COMMISSIONER OF INCOME TAX-II, AMRITSAR vs. VIDYA SAGAR SAINI, PROP. M/S VIDYA SAGAR SAINI ETC.

ITA/80/2012HC Punjab & HaryanaPHHC01099448201213 February 2013Author: MR. JUSTICE HEMANT GUPTA,MR. JUSTICE TEJINDER SINGH DHINDSA3 pages
AI SummaryDismissed

What were the facts?

The Revenue, Commissioner of Income Tax -II, Amritsar, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated December 13, 2011, passed by the Income Tax Appellate Tribunal, Amritsar Bench. The appeal pertained to assessment year 2006-07. The assessee, Vidya Sagar Saini, is a civil contractor. During the assessment, the Assessing Officer rejected the assessee's accounts and framed the assessment by applying a net profit rate of 13%. The Commissioner of Income Tax (Appeals) reduced this rate to 8%, a finding affirmed by the Tribunal. The Revenue contended that this reduction was arbitrary and without justification, citing previous High Court and Supreme Court decisions.

What did the High Court hold?

The High Court dismissed the appeal, holding that no substantial question of law arises. The Court noted that in best judgment assessment, there is an element of guesswork, and while authorities should make a fair estimate, they should not act arbitrarily. The Supreme Court in Kachwala Gems case acknowledged this. The Court found that the determination of the net rate of profit for a civil contractor's work is a pure finding of fact. In the cited Parbhat Kumar's case, the revenue appeal was dismissed, holding that the net profit rate in best judgment assessment after rejecting accounts is a question of fact, unless the findings are arbitrary and perverse. The Court did not find the application of 8% as a net profit rate to be so arbitrary or perverse as to warrant interference in the present case. Therefore, the appeal was dismissed.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in law and on facts in deciding the case in favour of the assessee, which is contrary to the decision of the Punjab & Haryana High Court in the case of M/s Parbhat Contractor, Sirsa (2008) 323 ITR 675? (Question of law and fact, concerning the determination of net profit rate under Section 271(1)(c) or best judgment assessment provisions). Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The net profit rate of 8% applied by the Commissioner of Income Tax (Appeals) and affirmed by the Tribunal is arbitrary and without justification. The Revenue relied on the judgment of this Court in Commissioner of Income Tax Vs. Parbhat Kumar (2008) 323 ITR 675 and the Supreme Court in Kachwala Gems Vs. Joint Commissioner of Income Tax (2007) 288 ITR 10.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 13.02.2013.

The Commissioner of Income Tax -II, Amritsar .... Appellant Vs.

Vidya Sagar Saini .... Respondent CORAM:- HON'BLE MR. JUSTICE HEMANT GUPTA. HON'BLE MR. JUSTICE TEJINDER SINGH DHINDSA.

Present: Mr. Denesh Goyal, Advocate for the appellant. ..... HEMANT GUPTA, J. (ORAL)

The present petition has been filed under Section 260-A of the 1961 Act arises out of an order dated 13.12.2011 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short 'the Tribunal') pertaining to assessment year 2006-07. Revenue has claimed the following substantial question of law: “Whether on the facts and circumstances of the case, Hon'ble ITAT Bench Amritsar was justified in law and on the facts in deciding the case in favour of assessee which is totally against the decision of Punjab & Haryana High Court in the case of M/s Parbhat Contractor, Sirsa, reported in ITR 293 of 2008 (323 ITR 675).”

The assessee is a civil contractor working primarily for the government department. During the course of assessment for the year in question, the learn

The order continues below.

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