ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI vs. JEGATHESE RAMACHANDRAN, MADURAI

ITA 1769/CHNY/2026Status: DisposedITAT Kolkata24 September 2026AY 2018-1910 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A). Regarding the disallowance of expenditure, the Tribunal noted that while the assessee admitted deficiencies in maintaining supporting records, the AO had not produced specific material to establish that the expenditure was bogus, fictitious, or for non-business purposes. The declared turnover was not disputed. The CIT(A)'s estimation of net profit at 5% of the declared turnover, based on past results and deficiencies in record-keeping, was considered a reasonable basis for determining business income. The Tribunal also referred to the Supreme Court decision in CIT v. S. Khader Khan Son, stating that a statement recorded during survey alone cannot be the sole basis for an addition. The Revenue did not challenge the basis of the estimation or dispute the past net profit figures considered by the CIT(A). Therefore, the CIT(A)'s approach was found to be without infirmity, and the differential income sustained was upheld. The cross-objection filed by the assessee was dismissed as infructuous because the assessee did not press the grounds if the Revenue's appeal was dismissed.

What were the facts?

The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2018-19. The assessee, engaged in fish net trading, had filed a return declaring an income of Rs. 8,67,890. A survey under Section 133A was conducted, leading to reassessment proceedings initiated by a notice under Section 148. The Assessing Officer (AO) disallowed an expenditure of Rs. 2,56,18,186 claimed by the assessee, citing a lack of supporting bills, vouchers, or bank statements. The assessee appealed to the CIT(A), who partly allowed the appeal by estimating the business income at 5% of the turnover, resulting in an addition of Rs. 3,93,384. The CIT(A) dismissed the legal ground regarding the validity of reassessment proceedings for statistical purposes. The Revenue's appeal challenges the CIT(A)'s deletion of the addition and admission of new evidence.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs. 2,56,18,186/- on account of inflated expenditure, and instead estimating the business income at 5% of the declared turnover, as per Section 37 of the Income Tax Act, 1961. - Assessee's Contention: The AO ought to have estimated the real income rather than disallowing the entire expenditure. The CIT(A) rightly estimated the net profit at 5% of the turnover based on past results. - Revenue's Contention: The CIT(A) erred in deleting the addition and allowing new evidence without satisfying the mandates of Rule 46A of IT Rules, 1962, and by not taking cognizance of legal presumptions under Section 132(4A) and Section 292C of the Act, contrary to the High Court of Madras decision in Smt. N. Saroja vs. ACIT. 2. Whether the Commissioner of Income Tax (Appeals) erred in allowing new evidence to be filed by the assessee without satisfying the mandates of Rule 46A of IT Rules, 1962, and without giving the AO an opportunity to file submissions. - Revenue's Contention: The CIT(A) erred in admitting new evidence without following the prescribed procedure. - Assessee's Contention: No additional evidence was furnished before the CIT(A); the ground raised by the Revenue is misconceived.

Which sections of the Income-tax Act were involved?

Section 37,Section 133A,Section 147,Section 148,Section 148A,Section 151,Section 250,Section 292C,Section 132(4A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO

Hearing: 22.09.2026Pronounced: 24.09.2026

Heard together (2 matters)

C.O. No.83/CHNY/2026
I.T.A.No.1769/CHNY/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER GEORGE GEORGE K, VICE PRESIDENT:

This appeal filed by the Revenue and the cross objection filed by the assessee are directed against the order of Commissioner of & CO No.83/CHNY/2026 Jegathese Ramachandran Income Tax (Appeals), Chennai-19 dated 22.01.2026, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’).

The order continues below.

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