE, HOWEVER, SOUGHT TO PRESS GROUND NO. 2 IN APPEAL BEING A SUB SET OF GROUND NO. 1 AND REQUIRED THAT ORDER OF EARLIER APPELLATE TRIBUN AL MAY BE FOLLOWED FOR ASSESSING INCOME OF THE APPELLANT. THE LD. CIT (A) DID NOT AG REE WITH THIS PLEA AT INTERNAL PAGE 10 OF THE IMPUGNED ORDER AND REACHED THE DECISION AS S TATED IN PARA 4.22 WHICH IS REPRODUCED AS UNDER :- IN THIS CASE, THE A.O. HAS MENTIONED VARIOUS DISC REPANCIES IN THE ASSESSMENT ORDER WHICH WERE DISPUTED BY THE ASSESSE E. TO VERIFY THE CLAIM THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS AND VOUCHERS. I HAVE EXAMINED BOOKS OF ACCOUNTS OF ASSESSEE, HOWEVER, NO VOUCHERS WERE PRODUCED BEFORE ME. IT WAS SEEN THAT THERE WERE PAY MENTS WHICH SHOULD HAVE BEEN SUBJECT TO TDS. HOWEVER, A DECISION FOR ADDITION U/S 40(A)(IA) COULD BE TAKEN ONLY AFTER VERIFYING THE VOUCHERS. T HE AMOUNT OF THESE PAYMENTS WAS APPROXIMATELY EQUAL TO THE ADDITION MA DE BY THE A.O. AS THE ADDITION IN THIS CASE WAS CHALLENGED IN GROU ND NO. 1 WHICH WAS NOT PRESSED BEFORE ME AND IN VIEW OF THE FACT THAT VARI OUS VOUCHERS WERE NOT PRODUCED BEFORE ME WHICH COULD LEAD TO DISALLOWANCE U/S 40(A)(IA), IT IS 4 HELD THAT IT IS NOT NECESSARY TO FOLLOW THE RATE OF PROFIT UPHELD BY ITAT IN EARLIER YEARS. EACH YEAR IS A SEPARATE YEAR AND PROFIT OF THE SAME HAS TO BE DETERMINED SEPARATELY ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE. THE FACT, THAT ASSESSEE FAILED TO PRODUCE VOUCHERS, GOES AGAINST THE ASSESSEE. IT IS ALSO SEEN THAT IN ASSESSMENT ORDER FOR A.Y. 2005-06, THE A.O. HAS GIVEN TWO COMPARABLE CASES OF A.Y. 2006-07 WHEREIN THE PROFIT RATE WAS 8.15% AND 10.48%. CONSIDERING THE ABOVE AND OVERALL FACTS OF THE CASE , THE ACTION OF A.O. IS UPHELD. 5. THE ASSESSEES COUNSEL SHRI P.C. PARWAL MADE ELA BORATE WRITTEN SUBMISSIONS AND REITERATED THE SAME IN HIS ARGUMENTS AS WELL. THE SAID SUBMISSIONS ARE REPRODUCED HERE UNDER :- (I) CIT (A) IN CONFIRMING THE ADDITION MADE BY TH E A.O. HAS OBSERVED THAT ASSESSEE HAS NOT PRODUCED VOUCHERS WH ICH COULD LEAD TO DISALLOWANCE U/S 40(A)(IA) APPROXIMATELY EQUAL TO T HE ADDITION MADE BY A.O. & THEREFORE HE HAS NOT FOLLOWED THE N.P. RATE UPHELD BY ITAT IN EARLIER YEARS. IN MAKING SUCH OBSERVATION, HE HAS E VEN NOT POINTED OUT AS TO WHAT ARE THOSE EXPENSES CLAIMED BY THE ASSESSEE WHICH ARE LIABLE FOR DEDUCTION OF T4AX AT SOURCE. FURTHER, ONCE INCOME I S ESTIMATED BY APPLICATION OF N.P. RATE, NO SEPARATE DISALLOWANCE OF EXPENSES BY APPLICATION OF SEC. 40(A)(IA) CAN BE MADE AS HELD B Y HON'BLE BENCH IN CASE OF SURESH KUMAR TAK VS. DCIT IN ITA NO. 317 TO 320/ JP/2013 DATE. 