RAHAMATH ABOOBACKER,CHENNAI vs. ITO, INTL TAXN. WARD-2(1), CHENNAI

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ITA 629/CHNY/2026Status: DisposedITAT Chennai03 August 2026AY 2023-244 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee's average gross profit rate of 2.94% was reasonable and directed the AO to adopt this rate. Consequently, the addition made by the AO and confirmed by the CIT(A) was deleted.

What were the facts?

The Assessing Officer (AO) made an addition to the assessee's income by estimating gross profit at 3% on account of disallowance of business expenses. The assessee argued that the average gross profit rate was 2.94%, as supported by their financial records.

What were the issues?

Whether the AO was justified in estimating the gross profit at 3% when the assessee's historical average was 2.94%.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13)

AI-generated summary — verify with the full judgment below

Before: SHRI. INTURI RAMA RAO & BEFORE SHRI S.S. VISWANETHRA RAVI

Hearing: 17.06.2026Pronounced: 03.08.2026

आयकर अपीलीय अिधकरण, ’ ए’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी इंटूरी रामाराव, लेखा सद एवं �ी एस.एस. िव"ने$ रिव, �ाियक सद के सम% । BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 629/Chny/2026 िनधा'रण वष'/Assessment Year: 2023-24 Rahamath Aboobacker, Vs. Income Tax Officer, New No. 19, Old No. 7, International Taxation Ward-2(1), Malleswaran Koil Street, Chennai. Mylapore, Chennai – 600 004. [PAN: AHUPR-7225-F] (अपीलाथ*/Appellant) (+,थ*/Respondent) अपीलाथ* की ओर से / Appellant by : Mr. N. Arjun Raj, Advocate +,थ* की ओर से/Respondent by : Mr. S. Manoj Prakash, JCIT सुनवाई की तारीख/ Date of hearing : 17.06.2026 घोषणा की तारीख /Date of Pronouncement 03.08.2026 : आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 28.03.2025 passed by the Income Tax Officer, International Taxation, Ward 2(1), Chennai, for the assessment year 2023-24.

2 ITA No. 629/Chny/2026

2.

At the outset, it is noted that the AO determined the income of the

assessee at Rs.72,20,015/- as against returned income of

Rs.15,88,730/- vide its order dated 02.01.2026 passed u/s. 143(3) r.w.s.

144C(13) of the Income-tax Act, 1961 (hereinafter “the Act”), inter alia,

making addition on account of estimating the gross profit @ 3% on

account of disallowance of business expenses. The ld.CIT(A) confirmed

the same.

3.

The assessee raised 15 grounds of appeal and in support of the

same the ld.AR, Shri. N. Arjun Raj, Advocate, placed on record chart

showing the particulars of turnover, gross profit, percentage of gross

profit, net profit, percentage of net profit, average percentage of gross

profit and average percentage of net profit for AY 2019-20 to AY 2022-

23 along with financials at page no.5 of the paper book. He argued by

referring the average gross profit for the year under consideration is at

2.94%, but not 3% as determined by the AO. Further, he prayed to adopt

the average gross profit at 2.94% in the facts and circumstances of the

case.

3 ITA No. 629/Chny/2026

4.

The ld.DR, Shri. S. Manoj Prakash, JCIT, opposed the same and

referred to para no. 4.2 of the final assessment order and submits that

the AO applied gross profit at 3% of the turnover which is almost

equivalent to average gross profit as shown in the chart by the assessee.

He relied on the order of the final assessment order.

5.

Having heard both the parties, we note that the assessee filed

details of financials from page no.1 to 102 of the paper book. We find

the statement of income at page no. 98 of the paper book, wherein the

total income declared by the assessee at Rs.15,88,740/- which is

matching with the income disclosed in return of income at page no.1 of

paper book. Further, we note that the assessee disclosed income from

house property, income from business and income from other sources.

Further, assessee has declared net profit before tax as per profit and

loss account in respect of the income from business at Rs.17,73,692/-,

which is matching with the net profit declared on total turnover in the

chart relevant to AY 2023-24. Therefore, as suggested by the ld.AR, the

average gross profit rate of 2.94%, in our opinion, is reasonable and

accordingly we direct the AO to determine the total income in respect of

income from business by adopting the same. Therefore, the addition

4 ITA No. 629/Chny/2026

made by the AO which was confirmed by the ld.CIT(A) is not justified and deleted. Thus, grounds raised by the assessee are allowed for statistical purposes.

6.

In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 03rd August, 2026 at Chennai.

Sd/- Sd/- (INTURI RAMA RAO) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Chennai, Dated: 03.08.2026 JPV आदेश की +ितिलिप अ3ेिषत/Copy to: 1. अपीलाथ*/Appellant, 2.+,थ*/ Respondent, 3. आयकर आयु4/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय +ितिनिध/DR & 5. गाड' फाईल/GF.

PRASANNA Digitally signed by PRASANNA VANI JETTY VANI JETTY Date: 2026.08.06 10:05:54 +05'30'

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