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Judgment
The appeal is worthy of admission on the point of principle that the Revenue has raised. The assessee is engaged in the construction business,
primarily, in the construction of roads. In course of the relevant assessment year, the assessee claims to have constructed roads in Tripura as a sub-
contractor under two or more Government agencies and also carried on business as a sub-contractor for the construction of a jail in the same State.
In course of the assessment for the relevant assessment year, the Assessing Officer was dissatisfied with several of the deductions claimed by the
assessee and the Assessing Officer issued notices to the third parties who were shown to have received payments from the assessee. Several of such
third parties did not respond to the notices or furnish any particulars.
It is the assessee’s case that since the name of the assessee was changed and several of the third parties had done business with the assessee
when the assessee was known by its previous name, the queries raised by the Assessing Officer pertaining to the assessee in its changed name went
unheeded as the concerned parties may not have understood the context in which the particulars had been sought by the Assessing Officer. The
Assessing Officer rejected the claims for deduction, discovered the income to be in excess of Rs.9 crore and slapped a demand for a sum in excess of
Rs.2 crore.
In appeal, the Commissioner (Appeals) sought to apply what the Commissioner (Appeals) perceived to be the principle of law embodied in Section
44AD of the Income Tax Act, 1961 despite noticing that the applicability of such provision was limited and the assessee in this case was not eligible to
be considered thereunder.
In the circumstances, the substantial question of law which arises is whether the Commissioner (Appeals) or the Appellate Tribunal have any authority
to make a rough-and-ready assessment as to the quantum of tax and what percentage of the net income would be demanded as tax when there are no
statutory guidelines in such regard. The Appellate Tribunal has endorsed the view taken by the Commissioner (Appeals) by referring to several
judgments including of the Punjab and Haryana High Court.
In several cases, the Punjab and Haryana High Court despite noticing that Section 44AD of the Act may not have been applicable to the relevant
assessee, upheld the order of the Tribunal on the ground that the discretion exercised by the Tribunal did not appear to be perverse. With respect, the
decisions in such regard beg the question whether the Appellate Tribunal has any discretion in the matter and if such discretion is governed by Section
44AD of the Act when, clearly, such provision does not apply to a particular case.
The Revenue will prepare the paper-books within eight weeks from date and forward adequate copies thereof to Advocate for the assessee. The
appeal will appear for hearing in the monthly list of September, 2018. GA No.1247 of 2017 is disposed of, but without any order as to costs.