Rajesh Bindal, J. - (1.) THIS appeal has been preferred under section 260 -A of the Income -tax Act, 1961 (for short "the Act") proposing the following substantial questions of law, arising out of order dated 20 -7 -2006 passed by the Income -tax Appellate Tribunal, Delhi Bench 'E', New Delhi (for short "the Tribunal) in ITA No.4993/Del/2003, in respect of the assessment year 1995 -96: - 1. Whether to frame the assessment under section 143(3) in the case when the reason given under notice under section 148 of the I.T. Act, 1961 are not correct, is legally sustainable in the eyes of law?
(2.) WHETHER the estimation of such net profit rate at 10 per cent can be sustained in the eyes of law without giving any reasonable opportunity of hearing to the assessee and more over when no such procedure for calculation is laid down in the statute? Whether the calculation of such rate of net profit could be based on such rate prevailing to sister concern of the assessee when there is no material on record that such rate has been estimated to be 10 per cent in that sister concern of the assessee is legally sustainable in the eyes of law? Briefly the facts of the case are that a survey under section 133A of the Act was conducted at the premises of the assessee and because of certain discrepancies found at time of survey assessee offered to surrender a sum of Rs.3 lacs as income of M/S Avinash Ceramics, Gurgaon, of which assessee is sale proprietor. The surrendered income having not been disclosed in returned income, a notice under section 148 was issued to the assessee. Inspite of that the assessee neither filed return nor produced books of accounts or documents for verification but filed only list of sundry creditors and photocopy of some ledger account. During the course of assessment, it was found that on a total sale turn -over of Rs. 1,21,71,599 made during the year in question, net profit of merely Rs. 54,137 was declared, which was found to be quite on lower side, as compared to other concerns in same business. Vide letter dated 28 -10 -1999 the assessee was required to produce complete set of books of account, vouchers and other information. It was further mentioned in the notice that in case of failure, the net profit rate at the rate of 10 per cent would be applied. In spite of that the assessee failed to comply with the notice. Accordingly, the assessing officer did not have any other choice but to determine net profit rate 10 per cent of the total sale which came to Rs. 12,17,155. This estimation was done by referring to instances of other firms in similar trade, which are owned by other family members. In appeal, the assessee succeeded before the Commissioner of Income -tax (Appeals). However, in further appeal by the Revenue before the Tribunal, the order passed by the assessing officer was upheld. 2. After hearing learned counsel for the assessee, we find the conduct of the assessee clearly shows that he is not entitled to any relief in the case in hand. During the course of survey the assessee surrendered a sum of Rs. 3 lacs, as concealed income, on account of various discrepancies, however, the same was not reflected in return filed. During the course of re -assessment proceedings, the assessee did not produce any books of account or vouchers to justify his claim. Even the show cause notice issued for production of books of account and in the alternative proposing estimation of net profit rate at the rate of 10 per cent of the turn over was also not responded to. Under the circumstances, there was nothing wrong in estimation of income where some guess work is bound to be applied. Accordingly, we do not find any merit in the appeal and the -same is dismissed.;