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Facts
The assessee challenged an addition of Rs. 4,00,008/- made by the lower authorities for AY 2020-21. This addition resulted from the rejection of books of account and the enhancement of the net profit rate from 5.04% (inclusive of interest from FDRs and refunds) to 6% (exclusive of these items). The appeal stemmed from proceedings under section 143(3) of the Income-tax Act, 1961.
Held
The Tribunal found it appropriate to make a lumpsum addition of Rs. 1 lakh only, providing relief of Rs. 3,00,008/- to the assessee. This decision was made in the interest of justice, with a rider that it should not be treated as a precedent.
Key Issues
Whether the lower authorities were justified in making an addition of Rs. 4,00,008/- by rejecting the books of account and enhancing the net profit rate, considering the inclusion or exclusion of interest from FDRs and refunds.
Sections Cited
143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
ORDER This assessee’s appeal for assessment year 2020-21 is directed against the Commissioner of Income Tax (Appeals)-3 [in short, the “CIT(A)”], Noida’s order dated 22.05.2024 passed in case no. CIT(A), Kanpur-4/11110/2019-20, involving proceedings under sections 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Case called twice. None appeared at the assessee’s behest. I accordingly proceeded ex-parte against him.
It emerges at the outset with the able assistance coming from both the Departmental Representative that the assessee’s sole substantive grievance raised herein challenges the learned lower authorities’ action making addition of Rs.4,00,008/- assessed in his hands after rejecting books on the ground that the corresponding net profit rate of 5.04%; inclusive of interest on FDR’s and refund, had to be computed after rejection of books of account and the same deserves to be enhanced to that extent at the rate of 6%. Both the parties have their respective stands against and in support of the impugned addition.
I hereby reiterate that the assessee had declared his net profit at the rate of 5.04% only which included interest from FDR’s as well as interest on refunds involving wearisome whereas the department has assessed at the rate of 6% after excluding the said twin heads. It is, therefore, deemed appropriate in larger interest of justice that a lumpsum addition of Rs. 1 lakh only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.3,00,008/- in other words. Necessary computation shall follow as per law.
This assessee’s appeal is partly allowed in above terms.
2 | P a g e Order pronounced in the open court on 3rd December, 2024