Law:

Section:

Section 144 of the Income-tax Act, 1961, read with section 72 of the Finance Act, 1997 - Best assessment - Assessment years 1994-95 and 1998-99 - Whether declaration filed by assessee under VDIS for subsequent years can be looked into by Assessing Officer for purpose of estimating income for current year - Held, yes - During a survey conducted at business premises of assessee-firm and its accountants, it was found that assessee had not filed its return of income after assessment year 1993-94 - It was only after notice under section 148 as well as several notices under section 143(2)/142(1) had been issued to assessee that assessee filed its return declaring certain income - Assessing Officer held that since return was neither filed within time allowed under section 139(1) nor under section 148, no sanctity could be attached to such a return of income - In absence of books of account, he proceeded to make best assessment and estimated assessee's income on basis of percentage of profits disclosed by assessee itself in subsequent years as per declaration made under Voluntary Disclosure of Income Scheme, 1997 (VDIS) - Whether profit margins of a taxpayer as declared by him can be varied and disturbed only if profit margins in case of other assessees engaged in similar business are higher - Held, yes - Whether since Assessing Officer had not brought on record any comparable case wherein net profit declared by a taxpayer in similar business was higher than one declared by assessee, profit as declared by assessee could not be disturbed and best assessment made by Assessing Officer was liable to be set aside - Held, yes FACTS The assessee-firm was engaged in the business of manufacturing and trading of footwear. On 21-7-1999, a survey operation under section 133A was conducted at the business premises of the assessee-firm and its accountants, during which it came to the notice of the department that the assessee had not filed its return of income after the assessment year 1993-94. A notice under section 148 after recording reasons was issued and served upon the assessee on 25-11-2000 requiring it to file its return of income within the time allowed but no return was…

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