ARVIND BALONI vs. C I T AND ORS.

The assessee has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 27.1.2008, Annexure A-3, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh in I.T.A.No.497/CHD/2007 for the assessment year 2004-05, proposing to raise following question of law:- “Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in setting aside the order of the CIT (Appeals), and partly allowing the appeal of the revenue by making additions of Rs.4,32,000/- as against the additions of Rs.6,52,235/- in spite of the fact that no reasoning for the same has been given by the ITAT for the same while ignoring the rate of profit disclosed by the assessee in the preceding year.”

The assessee is manpower supplier. He failed to produce books of account during assessment. The Assessing Officer assessed income equal to 5% of the gross receipts. On appeal, the CIT(A) held that the book results of the assessee should have been accepted. The Tribunal restored the assessment made by the Assessing Officer, modifying the same equal to 4% of G.P. It was held that the CIT(A) was not justified in interfering with the assessment when books of account had not been produced. No doubt the best judgment assessment could not be arbitrary, but some guess work was inevitable. Mere fact that the assessee declared income which was almost equal to the income assessed in the previous year, could not be conclusive. The assessee had disclosed gross profit of 6.45% and claimed deductions, even though he was receiving 7% service charges and was being reimbursed salary, wages, ESI and EPF which had been claimed as deductions. The Tribunal reduced the assessed income to 4% of the turnover.

We have heard learned counsel for the parties.

Learned counsel for the appellant submitted that rate of 4% of the turnover was arbitrary as in the earlier year, the assessee had been assessed at lower income and consistency had to be maintained. Reliance is placed on judgments of Madhya Pradesh High Court in Assistant Commissioner of Income-tax v. Gendalal Hazarilal & Co. (2004) 134 TAXMAN 384 (MP) and Madras High Court in R.V.S. & Sons Dairy Farm v. Commissioner of Income-tax (2003) 130 TAXMAN 615 (Mad.).

We are unable to accept the submission.

The rate to be applied, having regard to features of an individual case, depends on facts of each case. In absence of reasons being perverse, the finding of the Tribunal is final. The assessment for the previous year may be a guide but is not binding for making assessment for subsequent years. The judgments relied upon are on individual fact situations.

We are unable to hold that any substantial question of law arises.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 21, 2009