Burden To Prove That Best Assessment By Income Tax Authorities Is Perverse Is On Assesee: Allahabad High Court

The bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri held that “when a best assessment is done, it is for the assessee to bring on record the facts that may reveal that the findings are perverse in nature.”

Appellant filed the Income Tax Appeal against the order of the Income Tax Appellate Tribunal who upheld the findings of the Commissioner of Income Tax (Appeals) where an enhancement of Rs.13,38,780/- over and above to the assessed income of the appellant amounting to Rs.25,63,730/- was made by the Assessing Officer. It was argued that the Tribunal did not go into the issue of enhancement and simply upheld the same.

Perusing the order passed by the Tribunal, the Court observed that enhancement made by the Commissioner of Income Tax (Appeals) was discussed. Discussing the fact findings of the Tribunal, the Court held that the assesee had failed to bring on record anything contrary to show that the rates were not the same as that recorded by the Commissioner.

The Court relied on Kachwala Gems Versus Joint Commissioner of Income Tax, where the Apex Court held that even though the authorities are to make fair and non-arbitrary assessment while making best judgment assessment, there is some guesswork involved. It held that the blame is on the assesee for not submitting proper documents for assessment in such cases.

Accordingly, the Court held that the assesee had not brought on any contrary material on record to prove its case. The appeal was decided against the assesee.

Case Title: M/S Rai Wines Ras Bahar Colony v. The Commisssioner Of Income Tax [INCOME TAX APPEAL No. - 395 of 2007]