DRASMITH CHANDRASEKHARAN,KOZHIKODE vs. ITO, WARD-2(3), KOZHIKODE
Facts
The assessee did not file a return of income for AY 2018-19. Based on information of cash deposits, the AO issued a notice under Section 148, then completed the assessment, estimating business income at 3.75% of turnover while also making other additions. The CIT(A) dismissed the assessee's appeal for non-prosecution.
Held
The Tribunal found the assessee's grievance regarding the calculation of business profit at the 3.75% rate and claims for TDS and advance tax credit to be genuine. The matter was restored to the AO for correct computation of business profit and verification of the TDS and advance tax claims.
Key Issues
Whether the AO correctly computed business profit when a net profit rate of 3.75% was applied to turnover, and whether credit for TDS and advance tax was appropriately granted.
Sections Cited
148, 147, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, COCHIN
Before: Shri Inturi Rama Rao
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member ITA No.132/Coch/2025 : Asst.Year 2018-2019 Drasmith Chandrasekharan The Income Tax Officer MP-6/680-C, RPM Associates v. Ward 2(3) Manassery, Muthalam, Kukkam Kozhikode. Kozhikode – 673 602. PAN : APQPD3423D. (Appellant) (Respondent) Appellant by : --- None --- Respondent by : Smt.Leena Lal, Senior AR Date of Date of Hearing : 13.03.2025 Pronouncement : 27.03.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Assessment Centre / Commissioner of Income- tax (Appeals) [“CIT(A)” for short] dated 27.01.2025 for the assessment years 2018-2019.
The appellant is an individual. No return of income was filed for the assessment year 2018-2019 by the appellant. The Assessing Officer (“the AO” hereinafter) based on the information that during the financial year 2017-2018 the appellant made cash deposit aggregating to Rs.3,41,21,180 in the current account maintained with Andhra Bank, formed an opinion that the income chargeable to tax has escaped the assessment. Accordingly, the AO issued a notice u/s.148 of the Income- tax Act, 1961 (“the Act” hereinafter) on 31st March, 2022. In response
2 ITA No.132/Coch/2025. Drasmith Chandrasekharan. to the notice u/s.148 of the Act, the appellant filed the return of income for the assessment year 2018-2019. Against the said return of income, the assessment was completed by the AO at a total income of Rs.20,76,962 vide assessment order dated 20th March, 2023, passed u/s.147 r.w.s. 144B of the Act. While doing so, the AO treated the total cash deposit of Rs.1,79,80,272 made in the current account maintained with Andhra Bank as business turnover of the assessee and estimated the taxable income at 3.75% of the gross turnover and accordingly made an addition of Rs.14,38,422. The AO also made addition of Rs.3,71,860 as income from other sources and Rs.2,66,186 under the head salaries.
Being aggrieved by the above assessment order, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal for non-prosecution.
Being aggrieved, the appellant is in appeal before me in the present appeal. When the appeal was called upon, none appeared on behalf of the assessee despite due service of notice. Therefore, I proceed to dispose of the appeal on merits after hearing the learned Sr.DR.
I heard the learned senior DR and perused the material available on record. From the ground of appeal, the grievance of the appellant is that when the AO applied 3.75% of the turnover of Rs.1,79,80,272, the estimated income works out to only Rs.6,74,260 and further having estimated the income, the AO was not justified in making any other addition under the head income from business. Further, the credit for
3 ITA No.132/Coch/2025. Drasmith Chandrasekharan. TDS of Rs.400 was not granted and advance tax of Rs.50,000 was not allowed.
Having gone through the above submission, the grievance of the appellant appears to be genuine and correct. Accordingly the matter is restored to the file of the AO to adopt the correct figure of business profit when the net profit rate of 3.75% is adopted. Accordingly, the issue relating to grant of credit of TDS of Rs.400 and advance tax of Rs.50,000 are also restored to the file of the AO for due verification and allow the correct one if it is found that the claim of the appellant is correct.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced on this 27th day of March, 2025.
Sd/- (Inturi Rama Rao) ACCOUNTANT MEMBER Cochin; Dated : 27th March, 2025. Devadas G*
Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin
