GANAPATHY SUNDARI,THIRUVALLUR vs. ITO,WARD 1 , TIRUVALLUR, TIRUVALLUR

ITA 3849/CHNY/2026Status: DisposedITAT Chennai07 October 2026AY 2016-175 pages
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What did the Tribunal hold?

The Tribunal noted that the assessee did not file the return of income under Section 139(1) and filed it only in response to a notice under Section 148. The AO estimated income at 8% of gross receipts due to the lack of documentary evidence. The Tribunal observed that the assessee's declared income for AY 2014-15 was Rs. 2,52,000/- and for AY 2015-16 was Rs. 4,65,000/-, with the profit percentage showing a marginal increasing trend, reaching 4.51% in the immediately preceding year. The Tribunal held that income estimation should be fair and reasonable, considering the past history of the business. Given the significant increase in declared income for the current year and the profit percentage being broadly in line with the trend of 4.51%, the Tribunal deemed an estimation of 5% of gross receipts to be just and fair. The AO was directed to recompute the income by estimating profit at 5% of gross receipts and modify the addition after adjusting the income already declared. The same direction was applied mutatis mutandis for AY 2017-18.

What were the facts?

The assessee, Ganapathy Sundari, is an individual engaged in the business of lorry hiring. For Assessment Year (AY) 2016-17, she did not file a return of income. The Assessing Officer (AO) reopened the assessment under Section 148 of the Income Tax Act, 1961, after noticing gross receipts of Rs. 4,81,51,549/-. The assessee filed a return on 17.11.2021, declaring a total income of Rs. 19,79,476/-, citing portal technical issues for the delay. The AO estimated the assessee's income at 8% of gross receipts, amounting to Rs. 38,52,124/-, and made an addition of Rs. 18,72,648/- after adjusting the declared income. The Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) dismissed the assessee's appeal. Similar facts and additions were made for AY 2017-18.

What were the issues?

1. Whether the estimation of income at 8% of gross receipts by the AO, as confirmed by the CIT(A), is justified for AY 2016-17 and AY 2017-18, turning on Section 144 of the Income Tax Act, 1961. Assessee's contentions: The assessee argued that an 8% estimation of profit is excessively high for the lorry hiring business. They pointed to the AO's own findings for AY 2014-15 (income declared Rs. 2,52,000/-) and AY 2015-16 (income declared Rs. 4,65,000/-), and the declared income of Rs. 19,79,476/- for the current year, which is significantly higher. They also submitted a statement showing the gross profit ratio for earlier years, noting that the immediately preceding year's profit was only 4.51%, making the 8% estimation unsustainable. Revenue's contentions: The revenue contended that the AO rightly estimated the income as the assessee failed to submit any documentary evidence to support the business income.

Which sections of the Income-tax Act were involved?

Section 148,Section 250,Section 139(1),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI SS VISWANETHRA RAVI & MS. PADMAVATHY.S

For Respondent: Ms. Anshu Sharawat, Addl. CIT

PER PADMAVATHY.S, A.M: These appeals by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") both dated 05.06.2026 for Assessment Year (AY) 2016-17 & 2017-18. The commons issue contended by the assessee in both the AYs pert

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