23.04.2013. HENCE, THIS OBSERVATION OF THE CIT (A) ARE SUPERFLUOUS AND THEREFORE FOR THAT REASON, NOT FOLLOWING THE ORDERS OF HON'BLE ITAT IN EARLIER YEARS IN ASSESSEES OWN CASE IS UNJUSTIFIED . (II) THE FOLLOWING TWO ISSUES, THUS, NOW ARISES FOR CONSIDERATION IN THE PRESENT APPEAL :- (A) WHETHER CIT (A) WAS JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. IN ESTIMATING THE NET PROFIT OF THE ASSESSEE BY APP LYING N.P. RATE OF 9% ON DECLARED RECEIPTS SUBJECT TO ALLOWABILITY OF DEPRECIATION IGNORING THE DECISION OF HON'BLE ITAT IN EARLIER YE ARS. (B) WHETHER INTEREST IS ALLOWABLE FROM THE INCOME A SSESSED AFTER APPLICATION OF N.P. RATE OR NOT. 5 (III) AS FAR AS ISSUE NO. 2(A) IS CONCERNED, IT IS TO BE NOTED THAT IN A.Y. 01-02 AND 03-04 ALSO, A.O. POINTED OUT VARIOUS DEFE CTS/DEFICIENCIES IN THE BOOKS OF ACCOUNTS AKIN TO THE ONE POINTED DURING TH E YEAR UNDER CONSIDERATION AND REJECTED THE BOOKS OF ACCOUNTS U/ S 145(3) AND APPLIED N.P. RATE OF 8.5%. CIT (A) REDUCED THE SAME TO 8% W HICH WAS UPHELD BY HON'BLE ITAT VIDE ITA NO. 577/JP/2004 DATE. 27.07.2 007 (PB 18-19) AND ITA NO. 955/JP/2006 DATE. 30.11.2007 (PB 22-23). T HUS, WHEN IN THE PAST, N.P. RATE OF 8% IS UPHELD, THERE IS NO REASON TO APPLY A N.P. RATE OF 9% PARTICULARLY WHEN THE NATURE OF MAINTENANCE OF B OOKS OF ACCOUNTS AND VOUCHERS ARE SAME. IT IS A SETTLED LAW THAT COMPARI SON SHOULD BE MADE FROM THE ASSESSEES OWN PAST HISTORY. THE CASES REL IED BY LOWER AUTHORITIES ARE NOT COMPARABLE ON ACCOUNT OF TURNOVER AND IN TH OSE CASES ONLY G.P. RATE HAS BEEN GIVEN AND NOT THE N.P. RATE. IT MAY B E NOTED THAT HON'BLE ITAT JAIPUR BENCH IN CASE OF KIRODI MAL MODI, WHERE A.O. ESTIMATED THE NET PROFIT OF THE ASSESSEE BY APPLYING N.P. RATE OF 8%, UPHELD THE ORDER OF THE CIT (A) IN APPLYING N.P. RATE AS UNDER :- A.Y. N.P. RATE DECLARED BY ASSESSEE. N.P. RATE APPLIED BY A.O. N.P. RATE APPLIED BY CIT(A) & UPHELD BY ITAT REMARKS 2005-06 6.73% 8% 7.2% ORDER OF CIT (A) IN APPLYING N.P. RATE OF 7.2% UPHELD FURTHER DIRECTING A.O. TO ALLOW INTEREST PAID TO THIRD PARTIES BESIDES DEPRECIATION (PARA 5) 2006-07 7.024% 8% 7.1% HON'BLE ITAT IN ITA NO. 698/JP/09 DATE. 22.01.2010 UPHELD THE ORDER OF CIT (A) IN APPLYING N.P. RATE OF 7.1% CONSIDERING THE PAST HISTORY (PARA 6) 2007-08 6.97% 8% 7.2% ORDER OF CIT (A) IN APPLYING N.P. RATE OF 7.2% UPHELD FURTHER ALLOWING INTEREST & DEPRECIATION (PARA 6) IN VIEW OF ABOVE, ESTIMATION OF INCOME BY APPLYING N.P. RATE OF 9% BY IGNORING THE N.P. RATE APPLIED BY HON'BLE ITA T IN EARLIER YEARS IS UNJUSTIFIED. (IV) AS FAR AS ISSUE RELATING TO THE ALLOWABILITY OF INTEREST