KARTAVYA CONSULTANTS PRIVATE LIMITED,BHUBANESWAR vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), BHUBANESWAR, BHUBANESWAR

आयकर अपीलीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH VIRTUAL HEARING) श्री जाजज माथन, न्याययक सदस्य एवं श्री राजेश कुमार, लेखा सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER आयकर अपील सं/ITA No.346/CTK/2025 (नििाारण वर्ा / Assessment Year : 2020-2021) Kartavya Consultants Pvt. Ltd., Vs The DCIT, Circle-1(1), Plot No.587, Saheed Nagar, Bhubaneswar Bhubaneswar-751007 PAN No. : AACCK 0053 A (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shrii P.K.Mishra & Shri Himanshu Jena & Shri Narahari Swain, Advocates राजस्व की ओर से /Revenue by : Shri Vijay Singh, Sr.DR सुनवाई की तारीख / Date of Hearing : 25/09/2025 घोषणा की तारीख/Date of Pronouncement : 25/09/2025 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of the Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 26.02.2025 for the assessment year 2021-2022. 2. At the outset, it is found that the appeal of the assessee is barred by 36 days. In this regard, the assessee has filed an affidavit stating sufficient reasons for condonation of delay, which are plausible and not found to be false. Ld.Sr. DR also did not raise any serious objection to condone the delay. Accordingly, the delay of 36 days in filing the appeal by the assessee is condoned and the appeal of the assessee is admitted for hearing. 3. It was submitted by the ld. AR that the assessee is in the business of meter reading, bill distribution and revenue collection work for the

2 ITA No.346CTK/2025 electricity distribution in the state of Orissa. The assessee has shown contractual business receipts under the head other income for Rs.18,84,20,952/- which is in effect the electricity bill revenue collection. It was the submission that the AO estimated the income of the assessee at 8% without rejecting the books of accounts of the assessee. It was the submission that no estimation can be done without rejecting the books of accounts. It was a prayer that in view of the decision of the Honorable High Court of Madras in the case of Marg Limited, reported in 396 ITR 580, the Hon’ble Madras High Court has categorically held that the income on estimation basis cannot be done without rejecting the books of accounts. This principle has been laid down by the Hon’ble Madras High Court by following the decision of the Hon’ble Supreme Court in the case of Janardhan Rao, reported in 273 ITR 50. It was the submission that as the books of accounts of the assessee has not been rejected, the addition as made by the AO is liable to be deleted. The learned AR has also placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Sat Inder Construction Pvt. Ltd. in ITA 511/CTK/2024, dated 17-07-25 wherein in Para 5, the Coordinate Bench has held as follows :- 05. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that there is no mentioned by the ld. AO in the assessment order that the books of account are to be rejected. The ld. AO admittedly pointed out various errors in the assessment order such as the payment claimed under the head labour charges appeared to be bogus. Similarly, the ld. AO mentioned that the assessee did not have sufficient plant and machinery to execute the civil construction work of such huge magnitude and there was no claimed of plant and machinery of hire charges in the Profit and Loss account. The ld. CIT (A) in para no.6 of his order also brought the various points which has been mentioned by the ld. AO but no where in the assessment order the ld. AO has mentioned that the provisions of Section 145 have been

3 ITA No.346CTK/2025 invoked or that the books of accounts of the assessee have been rejected. For the purpose of estimating the income of an assessee, one of the compulsory requirements are that the provisions of Section 145 of the Act have to be invoked and the books of account of the assessee have to be rejected. As the ld. AO has not rejected the assessee’s books of accounts, we are of the view that the estimation has done by the ld. AO and has affirmed by the ld. CIT (A) is unsustainable and consequently, we direct the ld. AO to delete the estimation of income as done by him. 4. It was a prayer that the addition as made by the AO and as confirmed by the learned CIT(A) is liable to be deleted. 5. In reply, the learned Sr. D.R. vehemently supported the order of the AO and CIT(A). It was the submission that separate accounts have not been maintained by the assessee in respect of the bill collection. It was also the submission that there has been no registration under section 35 CCD. It was the submission that the order of the AO and CIT Appeals is liable to be upheld. 6. We have considered the rival submissions. A perusal of the assessment order clearly shows that the provisions of section 145 of the Act have not been invoked by the AO. The books of accounts of the assessee have not been rejected by the AO. In fact, the page 4 of the assessment order shows that the income of the assessee has been computed by starting the computation by treating the income as per the return of income filed and this has been added to the alleged estimation of income. If the AO has rejected the books, obviously the AO would have done reduce the said returned income from the estimation. This clearly shows that the books of accounts of the assessee have not been rejected by the AO. As the books of accounts have not been rejected by the AO, there is no possibility of the AO to estimate the income of the assessee. In

4 ITA No.346CTK/2025 these circumstances, the addition as made by the AO and confirmed by the CIT(A) respect of the estimation of income stands deleted. 7. In the result, appeal the assessee is allowed. Order dictated and pronounced in the open court on 25/09/2025. Sd/- Sd/- (राजेश कुमार) (जाजज माथन) (RAJESH KUMAR) (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER ददनाांक Dated 25/09/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : अपीलार्थी / The Appellant- 1. प्रत्यर्थी / The Respondent- 2. 3. आयकर आयुक्त(अपील) / The CIT(A), आयकर आयुक्त / CIT 4. 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT, Cuttack गार्ज फाईल / Guard file. 6. सत्यापपत प्रयत //True Copy// आदेशािुसार/ BY ORDER,

(Assistant Registrar) आयकर अपीलीय अधिकरण, कटक/ITAT, Cuttack