S BALASUBRAMANIAN,POLLACHI vs. ACIT, CIRCLE-1,, COIMBATORE

The Assessee raised the following grounds of appeal :

Briefly, the facts of the case are that the appellant is an Individual. No regular Return of Income for the Assessment Year 2020-21 was filed under the provisions of section 139(1) of the Income Tax Act, 1961. However, based on the information that the appellant made cash deposits of Rs.12,21,87,186/- in the bank account maintained with State Bank of India and also made cash withdrawals from the State Bank of India. The Jurisdictional Assessing Officer(JAO) formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.148 of the Act on 29.03.2024 after duly complying with the procedure laid down u/s.148A of the Act. However, the appellant neither complied with the notice u/s.148 nor the notice u/s.142(1) of the Act. In the circumstances, the e-Assessment Unit of the Department (hereinafter called ‘AO’) had proceeded with framing best judgment assessment vide order dated 11.02.2025 passed u/s.147 r.w.s 144 read with section 144B of the Act at a total income of Rs.1,62,44,054/-. While doing so, the Assessing Officer estimated the profit at 8% by treating the entire credits in the bank account aggregating to Rs.20,31,75,674/- as a business turnover of the appellant.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order dismissed the appeal by rejecting the submission of the appellant that the matter may be remanded back to the file of Assessing Officer for fresh assessment.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. When the appeal was called-on, no one appeared on behalf of the assessee despite due service of notice of hearing. Therefore, after hearing learned Sr.DR, we proceeded to dispose of the appeal on merits.

We heard learned Sr.DR and perused the material available on record. The issue that arises for our consideration for the estimation of profit at 8% is reasonable.

On careful perusal of the assessment order, it would reveal that the Assessing Officer has estimated the income @8% of the total turnover for the failure of the appellant to submit any documentary evidence in support of the claim. Even on appeal before ld.CIT(A)/NFAC, the addition was confirmed for the same reason. However, we find that the estimation of profit cannot be arbitrary and it should be based on past history of the appellant or the comparable cases in the similar line of business. Therefore, we are of the considered opinion that the matter requires remand to the file of Assessing Officer for denovo assessment in accordance with law after affording an opportunity of being heard to the appellant.

In the result, appeal filed by the assessee stands partly allowed for statistical purpose. Order pronounced in the open Court on 12th June, 2026.