NARSIMHA GARDAS,HYDERABAD vs. INCOME TAX,WARD-1, HYDERABAD

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ITA 398/HYD/2021Status: DisposedITAT Hyderabad28 January 2022AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the lower authorities had not justified the 8% profit estimation. Considering the assessee's profit rate of 3.90% in the preceding year, the profit estimation was restricted to 4%.

What were the facts?

The assessee's appeal concerned the estimation of 8% profit on the running of medical and general stores. The addition in dispute was Rs. 7,35,612/-.

What were the issues?

Whether the estimation of profit at 8% by the lower authorities was justified. The appropriateness of the profit estimation rate for the business.

Which sections of the Income-tax Act were involved?

Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD

Before: SHRI S.S.GODARA

This assessee’s appeal for AY.2017-18 arises from the National Faceless Appeal Centre (NFAC), Delhi’s order dated 15-09-2021 passed in DIN & Order No.ITBA/NFAC/S/250/2021-22/1035592290(1), involving proceedings u/s.144 of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

The assessee’s sole substantive grievance pleaded in the instant appeal challenges correctness of both the lower authorities’ action estimating 8% profit element in running of medical and general stores. It is thus clear that there is not much a serious dispute between the parties regarding turnover figure as the addition in issue before me is Rs.7,35,612/- only.

3.

Learned departmental representative vehemently contended that both the lower authorities have rightly adopted 8% profit on assessee’s turnover. He fails to dispute the clinching fact that the assessee’s profit rate in the immediate preceding assessment year had been accepted @3.90% only.

4.

Faced with this situation and more so when both the learned lower authorities have nowhere justified the impugned profit estimation @8% estimation by quoting the relevant comparables or historic trends, I deem it appropriate to restrict the same at a lumpsum rate of 4% only with a rider that the same shall not be treated as a precedent. The assessee gets part relief in very terms. Necessary computation shall follow as per law. No other ground has been pressed during the course of hearing.

5.

This assessee’s appeal is partly allowed in above terms.

Order pronounced in the open court on 28th January, 2022

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