SUBASH CHANDRA BARDHAN,BALARAMGADI vs. ITO WARD-2, BALASORE

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ITA 108/CTK/2023Status: DisposedITAT Cuttack12 June 2023AY 2014-153 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal upheld the rejection of the assessee's accounts but found the AO's estimation of 8% to be high. Considering that the assessee had disclosed 3.72% in the revised return and comparable cases showed profit margins between 1% to 2.5%, the Tribunal directed the net profit to be taken at 3.5% of the total turnover.

What were the facts?

The assessee, engaged in fish trading, initially filed a return disclosing a turnover of Rs. 45,26,980/- under Section 44AD. Subsequently, a revised return was filed with a higher turnover of Rs. 1,10,65,800/- accompanied by audited accounts. The AO rejected the books and estimated income at 8% of the turnover.

What were the issues?

Whether the AO was justified in rejecting the assessee's books of accounts and estimating the income at 8% of the turnover, and if so, what would be the appropriate estimation percentage.

Which sections of the Income-tax Act were involved?

Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH CUTTACK

Before: SHRI GEORGE MATHAN

Hearing: 12/06/2023Pronounced: 12/06/2023

O R D E R This is an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 24.11.2021 in Appeal No.ITBA/NFAC/S/250/2022-23/1049793637(1) for the assessment year 2014-2015.

2.

It was submitted by the ld AR that the assessee is an individual, who derives income from trading in fish, which is perishable item. It was the submission that the assessee has originally filed its return of income and on account of non-availability of books and had disclosed its turnover at Rs.45,26,980/-. While filing the original return, the assessee had adopted the provisions of Section 44AD of the Act. Subsequently, the assessee had filed a revised return showing total turnover of Rs.1,10,65,800/- and the said revised return was accompanied with audited accounts which was specially qualified auditors. It was the submission that the AO did not accept the return of income wherein the 3.27% of the total turnover and the books of accounts being not available, the percentage of income declared by the assessee in the revised return has been rejected. The AO had adopted @8% of the total turnover of Rs.1,10,65,800/-. It was the submission that the estimation was done without applying any comparative case. It was submitted that the percentage of the net profit taken was high and the comparative case as decided by the coordinate bench of this Tribunal was in the range of 1% to 2.5%. It was the submission that the estimation of the income may be reduced.

3.

In reply, ld. CIT-DR submitted that the assessee has not complied with the notices issued by the AO. It was submitted that the AO had applied 8% by adopting the same percentage as disclosed by the assessee in its original return. It was the submission that the estimation as done by the AO is liable to be upheld.

4.

I have considered the rival submissions. A perusal of the facts of the present case show that the return filed by the assessee itself is not revised return. In any case, the return discloses higher turnover of Rs.1,10,65,800/-. This being so, the AO was right in adopting the higher turnover for the purpose of estimation. Coming to the issue of estimation, it is noticed that the AO has adopted 8%. Even if the estimation of the revised return is considered, the AO had adopted same percentage as adopted by the assessee in filing its original return, it is understood that the original return had been filed on presumptive basis u/s.44AD of the Act. The provisions of Section 44AD of the Act specifically provides of

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