VEERANAM THIRUMALAI,MADURAI vs. ITO, NCW-1(7), MADURAI

The assessee is an individual engaged in the business of trading in chicken and did not file the return of income for AY 2019-20. The Assessing Officer (AO) received information that the assessee has deposited cash into the bank account during the year under consideration. The AO therefore reopened the assessment by issue of notice under section 148. The assessee initially did not respond to the notices but later filed the return of income. The assessee also filed details such as bank book, cash book, purchase register sales register etc. However the AO stated that the details furnished by the assessee do not pertain to the year under consideration and accordingly estimated the income of the assessee at 8% of the declared turnover to make an addition of Rs.22,98,211/-. Aggrieved, the assessee filed the appeal before the CIT(A). Since the assessee did not respond to the various notices the CIT(A) confirmed the addition made by the AO ex-parte. The assessee is in appeal before the tribunal against the order of the CIT(A).

The Ld. AR at the outset submitted that the findings of the AO that the details furnished by the assessee does not pertain to AY 2019-20 is factually incorrect. The Ld. AR in this regard drew our attention to the submissions made before the AO (page 134 to 136 of paper book). The Ld. AR further submitted that the assessee has filed the return of income in response to notice under section 148 which has been considered as invalid by the AO. The Ld. AR also submitted that the estimation of profit at 8% is very high since in the line of business the assessee is engaged in the profit margin is in the range of 2% to 5%. The Ld. AR in support of the said claim submitted a table containing the profit on the by the assessee from AY 2019-20 to AY 2025-26. The Ld. AR accordingly argued that the AO is not correct in estimating the profit at the very high percentage without considering the return and other details furnished by the assessee.