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Eastern Construction Company vs Income-Tax Officer. on 29 August, 1997 cites

Commissioner Of Income-Tax, Delhi-I vs Anand Prasad And Others on 22 September, 1980

13. The contention of the learned counsel that the Tribunal cannot consider the reasonableness of the confirmation of addition of Rs. 20,128 and disallowance of Rs. 1,67,892 out of total expenses confirmed by the CIT(A) on the basis of application of a reasonable net profit rate is also not valid and acceptable. The reliance placed by the learned lawyer on the judgment of the Honble Delhi High Court in the case of CIT vs. Anand Prasad & Ors. (supra) is misplaced as the facts of that case are totally different. The Honble High Court in the aforesaid judgment was considering the question relating to assessability of profit from sale of plots assessed by the AO as business income. The AAC held that the sale of lands did not constitute business and set aside the assessments in respect of the profits from the sale of land. The ITO at that stage did not raise any alternative plea that capital gains arose from the sale of the plots of the lands and had to be taxed. The Revenue preferred appeals to the Tribunal and contended that profits were taxable as capital gains. The Tribunal refused to permit the Department to raise the alternative contention as the ITO ought to have raised it before the AAC. On a reference the Honble High Court held that the alternative contention involved some other amount chargeable to income-tax as capital gains and that was a completely different point. The Tribunal was right in holding that such point could not and should not be permitted to be raised before it. Such a view was taken by the Honble High Court on account of the fact that the alternative contention raised on behalf of the Revenue necessarily required determination of income liable to tax as capital gains under S. 12B of Indian IT Act, 1922, which is a different and distinct head of income than the income from business, profession or vocation. The Tribunal cannot for the first time determine income under a different and separate head of income.
Delhi High Court Cites 18 - Cited by 106 - Full Document

Hukumchand Mills Ltd vs Commissioner Of Income-Tax, Central ... on 22 September, 1966

The Honble High Court at p. 394 while referring to the judgment of the Honble Supreme Court in the case of Hukumchand Mills vs. CIT (1967) 63 ITR 232 (SC) and CIT vs. Mahalakshmi Textile Mills Ltd. (1967) 66 ITR 710 (SC) observed that in both these cases, a new aspect of the point raised earlier was allowed to be raised before the Tribunal. In the present case, the AO determined the income of the assessee according to his best judgment by making separate additions or disallowances out of various expenses claimed in the P&L a/c. Since the assessee failed to produce vouchers or any other documentary evidence in support of the expenses claimed by the assessee, the AO was fully justified in making a best judgment by choosing to make disallowance out of the total expenses claimed by the assessee against the contract receipts. The Tribunal can certainly consider the reasonableness of such disallowance by taking into consideration the net effect of such disallowances and find out whether the net profit rate finally sustained by the CIT(A) as a result of confirmation of various disallowances can be regarded as fair and reasonable. It is not a case where the Tribunal is considering the assessability of the disputed amount of additions under a separate and distinct head of income. Such an exercise is being made only with a view to ascertain that the disallowances and addition made by the AO and confirmed by the CIT(A) should be restricted to such an amount so that the net income on the contract receipts is determined at a reasonable and just figure of profit from contract business.
Supreme Court of India Cites 11 - Cited by 243 - V Ramaswami - Full Document

Commissioner Of Income-Tax, Madras vs Mahalakshmi Textile Mills on 5 May, 1967

The Honble High Court at p. 394 while referring to the judgment of the Honble Supreme Court in the case of Hukumchand Mills vs. CIT (1967) 63 ITR 232 (SC) and CIT vs. Mahalakshmi Textile Mills Ltd. (1967) 66 ITR 710 (SC) observed that in both these cases, a new aspect of the point raised earlier was allowed to be raised before the Tribunal. In the present case, the AO determined the income of the assessee according to his best judgment by making separate additions or disallowances out of various expenses claimed in the P&L a/c. Since the assessee failed to produce vouchers or any other documentary evidence in support of the expenses claimed by the assessee, the AO was fully justified in making a best judgment by choosing to make disallowance out of the total expenses claimed by the assessee against the contract receipts. The Tribunal can certainly consider the reasonableness of such disallowance by taking into consideration the net effect of such disallowances and find out whether the net profit rate finally sustained by the CIT(A) as a result of confirmation of various disallowances can be regarded as fair and reasonable. It is not a case where the Tribunal is considering the assessability of the disputed amount of additions under a separate and distinct head of income. Such an exercise is being made only with a view to ascertain that the disallowances and addition made by the AO and confirmed by the CIT(A) should be restricted to such an amount so that the net income on the contract receipts is determined at a reasonable and just figure of profit from contract business.
Supreme Court of India Cites 5 - Cited by 53 - J C Shah - Full Document

Commissioner Of Income-Tax, Bangalore vs K.Y. Pilliah And Sons on 13 October, 1966

The learned counsel also relied upon the judgments in CIT vs. K. Y. Pilliah & Sons. (1967) 63 ITR 411 (SC), 2 ITC 176 and 5 ITC 159 to further support his contention that no such ad hoc/lumpsum disallowance can be validly made. The AO while making an assessment to the best of his judgment does not possess absolutely arbitrary authority to assess at any figure he likes and though not bound by strict judicial principles, he should be guided by rules of justice, equity and goods conscience. The learned counsel submitted that no such disallowance out of expenses were made in the past. The AO has not given any convincing reasons for disallowing a lumpsum amount out of various expenses.
Supreme Court of India Cites 1 - Cited by 105 - J C Shah - Full Document
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