FROM THE INCOME ASSESSED AFTER APPLICATION OF N.P. RATE IS C ONCERNED, IT IS TO BE NOTED THAT IN A.Y. 2001-02, HON'BLE ITAT IN ASSESSE ES OWN CASE HAS ESTIMATED THE INCOME BY APPLYING A N.P. RATE OF 8% SUBJECT TO DEPRECIATION AND INTEREST PAYMENT (PB 19 PARA 3-4) WHICH WAS FOL LOWED IN A.Y. 03-04 6 (PB 26-27). HENCE, FOLLOWING THE RULE OF CONSISTENC Y, INTEREST BE DIRECTED TO BE ALLOWED FROM THE INCOME ASSESSED AFTER APPLIC ATION OF N.P. RATE. RELIANCE IS ALSO PLACED ON THE FOLLOWING CASES :- CIT VS. BHAWAN PATH NIRMAN (BOHRA) & CO., 258 ITR 4 40 (RAJ.) WHERE THE BOOKS OF THE ASSESSEE WERE REJECTED, THE APPELLATE TRIBUNAL APPLIED THE NET PROFIT RATE AND MADE THE ESTIMATE S UBJECT TO DEDUCTION ON ACCOUNT OF DEPRECIATION AND INTEREST ON BORROWED MO NEY. THE HIGH COURT HELD THAT NO INTERFERENCE IS REQUIRED IN THE ORDER OF ITAT. DCIT VS. KIRODIMAL MODI IN ITA NO. 119/JP/2010 DATE . 10.09.2010 FOR A.Y. 07-08. BESIDES DEPRECIATION, INTEREST PAID TO THIRD PARTIE S IS ALSO ALLOWABLE FROM THE NET PROFIT RATE APPLIED. IN VIEW OF ABOVE, INTEREST OF RS. 5,63,269/- (RS. 2 ,90,013 + RS. 2,73,256/-) DEBITED IN THE PROFIT & LOSS ACCOUNT DURING THE YEA R (PB 16-17) BE ALLOWED FROM THE INCOME ASSESSED AFTER APPLICATION OF N.P. RATE. 6. ON THE OTHER HAND, THE LD. D/R SUPPORTS THE DECI SION REACHED BY THE LD. CIT (A). THE ASSESSEE DID NOT MAINTAIN PROPER BOOKS OF ACCOU NT NOR PRODUCED VOUCHERS FOR LABOUR PAYMENT AND EXPENSES ETC. THE ASSESSING OFFICER TH US MADE A FAIR AND BONAFIDE ESTIMATE OF ASSESSEES INCOME. THERE BEING NO ERROR IN THE ESTIMATES, THE GROUND RAISED IN APPEAL BE REJECTED. 7. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE HUGE EXPENSES INCURRED ON LABOUR PAYMENT AND FOR PURCHASE OF MATE RIAL AND OTHER EXPENSES CHARGED TO PROFIT & LOSS ACCOUNT WERE FOUND TO HAVE BEEN INCUR RED IN CASH. THERE WERE NO PROPER VOUCHERS AVAILABLE FOR THE SAME. SUCH EXPENSES WER E NOT VERIFIABLE. THE APPELLANT ALSO DID NOT MAINTAIN STOCK REGISTER AND QUANTITATIVE DE TAILS SUCH AS OPENING STOCK, PURCHASES AND CONSUMPTION AND CLOSING STOCK WERE NOT VERIFIAB LE IN THE ABSENCE OF SUCH REGISTER. THE WORK IN PROCESS WAS FOUND VALUED ON ESTIMATE BA SIS. NO BASIS THEREOF WERE LAID ON RECORD. THE ASSESSING OFFICER THUS WAS SATISFIED TH AT TRUE AND CORRECT PROFITS CANNOT BE 7 DEDUCED FROM THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. HE, THEREFORE, AFTER PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE PR OCEEDED TO REJECT THE ACCOUNTS BY APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT AND CONSIDERING OVER ALL FACTS AND COMPARABLE CASES