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Facts
The assessee, M/s Muskan Communication, engaged in the sale of SIM cards and data recharge, appealed against an assessment framed under Section 143(3). The AO made an estimated addition of 8% on total bank credits, increasing declared income from Rs.2.88 Lacs to Rs.6.23 Lacs, and also added Rs.8 Lacs for alleged initial investment. The CIT(A) dismissed the appeal for a delay of 84 days.
Held
The ITAT found the 8% estimation excessive for the nature of the business (low margin) and reduced the lump sum addition to Rs.2 Lacs. The addition of Rs.8 Lacs for initial investment was deleted as it was based merely on presumption. The AO was directed to re-compute the income accordingly.
Key Issues
1. Whether the estimated additions made by the AO (8% on bank credits and Rs.8 Lacs for initial investment) were justified. 2. Whether the CIT(A) was correct in dismissing the appeal due to condonation of delay.
Sections Cited
143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Addl. / Joint Commissioner of Income Tax (Appeals), Udaipur [CIT(A)] dated 21-01-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 06-12-2019. In the assessment order, Ld. AO made estimated addition of 8% on total bank credits over and above the regular income of Rs.2.88 Lacs as declared by the assessee. The same worked out to be Rs.6.23 Lacs. The Ld. AO also made addition of alleged initial investment of Rs.8 Lacs. The assessee failed to make any effective representation during assessment proceedings. The Ld. CIT(A) did not admit the appeal for want of condonation of delay of around 84 days. Aggrieved, the assessee is in further appeal before us.
From case records, it emerges that the assessee is engaged in sale of SIM card and data recharge of idea cellular Ltd. under proprietor concern by the name M/s Muskan Communication. In this line of business, the margins would be low. The assessee does not have any other source of income. On these facts, the estimation of 8%, in our considered opinion, is on the higher side. Considering the nature of business and with a view to settle the dispute, it would be in the fitness of thing to hold that a lump sum addition of Rs.2 Lacs would meet the end of justice. The addition of Rs.8 Lacs is merely on presumption and therefore, the same stand deleted. The Ld. AO is directed to re-compute the income of the assessee accordingly. No other ground has been urged in the appeal.
The appeal stand partly allowed. Order pronounced on 04-08-2025. (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 04-08-2025 आदेश की "ितिलिप अ"ेिषत /Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. ""थ"/Respondent 3. आयकरआयु"/CIT 4. िवभागीय"ितिनिध/DR 5. गाड"फाईल/GF