Court held that the Tribunal’s order clearly showed that the gross profit at the rate of 14.21 per cent. and net profit at the rate of 3.83 per cent. declared by the assessee, with the addition of 10 per cent. agreed by the assessee before the Commissioner (Appeals), resulted in a much better result of profits declared by the assessee in the AY. 2010-11 as compared to the previous years. The net profit rate in the previous three years was less than 3 per cent., whereas the assessee itself declared the net profit at the rate of 3.83 per cent. before the addition of 10 per cent. of Rs. 4,41,08,210. Therefore, the estimation of profits by the appellate authorities even on the premise taken by the assessing authority that some of the sub-contractors could not be produced before the assessing authority, did not result in any perversity in the findings of the Commissioner (Appeals) as well as the Tribunal. It is well known that where the books of account maintained by the contractors were not accepted by the Department, estimation of profits made on the basis of the history of the gross profit rate and net profit rate of the assessee in the previous years or comparable cases of contractors can be made. Once such profit rates were compared, the additions on account of non-confirmation or non-production of the sub-contractors, was totally irrelevant and could not be made. The estimation of income by the Tribunal was valid.

Obiter dicta : Though the provisions of section 260A of the Act are intended only to settle the substantial questions of law arising from the order of the Tribunal, there seems to be no application of mind by the higher authorities in sanctioning filing of these appeals before the High Court. The authorities should see the absence of reasonableness in filing such appeals in future. Merely because the Revenue’s stake may be more than rupees one crore for the Revenue Department, the validity of substantial question of law arising in the matter ought to have been examined by the responsible authorities of the Revenue Department, before filing such appeals before this court.( AY:2010-11)