C I T AJMER vs. M/S BT SUITINGS P LTD BHILWARA

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ITA/70/2006HC RajasthanRJHC01017245200514 August 2006Bench: RAJESH BALIA,GOPAL KRISHAN VYAS2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law, much less a substantial question of law, arises for consideration in the appeal filed under Section 260-A of the Income Tax Act. The Court reasoned that the making of an estimation of income on available material is primarily a matter of inherent guesswork and is a question of fact. Since the AO had not found material defects in the assessee's books and had accepted the sale receipts, the CIT(A)'s reduction of the addition was a factual determination. The Tribunal, by upholding the CIT(A)'s order, also dealt with a question of fact. Therefore, the appeal was dismissed in limine as it did not present a substantial question of law.

What were the facts?

The assessee, M/s. B.T. Suitings (P) Ltd., had its books of accounts rejected by the Assessing Officer (AO) for showing a lower Gross Profit (GP) rate in the current year. The AO applied a GP rate of 10% and made additions of Rs. 7,30,830/-. However, the AO did not find any material defects in the assessee's books of accounts, and the sale receipts were accepted. The Commissioner of Income Tax (Appeals) [CIT(A)] reduced the addition to Rs. 30,830/-. The Revenue appealed this decision to the Income Tax Appellate Tribunal (ITAT). The ITAT upheld the order of the CIT(A). The Revenue then filed an appeal before the High Court under Section 260-A of the Income Tax Act.

What were the issues?

1. Whether a substantial question of law arises for consideration in an appeal filed under Section 260-A of the Income Tax Act when the Tribunal has upheld the order of the CIT(A) regarding the estimation of income based on GP rate. Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court, other than implicitly supporting the ITAT's decision. Revenue's Contention: The Revenue contended that the appeal involved a substantial question of law arising from the ITAT's order which upheld the CIT(A)'s reduction of additions made by the AO. The Revenue likely argued that the estimation of income and the application of GP rates are matters that can involve substantial questions of law, especially when the AO's assessment is modified.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

1 D.B. INCOME TAX APPEAL NO.70/2006 (CIT, Ajmer Vs. M/s. B.T. Suitings (P) Ltd.) Date of order : 14.8.2006 HON'BLE MR. JUSTICE RAJESH BALIA HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS Mr. K.K. Bissa, for the appellant. Having heard learned counsel for the appellant, we are satisfied that no question of law much less substantial question of law arises for consideration in this appeal under Section 260-A of the Income Tax Act. The facts of the case are that assesses's books of accounts were rejected on the ground that in the current year of accounts, the assessee has shown lower GP rate. The assessing officer applied GP rate of 10% and made additions of Rs.7,30,830/-. The assessing officer has not found any material defects in the books of accounts of assessee and particularly the sale receipts have not been found to be erroneous and accepted by the assessing officer. Considering these facts, the CIT (A) reduced the addition to Rs.30,830/- while resorting to best judgment assessment. On further appeal by the revenue before the

2 Income Tax Appellate Tribunal, the order of CIT (A) was upheld. Making of estimation of income on available material is primarily a matter of inherent guess work and is a question of fact. We are of the opinion that the Tribunal has rightly dismissed the appeal of the revenue. No question of law has arisen for consideration in this appeal. The appeal is dismissed in limine. (GOPAL KRISHAN VYAS), J. (RAJESH BALIA), J. arun

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