PROCEEDED TO APPLY A NET PROFIT RA TE OF 9% ON THE DECLARED RECEIPTS OF RS. 2,94,55,411/- SUBJECT TO FURTHER DEDUCTION OF D EPRECIATION ALLOWANCE. THE APPELLANT DID NOT ASSAIL THE ACTION TO REJECT BOOKS OF ACCOUN T. THE APPELLANT ALSO DID NOT PRESS GROUND NO. 1 IN APPEAL BEFORE LD. CIT (A) WHICH REA DS AS UNDER :- 1. LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE INCOME BY APPLYING AN ADHOC RATE AT 9% SUBJECT TO DEPRECIATION ON CONTRACT RECEIPT AND AN ADHOC ADDITION RS. 30,00 0/- IN BRICKS MANUFACTURING BUSINESS BY INVOKING THE PROVISIONS O F SECTION 145(3) OF THE IT ACT, 1961. 8. THE PERUSAL OF FACTS ON RECORD WITH REFERENCE TO THE WRITTEN SUBMISSIONS AND ARGUMENTS THAT HAVE BEEN MADE BEFORE US, WE FIND TH AT THE ACCOUNTS MAINTAINED BY THE ASSESSEE WERE RIGHTLY REJECTED AS UNRELIABLE. DESP ITE OPPORTUNITY, THE APPELLANT DID NOT PRODUCE VOUCHERS FOR LABOUR PAYMENT AND EXPENSES ET C. BEFORE THE LD. CIT (A). AFTER REJECTING THE ACCOUNTS BY APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT, THE ASSESSING OFFICER HAS ACTED IN MAKING THE BEST JUDG MENT ASSESSMENT AS PROVIDED UNDER SECTION 144 OF THE ACT. THIS ACTION WAS WITHIN HIS COMPETENCE. THE ESTIMATE MADE BY THE ASSESSING AUTHORITY IS FOUND TO BE A BONAFIDE ESTIM ATE AND RESTED ON RATIONAL BASIS. THE APPELLANT HAS NOT SHOWN THAT THE ASSESSING AUTHORIT Y HAS BEEN VINDICTIVE OR CAPRICIOUS. THE BASIS ADOPTED IN ESTIMATING THE INCOME ARE FOUN D RELEVANT AND APPROPRIATE REQUIRING NO INTERFERENCE PARTICULARLY WHEN IT IS ASSESSEES OWN FAILURE OF NOT SUBMITTING PROPER ACCOUNTS. THE PECULIAR DEFECTS POINTED OUT BY THE ASSESSING AUTHORITY WERE SUFFICIENT ENOUGH TO DEVIATE FROM THE APPLICATION OF PROFIT RA TE SUSTAINED BY THE APPELLATE TRIBUNAL 8 IN ASSESSEES OWN CASE IN THE EARLIER YEAR. THUS N O ERROR CAN BE SAID TO HAVE BEEN COMMITTED WHEN THE ASSESSING AUTHORITY HAS DEVIATED FROM THE PAST HISTORY FOR JUST AND REASONABLE CAUSE AND APPLIED A REASONABLE NET PROFI T RATE OF 9% ON THE GROSS RECEIPTS DECLARED BY THE ASSESSEE, WHICH ALSO TAKES INTO ACC OUNT THE DEDUCTION FOR INTEREST PAYMENTS INCURRED FOR BUSINESS PURPOSES. NO FURTHER DEDUCTION FOR INTEREST WAS THUS CALLED FOR. THE JUDGMENTS RELIED UPON BY THE APPEL LANT DO NOT ADVANCE HIS CASE AS THE SAME DO NOT INVOLVE ANY QUESTION OF LAW BUT REST ON THE APPRECIATION OF FACTS ONLY WHILE THE DECISION REACHED BY US IS FOUND SUPPORTED BY TH E JUDGMENTS RENDERED BY HON'BLE APEX COURT IN THE CASE OF COMMISSIONER OF SALES TAX VS. ESUFALI (HM), 90 ITR 271 (SC) AT PAGE 277. RELEVANT PARA REPRODUCED AS UNDER :- THE ASSESSING AUTHORITY WHILE