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Facts
The assessee, Tajshree Motors Pvt. Ltd., failed to file its return of income for AY 2018-19. The Assessing Officer (AO) initiated reassessment proceedings and, in the absence of any response or documents from the assessee, estimated the gross profit based on bank credits and made additions. The CIT(A) dismissed the assessee's appeal due to non-compliance.
Held
The Tribunal noted the assessee's non-compliance before the lower authorities and acknowledged the dispute among owners/promoters as a reason. However, considering the assessee's prayer and the potential error in estimating profit based on bank credits instead of turnover from GST/VAT returns, the Tribunal decided to remand the case for fresh assessment.
Key Issues
Whether the AO erred in estimating gross profit based on bank credits instead of turnover from GST/VAT returns, and whether the assessee deserves a fresh opportunity to present evidence due to circumstances beyond control.
Sections Cited
147, 144, 144B, 250, 4
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Income Tax Appellate Tribunal, NAGPUR BENCH :: NAGPUR
Before: SHRI PAWAN SINGH & SHRI KHETTRA MOHAN ROY
This appeal by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi, dated 27/03/2025 passed under section 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of
Brief facts of the case are that assessee-company did not choose to file the return of income for AY 2018-19. Based on the information available with the Department, 148A proceedings were initiated. In response to the notice issued u/s. 148, assessee neither furnished return of income nor provided any documents. In absence of financial statements /documents, total credits in the bank accounts at Rs.55,88,80,400/- have been taken as gross receipts and estimated the gross profit @ 6.35% which comes to Rs. 3,54,88,905/-, in which depreciation of Rs. 60,60,315/- was deducted. Consequently, Ld. Assessing Officer (AO) completed the assessment making addition of Rs.2,94,28,950/-.
Aggrieved with the above addition, assessee preferred appeal before the Ld. CIT(A). Due to non-compliance to the various notices issued, Ld. CIT(A) dismissed the appeal of
At the beginning, learned counsel for the assessee as punctilious he is ever fairly admitted that assessee could not comply with the notices issued by the Ld. CIT(A) due to circumstances beyond control. The documents whatever was called for by the Ld. CIT(A) are now available with the assessee. He further submitted that due to non-availability of documents/ financial statements, Ld. AO has taken the bank credits to estimate GP which is quite arbitrary. As per the learned counsel, Ld. AO ought to have taken turnover of the assessee as per GST and VAT returns to estimate NP instead of GP. Therefore, he prayed for one more opportunity to appear before the Ld. Jurisdictional Assessing Officer (JAO) to substantiate his averments and to submit the relevant documents and evidences to buttress his claim.
On the contrary, Ld. Departmental Representative (DR) supported the orders of the authorities below and submitted that though various opportunities have been granted, assessee could not avail to produce any documents before 3 (Tajshree Motors Pvt. Ltd.) the Ld. AO. He further submitted that before the Ld. CIT(A) also, assessee did not appear and failed to file any documents, therefore, Ld. CIT(A) has rightly upheld the order of the Ld. Ld. AO and no interference of this Tribunal is required.
We have heard rival contentions and perused the records placed before us. We observe that in absence of documentary evidence, Ld.AO made the addition of Rs. 2,94,28,950/- @6.35% of the total gross receipts as per bank. Admittedly, assessee did not participate in the appellate proceedings before the Ld.CIT(A) and the same has been accepted by the learned counsel for the assessee during the course of hearing before this Tribunal. The main reason for such non-compliance is due to dispute between the owners and the promotors of the company. Before us, learned counsel filed a paper book running into 133 pages and submitted that Ld. AO seriously erred in taking into consideration the bank credits instead of turnover of the company arriving at gross profit ignoring net profit declared.
(Tajshree Motors Pvt. Ltd.) 7. Considering the prayer made by the learned counsel for the assessee and also observing that assessee has been non- compliant before the Ld.AO as well as Ld.CIT(A), we deem it appropriate to remit the issues back to the file of the JAO for framing denovo assessment. Ld.JAO is directed to verify the turnover as per VAT & GST returns and calculate net profit thereon keeping in view the past history after considering deduction of statutory expenses. Needless to mention that JAO shall afford a reasonable opportunity of being heard to the assessee. The assessee shall furnish a comprehensive cash flow statement clearly explaining the inflows and outflows in the bank account. It is imperative to underscore that only the total income, as envisaged under section 4 of the Act, is exigible to tax and must be determined with precision in accordance with the mandate of Article 265 of the Constitution of India, which stipulates that no tax shall be levied or collected except by authority of law. Assessee is also directed to remain vigilant and not to take unnecessary adjournments unless otherwise required for reasonable cause and also produce all necessary documents what would 5 (Tajshree Motors Pvt. Ltd.) be called for by the JAO. Grounds of appeal raised by the assessee are allowed for statistical purposes.
8. In the result, appeal of the Assessee is allowed for statistical purposes.