GANGA PRASAD SHARMA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a petition under Arts. 226 and 227 of the Constitution. The material facts giving rise to this petition briefly are as follows : The petitioner carries on business as a contractor and is an assessee under the INCOME TAX ACT, 1961, hereinafter called "the Act". For the asst. year 1974 -75, the petitioner filed his return on estimate basis by computing the profit at a flat rate of 10 per cent on gross receipts, as the petitioner did not maintain any account books. The ITO, however, computed the net profit at 15 per cent on the contract payments received by the petitioner. Being aggrieved by the order passed by the ITO, the petitioner filed a revision petition under S. 263 of the Act to the Commissioner. The learned Commissioner, by his order dt. 23rd Sept., 1977, dismissed the revision petition. Aggrieved by that order, the petitioner has filed this petition.

(2.) LEARNED counsel for the petitioner contended that though the ITO has jurisdiction to make a best judgment assessment, as no account books were produced by the assessee, the ITO could not act arbitrarily. It was also contended that the learned Commissioner committed an error apparent on the face of the record in upholding the order of the ITO by merely observing that in view of the nature of the business, the estimate of net profit at 15 per cent appeared reasonable.

(3.) FOR all these reasons, this petition is allowed. The order dt. 7th Aug., 1976, passed by the ITO and that dt. 23rd Sept., 1977, passed by the Commissioner are quashed. In the circumstances of the case, the parties shall bear their own costs of this petition. The outstanding amount of security deposit shall be refunded to the petitioner.