MAKING THE ' BEST J UDGMENT ' ASSESSMENT, NO DOUBT, SHOULD ARRIVE AT ITS CONCLUSION WITHOUT ANY BIAS AND ON RATIONAL BASIS. THAT AUTHORITY SHOULD NOT BE VINDICTIVE OR C APRICIOUS. IF THE ESTIMATE MADE BY THE ASSESSING AUTHORITY IS A BONA FIDE EST IMATE AND IS BASED ON A RATIONAL BASIS, THE FACT THAT THERE IS NO GOOD PRO OF IN SUPPORT OF THAT ESTIMATE IS IMMATERIAL. PRIMA FACIE, THE ASSESSING AUTHORITY IS THE BEST JUDGE OF THE SITUATION. IT IS HIS ' BEST JUDGMENT ' AND NOT OF ANYONE ELSE. THE HIGH COURT COULD NOT SUBSTITUTE ITS ' BEST JUD GMENT ' FOR THAT OF THE ASSESSING AUTHORITY. IN THE CASE OF ' BEST JUDGMEN T ' ASSESSMENTS, THE COURTS WILL HAVE TO FIRST SEE WHETHER THE ACCOUNTS MAINTAINED BY THE ASSESSEE WERE RIGHTLY REJECTED AS UNRELIABLE. IF T HEY COME TO THE CONCLUSION THAT THEY WERE RIGHTLY REJECTED, THE NE XT QUESTION THAT ARISES FOR CONSIDERATION IS WHETHER THE BASIS ADOPTED IN ESTI MATING THE TURNOVER HAS REASONABLE NEXUS WITH THE ESTIMATE MADE. IF THE BA SIS ADOPTED IS HELD TO BE A RELEVANT BASIS EVEN THOUGH THE COURTS MAY THI NK THAT IT IS NOT THE MOST APPROPRIATE BASIS, THE ESTIMATE MADE BY THE ASSESS ING AUTHORITY CANNOT BE DISTURBED. THE CONCLUSION REACHED BY US ALSO FINDS SUPPORT FRO M THE JUDGMENT RENDERED BY HON'BLE APEX COURT IN THE CASE OF KACHWALA GEMS VS. JCIT, ( 2007) 288 ITR 10 (SC) AT PAGE 14, WHICH READS AS UNDER :- 9 IT IS WELL-SETTLED THAT IN A BEST JUDGMENT ASSESS MENT THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT THE AUTHORIT IES CONCERNED SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCO ME EVEN IN A BEST JUDGMENT ASSESSMENT, AND SHOULD NOT ACT TOTALLY ARB ITRARILY, BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS T O BLAME AS HE DID NOT SUBMIT PROPER ACCOUNTS. IN OUR OPINION THERE WAS NO ARBITRARINESS IN THE PRESENT CASE ON THE PART OF THE INCOME-TAX AUTHORIT IES. THUS, THERE IS NO FORCE IN THIS APPEAL, AND IT IS DISMISSED ACCORDING LY. NO COSTS. 8. KEEPING IN VIEW THE OVER ALL CONSPECTUS OF THE CASE AND AS THE ADDITION IS NOT RESTED ON ANY DISALLOWANCE MADE UNDER SECTION 40(A) (IA) OF THE ACT, THE GROUND RAISED IN APPEAL ARE FOUND DEVOID OF ANY MERIT. FOR THE DETAI LED DISCUSSIONS AS CONTAINED HEREINBEFORE, THE GROUNDS RAISED IN APPEAL ARE HERE BY REJECTED AND APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.8.2013. SD/- SD/- ( KUL BHARAT ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 20/08/2013. D/- COPY FORWARDED TO :- SHRI AJAY KUMAR BAKLIWAL, KOTA. THE ACIT, RANGE-1, KOTA. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 360/JP/2012) BY ORDER, AR ITAT JAIPUR. 10