S.P TRAVELS AND LOGISTICS,CHENNAI vs. ACIT NON CORPORATE CIRCLE-22, CHENNAI
What did the Tribunal hold?
The Tribunal held that the estimation of income at 8% of gross receipts by the AO was without any reasonable basis. It directed the AO to estimate the income based on the average rate of gross receipts from the earlier three years, after providing an opportunity of hearing to the assessee.
What were the facts?
The assessee filed its return of income, but failed to respond to notices issued by the Assessing Officer. The AO, unable to verify expenses, estimated the income at 8% of gross receipts. The CIT(A) dismissed the assessee's appeal for non-representation.
What were the issues?
Whether the estimation of income by the Assessing Officer was arbitrary and without a reasonable basis. The need for a reasonable basis for estimating income when accounts cannot be verified.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Before: Shri Duvvuru RL Reddy & Shri G. Manjunatha
आयकर अपीलीय अिधकरण, ’बी’ "ायपीठ, चे"ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI "ी धु"ु" आर.एल रे"ी, "ाियक सद" एवं "ी जी. मऺजुनाथा, लेखा सद" के सम" Before Shri Duvvuru RL Reddy, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./ Year: 2015-16 M/s. S.P. Travels & Logistics, The Assistant Commissioner of No. 4/22, Ponni Apartments, Vidhutalai Vs. Income Tax, Nagar, 7th Street, South Kolathur, Non Corporate Circle 22 Ground Floor, Chennai 600 129. Chennai 600 034. [PAN:ABXFS1633D] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant by : Shri D. Anand, Advocate ""थ" की ओर से/Respondent by : Shri Suresh Periasamy, JCIT सुनवाई की तारीख/ Date of hearing : 14.12.2020 घोषणा की तारीख /Date of Pronouncement : 15.02.2021 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 10, Chennai, dated 30.01.2019 relevant to the assessment year 2015-16. In the grounds of appeal, the assessee has challenged confirmation of estimation of income at 8% of gross receipts.
Brief facts of the case are that the assessee filed its return of income for the assessment year 2015-16 on 30.09.2015 declaring total income of 2 ₹.47,81,870/-. The return filed by the assessee was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] was issued. The notice returned unserved. Then notice under section 142(1) of the Act was issued. The said notice also returned unserved stating that the assessee left the location. Thereafter, notice under section 142(1) r.w.s. 129 of the Act was issued with a direction to produce the documents, but there was no response from the assessee. Despite various notices issued, there was no proper response from the assessee and finally, the assessee was given pre-assessment notice intimating the assessee for completing the assessment on an estimate basis at an income of ₹.78,93,143/- @ 8% of the gross receipts of ₹.9,86,64,287/-. Without any supporting bills and vouchers, expenses incurred by the assessee could not be verified and since the correctness of the accounts of the assessee could not be verified, the Assessing Officer proceeded to complete the assessment under section 144 of the Act at the total income of ₹.78,93,143/- @ 8% of the ₹.9,86,64,287/-. On appeal, since the assessee could not responded/ represented his case, the ld. CIT(A) dismissed the appeal.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that without adopting any reasonable basis, the Assessing Officer simply estimated the total income of the assessee at 8% of the gross receipts arbitrarily and prayed for suitable directions. On the other hand, the ld. DR strongly supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. On perusal of the assessment order under section 144 of the Act, we find that the Assessing Officer has concluded the assessment by simply estimating the current income of the assessee without any basis at 8% of gross receipts as total income on the ground that the expenses incurred by the assessee could not be verified with any supporting bills and vouchers and thereby income of the assessee could not be arrived at correctly, which was also confirmed by the ld. CIT(A). When the assessee has not provided with any supporting bills and vouchers for verification of its expenses, the Assessing Officer should have estimated the income of the assessee on some reasonable basis for which comparable case and history of the assessee could be taken as guide. The estimation of income at 8% of the gross receipts was without any basis and materials on record. Under these facts and circumstances, we set aside the orders of authorities below and direct the Assessing Officer to estimate the total income by applying an average rate of earlier three years gross receipts as income after affording an opportunity of being heard to the assessee.
More judgments on Section 142(1)
- Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), RaipurITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
- Subhash Chand Saini, Jaipur vs ITO Ward, Behror, BherorITA 36/JPR/2023[2017-18]Status: Disposed21 Oct 2026AY 2017-18
- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
- Venish Vinodray Lalani, Rajkot vs Income Tax Officer, MorbiITA 197/RJT/2026[2019-20]Status: Disposed19 Oct 2026AY 2019-20
- Gaurav Jiteshbhai Joshi, Rajkot vs Income Tax Officer, Ward 1(1)(1), RajkotITA 1000/RJT/2026[2022-23]Status: Disposed19 Oct 2026AY 2022-23
Recent GST High Court judgments
Search GST case law →- Shiromani Gurdwara Parbandhak Committee And Anr vs. Galactic Television And Communications PVT LTD And OrsDelhi · 3 Nov 2026
- Society For Human Resource Management Shrm vs. Strategic Hrm & Ors.Delhi · 3 Nov 2026
- Sanjay Kumar Jain & Anr. vs. Nandi Ayurved & Ors.Delhi · 3 Nov 2026
- Beiersdorf Ag & Anr. vs. Duvac Cosmedics & Ors.Delhi · 3 Nov 2026
- Namastu Enterprise Private Limited vs. Kajalben Maheshbhai Kaklotar (Proprietor Of Khodal Enterprise) And AnrDelhi · 3 Nov 2026