SURESH KUMAR TOSHINIWAL,HYDERABAD vs. ITO, WARD-1(1), HYDERABAD

ITA 2068/HYD/2026Status: DisposedITAT Hyderabad23 October 2026AY 2019-205 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided the issues as follows: Regarding the jurisdiction issue (additional ground 1), the judgment does not explicitly record a decision or finding by the Tribunal on this specific ground. It is not mentioned in the operative part of the order. Regarding the turnover (Grounds 1-3), the Tribunal restored the issue to the file of the Assessing Officer. The AO was directed to examine the bank accounts afresh, provide the assessee an opportunity for a hearing to explain the bank entries and the quantum of turnover, and then pass a fresh speaking order in accordance with the law. This implies that the Tribunal found merit in the assessee's contention that the turnover calculation needed re-examination. Regarding the net profit estimation (Grounds 4-6), the Tribunal restricted the profit to 2% of the turnover. The Tribunal noted that the AO had no valid justification for estimating profit at 5% when the assessee's books of account were duly audited and no defects were pointed out. The Tribunal also considered the nature of the edible oil business having a low profit margin. The assessee's counsel agreed to the profit being restricted to 2% of the turnover in open court. The general ground (Ground 7) was dismissed. The appeal was treated as partly allowed.

What were the facts?

The assessee, Suresh Kumar Toshiniwal, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, against the order of the Commissioner of Income Tax (Appeals) dated March 9, 2026, for Assessment Year 2019-20. The appeal was filed with a delay of 13 days, which was condoned by the Tribunal. The assessee's primary contention was that the Assessing Officer (AO) and the Ld. CIT(A) had incorrectly determined the turnover and net profit. The AO had treated deposits in bank accounts totaling Rs. 10,14,28,721/- as turnover, whereas the assessee claimed the actual turnover was Rs. 8,04,93,948/-, with the difference being auto sweep deposits and amounts received from debtors. The AO had also estimated net profit at 5% of the turnover, while the assessee declared a profit of 1.4%.

What were the issues?

1. Whether the Tribunal had jurisdiction to issue notice u/s 148 of the Income Tax Act and if consequent proceedings and assessment order are invalid (mixed law and fact, turns on Section 148). 2. Whether the annual turnover of the assessee is Rs. 10.14 crores or Rs. 8.04 crores (mixed law and fact). 3. Whether the estimation of net profit at 5% of the turnover is erroneous, considering the assessee's declared profit of 1.4% and the nature of the edible oil business (mixed law and fact). Assessee's Arguments: - The AO lacked jurisdiction to issue notice u/s 148, rendering subsequent proceedings invalid. - The turnover was wrongly calculated by the AO as Rs. 10.14 crores, as it included auto sweep deposits and amounts from debtors, while the actual turnover was Rs. 8.04 crores. - The net profit estimation of 5% was excessive, as the actual profit was around 1.4%, and the books of account were duly audited without any defects pointed out. The assessee relied on the decision in M/s. Siddi Vegetable Oil Products vs. Income Tax Officer, Ward-8(2), Hyderabad in ITA No.1182/Hyd/2014. - Estimation of income without rejecting books of account is against settled law. Revenue's Arguments: - The AO was justified in estimating the profit at 5% as the assessee had not originally filed the return of income.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SANJAY GARG & SHRI MADHUSUDAN SAWDIA

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 09/03/2026 for the Assessment Year (AY) 2019-20. 2. The appeal is time barred by 13 days. A separate application for condonation of delay has been filed. Considering the averments made in the applicatio

The order continues below.

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