IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 449 OF 2015 Rajhans Metals Private Limited Appellant Vs. Assistant Commissioner of Income tax 9(3), Mumbai 400 020 Respondent Mr. Bharat Janarthan with Mr. Atul K. Jasani for Appellant. Mr. Arvind Pinto for Respondent. CORAM: S.C. DHARMADHIKARI & PRAKASH D. NAIK, JJ. DATE : SEPTEMBER 12, 2017 P.C: 1. This appeal of assessee challenges order passed by Tribunal dated 10 9 2014 for Assessment Year 2007 08. 2. At outset, from six questions which are proposed as substantial questions of law by assessee and Page 1 of 10 12-ITXA-449.2015.doc appearing at pages 18 & 19 of paper book, question Nos.5 and 6, which were restored to file of Assessing Officer, with passage of time, relief is granted in favour of assessee. Therefore, appellant/assessee is not pressing these two questions. 3. It is then urged that question Nos.1 to 4 and overall perversity in order of Tribunal would enable this Court to admit this appeal as these questions are substantial questions of law. 4. In that regard, it is urged that there was no reasonable opportunity given to appellant/assessee so as establish and prove its version. version is arising from peculiarity of its business. During previous year relevant to Assessment Year 2007 08, appellant achieved turnover of Rs.131 crores. accounts of appellant were audited by statutory auditor as per provisions of Companies Act, 1956, under Section 44AB of Income Tax Act, 1961 ( I.T. Act, 1961 for short) and also for Value Added Tax Page 2 of 10 12-ITXA-449.2015.doc purposes. Therefore, repeated scrutiny of income was undertaken. 5. However, when appellant was regularly assessed to tax and assessment orders have been passed in its case for past 10 out of 12 years, there was no objection to books of account and method of accounting adopted. During Assessment Year 2007 08, Assessing Officer sought various details for purposes of completion of assessment. appellant attended office of Assessing Officer on stipulated dates and produced all records. date wise summary is placed as Annexure E to present memo of appeal. 6. Then, there was another notice issued on 1 12 2009 by Assessing Officer, copy of which is at Annexure F and in response to which as well, appellant addressed letter of 11 12 2009. It was pointed out that insofar as production of entire books of account, vouchers and materials as required by Assessing Officer, said books of account, bills, bank Page 3 of 10 ::: Uploaded on - 16/09/2017 ::: Downloaded on - 19/09/2017 11:59:47 ::: suresh 12-ITXA-449.2015.doc statements, etc., were maintained at factory and administrative office at Jamnagar, that is about 800 kms. from Mumbai. It would be, therefore, time consuming. Instead Assessing Officer can be accompanied by representative of assessee so that Assessing Officer can verify position from books by visiting Jamnagar. 7. Yet, Assessing Officer passed order on 16 12 2009, only five days after date of letter dated 11 12 2009 wherein he rejected books of account. He estimated gross profit of appellant at 9.78% based on average of earlier two years as against 7.43% gross profit as per audited accounts of appellant. Thus, detail submissions by assessee were not taken into consideration. In any event, had complete opportunity been provided, appellant would have been in position to demonstrate and establish that this estimation is wholly uncalled for. 8. Therefore, resultant addition of Rs.3,43,51,585/ was not justified and all more when other Page 4 of 10 ::: Uploaded on - 16/09/2017 ::: Downloaded on - 19/09/2017 11:59:47 ::: suresh 12-ITXA-449.2015.doc disallowances/additions were held to have not been satisfactorily dealt with necessitating remand. 9. In appeal to Commissioner of Income Tax (Appeals) so as to challenge this estimation of gross profit and rejection of books of account by Assessing Officer, nothing other than what Assessing Officer did transpired and Commissioner further reduced gross profit at 9% as opposed to 9.78% taken by Assessing Officer. 