Chaurasia Sandalwood Industries vs Dy. Commissioner of Income Tax

M. Katju, J.

Heard learned counsel for the appellant and Shri A.N. Mahajan for the department.

This is an Income Tax Appeal u/s 260A of the Income Tax Act, and the relevant assessment year is 1989-90. The books of account of the assessee for this year were rejected as they were found to be incorrect, and the true income of the assessee could not be ascertained from these books. Hence a best judgment assessment was resorted to. The gross profit rate fixed by the assessing authority was 12 per cent which was reduced by the Commissioner (Appeals) to 10 per cent and further reduced by the Income Tax Appellate Tribunal to 8 per cent. .

Learned counsel for the appellant submitted that even this rate is too high and the gross profit rate of 6.22 per cent disclosed by the assessee should have been accepted. We do not agree with this submission. It is settled law that there is a certain degree of guess work in a best judgment assessment vide Ganga Prasad Sharma Vs. Commissioner of Income Tax and Another, , Commr. of Income Tax. U. P. and C. P. v Badridas Ramrai shop Akola Brij Bhushan Lal Parduman Kumar Vs. Commissioner of Income Tax , Haryana Himachal Pradesh and New Delhi III, , etc. Moreover in the previous year, i.e., assessment year 1988-89 the gross profit rate was 11.45 per cent, whereas in the year in question it has been reduced to 8 per cent. There is no error of law in this.

Thus there is no force in this appeal and it is dismissed.