MEERAMAIDEEN MOHAMED RAJA,MADURAI vs. ITO, NCW-2(3), MADURAI

ITA 1749/CHNY/2026Status: DisposedITAT Chennai05 October 2026AY 2020-218 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 3,63,477/- was not sustainable. The Tribunal found that while the assessee's non-response during assessment justified ex parte proceedings, it did not preclude the consideration of evidence furnished at the appellate stage. The Tribunal noted that the assessee had provided sales ledger, monthly GST returns, and the annual GSTR-9, which reconciled with the books of account and profit and loss account. The GSTR-9 showed an annual turnover of Rs. 2,66,00,104/-, corresponding to the books. The Tribunal concluded that the differential turnover of Rs. 37,39,484/- represented a duplication in reporting for March 2020 GSTR-1, not actual undisclosed income. The Revenue had not produced contrary material to prove additional sales outside the books. Therefore, the basis for estimating profit did not survive. The addition was directed to be deleted, and the grounds raised by the assessee were allowed. The order of the CIT(A) was set aside.

What were the facts?

The assessee, an individual, failed to file his return of income for Assessment Year 2020-21. Based on GST data showing a higher turnover than reported and significant cash deposits, the Assessing Officer (AO) reopened the assessment under Section 147 of the Income-tax Act, 1961. The assessee filed a return declaring an income of Rs. 4,74,090/-. During assessment proceedings, the assessee did not respond to notices. The AO made an addition of Rs. 3,63,477/- by applying a 9.72% gross profit rate on an alleged undisclosed turnover of Rs. 37,39,484/-. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this addition. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the addition of Rs. 3,63,477/- made by the AO on account of alleged undisclosed business turnover is sustainable, considering the assessee's explanation of a reporting error in GSTR-1 for March 2020, which was subsequently rectified in GSTR-9? (Question of mixed law and fact, concerning Section 147 and Section 144 of the Income-tax Act, 1961). Assessee's Contention: The assessee argued that the difference in turnover arose from an inadvertent error while filing the GSTR-1 for March 2020, where sales from January and February 2020 were included twice. This error was rectified in the annual return GSTR-9. The assessee provided supporting documents like financial statements, sales ledger, and GST returns. They relied on the reconciliation of turnover with books of account and the GSTR-9 filing. Revenue's Contention: The Revenue contended that the AO correctly determined the taxable income by estimating 9.72% gross profit on the undisclosed turnover, as there was a clear discrepancy between GSTR-1 and the return of income, and the assessee failed to provide reconciliation during assessment. They prayed for confirmation of the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(1)(a),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA

For Respondent: Shri. A.T.Krishnamoorthy, Addl.CIT
Hearing: 03.08.2026Pronounced: 05.10.2026

PER S. R. RAGHUNATHA, AM : The present appeal of the assessee is directed against the order dated 27.01.2026 of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi (hereinafter referred to as the “Ld.CIT(A)”), arising out of the assessment order dated 07.02.2025 passed u/s.147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) by the Assessing Officer, Assessment Unit, Inc

The order continues below.

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