MEENAKSHISUNDARAM BALAMURUGAN,DINDIGUL vs. CIT(A) 2, MUDURAI, MADURAI

The ld. AR Shri D. Selvamuthukkumaran, FCA submits that the Assessing Officer arbitrarily estimated the net profit @ 8% of the turnover ignoring the audited net profit. He submits that the assessee is trading in highly perishable fresh flowers for more than 10 years, where profit margins are inherently as low as 1% to 2% and prayed to consider the estimation of profit.

The ld. DR Shri SBR Kumar Laghimsetti, Addl. CIT submits that the audit report was not furnished within the specified date and not verifiable since the assessee has not furnished any bills/vouchers and therefore, by rejecting the belated audit report under section 145(3) of the Act, the Assessing Officer has rightly estimated the net profit at 8%, which was confirmed by the ld. CIT(A) and prayed to sustain the same.

Having heard both the parties, considering the submissions of the ld. AR and the ld. DR, we note that the assessee has not filed his return of income under section 139 of the Act and moreover the assessee has not filed the audit report within the stipulated period. Considering the business of the assessee in retail and whole sale basis as noted at page 8 of the assessment order, the Assessing Officer determined the net profit at 8% and completed the assessment under section 147 r.w.s. 144B of the Act dated 20.01.2025. After considering the submission of the assessee, which are reproduced at pages 11 to 13 of the impugned order and observing that the assessee could not substantiate the profit margin derived from the business activities, the ld. CIT(A) rightly confirmed the addition made by the Assessing Officer and it is justified. Thus, ground Nos. 1.1 to 1.6 raised by the assessee are dismissed.

The assessee has raised a substantive ground in Ground No. 1.7 challenging confirmation of penalty proceedings initiated under section 270A(2)(b) of the Act in a appeal solely filed against the assessment order under section 147 r.w.s. 144B of the Act as per Column 6 of Form 36 filed by the assessee for AY 2017-18. Since the assessee preferred present appeal against the assessment order under section 147 r.w.s. 144B of the Act and the assessment proceedings and penalty proceedings are distinct, the ground raised by the assessee in ground No. 1.7 is dismissed as the same cannot be raised in an appeal preferred against the assessment order under section 147 r.w.s. 144B of the Act.

Ground Nos. 1.2 to 1.6 raised by the assessee in challenging as to whether the ld. CIT(A) is justified in confirming the estimation of net profit @ 8% of the turnover, which is not representing a realistic margin for the perishable fresh flower trade.

We find the issues raised by the assessee in this appeal are similar to issue raised in AY 2017-18, wherein, we have confirmed the order passed by the ld. CIT(A) in sustaining the addition made by the Assessing Officer, as there is no dispute with regard to facts and circumstances in the present case with that of wherein, we discussed the same in the aforementioned paragraphs. Therefore, the view taken by us in is equally applicable in this appeal also. Thus, ground Nos. 1.2 to 1.6 raised by the assessee are dismissed for AY 2018-19.

It is noted that the Assessing Officer initiated penalty proceedings under section 271B of the Act for not getting audited the accounts and timely filing of books of accounts under section 44AB of the Act. After considering the written submissions, reproduced at page 5 of the penalty order, the Assessing Officer levied penalty of ₹.1,50,000/- under section 271B of the Act. The ld. CIT(A) confirmed the penalty levied under section 271B of the Act.

Having heard both the parties, we note that the assessment year under consideration is 2018-19 (FY 2017-18) and the audit report under section 44AB of the Act is required to be filed on or before 30.09.2018 or extended due date of 31.10.2018 in Form 3CB/3CA with Form 3CD as the case may be. But, however, in the present case, as stated in the written submissions filed before the Assessing Officer and reproduced at page 5 of the penalty order, we note that after receiving the notice from the Assessment Unit, the books of account of the assessee were audited under section 44AB of the Act and audit report are filed on 22.06.2023. Thus, it is clear that the assessee has not filed the audit report as mandated under the Act and liable for levy of penalty. Accordingly, the Assessing Officer levied penalty of ₹.1,50,000/- under section 271B of the Act, which was rightly confirmed by the ld. CIT(A) and the same is justified. Thus, the ground 1.1 to 1.4 raised by the assessee are dismissed.

In the result, all the appeals filed by the assessee are dismissed. Order pronounced on 22nd January, 2026 at Chennai.