DULICHAND HANUMAN PRASAD SHAH,JHARSUGUDA vs. ITO-WARD-2, JHARSUGUDA

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ITA 185/CTK/2022Status: HeardITAT Cuttack20 February 2023AY 2014-153 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that estimating income without rejecting the assessee's books of accounts is unsustainable. Consequently, the order of the CIT(A) upholding the AO's assessment was set aside.

What were the facts?

The Assessing Officer (AO) estimated the assessee's income at a 2% GP rate, higher than the 1.8% disclosed by the assessee, without rejecting the books of accounts. The assessee argued that income should not be estimated without rejecting their books.

What were the issues?

Whether the AO can estimate income at a higher GP rate without rejecting the assessee's books of accounts.

Which sections of the Income-tax Act were involved?

Section 143(3)

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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK

Before: SHRI GEORGE MATHAN & SHRI ARUN KHODPIA

Hearing: 20/02/2023Pronounced: 20/02/2023

O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld.CIT(A)-2, Bhubaneswar, dated 28.10.2022 passed in I.T.Appeal No.SBP/10267/2016-17, for the assessment year 2014-2015.

2.

It was submitted by the ld. AR that the assessee had filed his return of income and the assessment came to be completed u/s.143(3) of the Act, wherein the AO has adopted 2% as GP as against 1.8% disclosed by the assessee. It was the submission that the AO has not rejected the books of accounts. It was submitted that before the ld. CIT(A) though the assessee has made his submission, however, the same was not considered. It was the submission that without rejecting assessee’s books of accounts the income of the assessee should not be estimated. He relied upon the decision of Hon’ble Jurisdictional High Court of Orissa in 2 the case of Ramchandra Ramnivas Vs. State of Orissa, reported in [1970] 25 STC 501 (Orissa).

3.

In reply, ld. Sr. DR submitted that the assessee as not disclosed the turnover of Rajgangpur Branch of the assessee. It was his submission that consequently the AO has estimated the assessee’s income. He placed reliance on the order of ld. CIT(A) at page 3. He vehemently supported the order of the ld. AO and ld. CIT(A).

4.

We have considered the rival submissions. A perusal of the assessment order clearly shows that the AO has estimated the income of the assessee at 2% of the Rajgangpur Branch. Admittedly, the claim of the Sr. DR that the assessee has not disclosed the turnover of the Rajgangpur Branch does not find any mention in the assessment order or the order of the ld. CIT(A). A perusal of the assessment order also shows that the AO has mentioned that he has enquired the similar business of petrol pump and determined GP at 2%, however, the assessment order does not talk of any comparative case. A perusal of the assessment order also shows that the books of accounts of the assessee have not been rejected. This being so, we are of the view that the estimation of the income of the assessee as done by the AO without rejecting the books of accounts of the assessee is unsustainable and consequently the order of the ld. CIT(A) upholding the assessment done by the AO stands set aside and the AO is directed to adopt the GP rate as disclosed by the assessee.

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