What did the Tribunal hold?

The Tribunal noted that the 6% estimation was arbitrary and directed the AO to estimate the Net Profit Rate at 2% of the turnover and re-compute the income. The delay in filing the appeal was condoned.

The assessee, a cooperative labour construction society, declared a profit of 0.34% on a turnover of Rs.471.77 Lacs. The AO estimated the income at 6% of the turnover, assessing it at Rs.28.30 Lacs, as the assessee's books were unavailable. The CIT(A) confirmed this.

What were the issues?

Whether the estimation of income by the AO at 6% of turnover was justified, given the unavailability of books and the assessee's claimed lower profit margins in previous years.

The Ravidass Baliayala… vs ITO | ITAT Chandigarh 2025

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा�रणवष� / Assessment Year: 2017-18) The Ravidass Baliayala Coop. Labour ITO Construction Society Ltd. बनाम/ Vs. Ward-2 Village Baliyala, Tohana, Haryana. Fatehabad, �थायीलेखासं./जीआइआरसं./PAN/GIR No.AACAT-3532-H (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Prince Goyal (Advocate) – Ld. AR ��थ�कीओरसे/Respondent by : Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 03-06-2025 घोषणाकीतारीख /Date of Pronouncement : 09-06-2025. आदेश / 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)-12, Mumbai [CIT(A)] dated 19-01-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 24-12-2019. The sole grievance of the assessee is assessment of estimated income of Rs.28.30 Lacs. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

The registry has noted delay of 147 days in the appeal, which stands condoned. The assessee is a society duly registered under Haryana Societies Registration Act. The prime objective of the assessee society was to promote the interest of manual labour.

Upon perusal of assessment order, it could be seen that Ld. AO computed excessive contribution to provident fund for Rs.12.70 Lacs. The assessee declared profit @0.34% on turnover of Rs.471.77 Lacs which was held to be very low. The assessee stated that the books were not available and the same were burn-out. On these facts, Ld. AO estimated income of 6% against turnover of Rs.471.77 Lacs and assessed the income at Rs.28.30 Lacs. Since the income was so estimated, no adjustment of excess provident fund was made by Ld. AO. The Ld. CIT(A) confirmed the assessment against which the assessee is in further appeal before us.

It clearly emerges that the books of the assessee are not available and there is no other alternative but to estimate the income of the assessee. The Ld. AR has stated that the assessee reflected Net Profit (NP) rate of 0.48% in AY 2015-16 and NP rate of 0.43% in AY 2016-17. Therefore, the estimation of 6% is quite arbitrary and far from reality. We find that the declared rates could be accepted only if the assessee was able to substantiate the same. With a view to put an end to the litigation, we direct Ld. AO to estimate Net Profit Rate of 2% of the turnover and re-compute the income of the assessee. No other ground has been urged in the appeal.

The appeal stand partly allowed. Order pronounced on 09-06-2025.

THE RAVIDASS BALIAYALA COOPERATIVE LABOUR CONSTRUCTION SOCIETY LIMITED,FATEHABAD vs. INCOME TAX OFFICER, FATEHABAD

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