10. Before Tribunal all these materials were produced and it was urged that as in other two disallowances/additions, even on this point if matter is sent back, ends of justice would be served. However, even such reasonable stand of assessee was rejected by Tribunal on flimsy and untenable reasons. Therefore, even these remaining questions are substantial questions of law. 11. Upon perusal of appeal paper book and order under challenge, and particularly relevant paragraph of Tribunal's order, we are unable to agree. Page 5 of 10 ::: Uploaded on - 16/09/2017 ::: Downloaded on - 19/09/2017 11:59:47 ::: suresh 12-ITXA-449.2015.doc 12. It is found by Tribunal that Assessing Officer issued notice under Section 142(1) of I.T. Act, 1961 on 10 7 2009 for Assessment Year 2007 08. scrutiny assessment proceedings under Section 143(3) of I.T. Act, 1961 were taken up and notice under Section 142(1) was issued on 10 7 2009 requiring assessee to file certain details. Tribunal has from record culled out opportunities granted to assessee to file those details. Hearing was fixed for this purpose on 21 8 2009, then on 3 9 2009, 11 9 2009, 22 9 2009, 6 10 2009, 15 10 2009, 23 10 2009, 27 10 2009 and 29 10 2009 respectively. numerous opportunities resulted in assessee failing to file details. It is thereafter on 1 12 2009 notice was issued requiring assessee to file such details on 11 12 2009. assessee failed to produce these details and instead filed letter. It is in these circumstances and when Assessing Officer found that there is no response and assessee is not producing relevant documents despite opportunities granted to him, that he completed assessment, that is on basis of materials before him. He observed that Page 6 of 10 ::: Uploaded on - 16/09/2017 ::: Downloaded on - 19/09/2017 11:59:47 ::: suresh 12-ITXA-449.2015.doc since books of account, documents and other materials as required have not been produced, satisfaction about completeness or correctness of account cannot be recorded. It is in these circumstances that he resorted to sub section (3) of Section 145 of Act. He rejected books of account and estimated gross profit at rate of 9.78% of sales as against 7.43% of sales declared by assessee. 13. First Appellate Authority found that Assessing Officer compared gross profit with those declared in earlier years. First Appellate Authority found that in best judgment assessment there is always certain degree of guess work. If books of account and relevant records were not produced by assessee, then, he has to blame himself. First Appellate Authority on independent scrutiny found that there is arbitrariness in adopting gross profit rate at 9.7% which is higher than rate of 9.16% of immediate preceding year even though there has been increase in turnover by Rs.50.83 crores. It is in these circumstances and deriving figures from record produced by assessee itself that Page 7 of 10 ::: Uploaded on - 16/09/2017 ::: Downloaded on - 19/09/2017 11:59:47 ::: suresh 12-ITXA-449.2015.doc restriction of addition was brought down from Rs.3,43,51,585/ to Rs.2,06,77,484/ . This exercise before First Appellate Authority resulted in relief of Rs.1,36,74,101/ . Even this was not to satisfaction of parties. 14. Revenue brought appeal and in ground No.2 stated that it is agitating reduction in estimated gross profit rate by First Appellate Authority and Assessing Officer's rate should have been maintained. 15. Tribunal heard arguments of both sides and perused record. ground No.1 in assessee's appeal and in Revenue's appeal this ground was common. It was taken up by Tribunal and after hearing parties, Tribunal found that reasonable and fair view should be adopted in estimating turnover. First Appellate Authority while restricting gross profit rate at rate of 9%, has taken into consideration overall facts and circumstances of case. He has also taken into consideration increase in turnover of assessee as compared to previous years. Once Page 8 of 10 ::: Uploaded on - 16/09/2017 ::: Downloaded on - 19/09/2017 11:59:47 ::: suresh 12-ITXA-449.2015.doc on facts there was no infirmity found in partial relief granted to assessee, then, grievance of both Revenue as also assessee in this regard has been rejected. 16. We do not see any error of law apparent on face of record nor perversity in order of Tribunal. reasoning in para 7, pages 190 & 191, of Tribunal's order is not vitiated by alleged non consideration of grievance of appellant/assessee that fair and reasonable opportunity was denied to it. Tribunal found from record that more than adequate and sufficient opportunity was given to produce records. estimation had to be done once assessee was not co operating. In such circumstances, substantial relief has already been derived by appellant/assessee. We do not think that we should reappraise and reappreciate same factual materials. We cannot arrive at different conclusion merely because that would be possible. On other hand, what we find is that such reappreciation and reappraisal is impermissible in law. More so, when there is no perversity in findings of Tribunal. Its view is imminently possible. We do not find any Page 9 of 10 12-ITXA-449.2015.doc merit in appeal. It is dismissed. No costs. (PRAKASH D. NAIK, J.) (S.C. DHARMADHIKARI, J.) Page 10 of 10 RajhansMetalsPrivateLimited v. TheAssistantCommissionerof Income-tax-9(3),Mumbai