M/S. C.L. GULHATI & SONS LIMITED,JAMMU vs. DEPUTY COMMISSIONER OF INCOME TAX - CIRCLE-1, JAMMU
Facts
The assessee, M/s C.L. Gulhati & Sons Ltd., failed to file income tax returns and respond to notices. The assessment was framed under Section 144 based on best judgment. The AO estimated income at 1% of net deposits, and the CIT(A) reduced it to 0.5%.
Held
The Tribunal noted the assessee's failure to comply with statutory requirements despite huge turnover. The past profit trends were inconsistent, making them unreliable for estimation. Therefore, the estimation by the CIT(A) was considered fair and reasonable.
Key Issues
Whether the estimation of income by the lower authorities is fair and reasonable, considering the assessee's failure to comply with statutory requirements and inconsistent past profit trends.
Sections Cited
144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI UDAYAN DAS GUPTA, JM
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI UDAYAN DAS GUPTA, JM (Hybrid Hearing) आयकरअपील सं. / ITA No.480/ASR/2024 (िनधा�रणवष� / Assessment Year: 2017-18) M/s C.L. Gulhati & Sons Ltd. DCIT, Circle-1 National Garage, B.C.Road, Jammu. बनाम/ Vs. Rehari, Jammu 180005. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACC-6577-F (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Joginder Singh (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Shri Manpreet Singh Duggal – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 26-03-2025 घोषणाकीतारीख /Date of Pronouncement : 16-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), dated 08-08-2024 in the matter of an assessment framed by Ld. AO on best judgment basis u/s 144 of the Act on 22-12-2019. The Ld. AR advanced arguments to assail the estimation made by Ld. AR whereas Ld. Sr. DR opposed any interference in the impugned
order. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. From case records, it emerges that the assessee failed to furnish return of income. The various notices issued by Ld. AO during the course of assessment proceedings remained un-responded. The assessee acted as authorized dealer of M/s Tata Motors Ltd. and it was dealing in heavy vehicles and passenger car division. The assessee also dealt in spare parts. It transpired that the bank credits were Rs.119.34 Crores which was stated to be out of regular business transactions. The assessee worked out total deposits of Rs.124.71 Crores. After adjusting inter-bank credits, net deposits were Rs.110.68 Crores. The assessee tabulated profitability for earlier years wherein the assessee reflected varying net profit rates. The rate of net profit for FY 2011-12 was 0.05% whereas the assessee had loss in FYs 2013- 14 to 2015-16. The assessee pleaded for estimation of net profit rate as per past trends. Left with no option, Ld. AO estimated income of 1% against net deposits of Rs.110.68 Crores and assessed income of Rs.110.68 Lacs. The Ld. CIT(A), considering assessee’s submissions, reduced the estimation to 0.5% against which the assessee is in further appeal before us. 3. From the fact, it clearly emerges that the assessee has miserably failed to comply with the statutory requirement of maintaining books of account as well as filing its Income Tax Returns despite having huge turnover. Under these circumstances, lower authority did not have any option but to estimate the income of the assessee. Except for past
trends of profitability, nothing has been placed before any of the lower authorities to show the quantum of income as earned by the assessee. Similar is the position before us. We find that there is no consistency in the past trends and the assessee has incurred profit in FYs 2011-12 & 2012-13 whereas it has incurred losses in subsequent years. This being the case, the onus was more on assessee to comply with statutory requirements. In the absence of such an exercise or any other material justifying adoption of past trends, the plea of Ld. AR for reduction in profit could not be accepted. The estimation as made by ld. CIT(A), in our opinion, is quite fair and reasonable considering the nature of assessee’s business requiring no interference on our part. 4. The appeal stand dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (UDAYAN DASS GUPTA ) (MANOJ KUMAR AGGARWAL) �ाियक सद� /JUDICIAL MEMBER लेखा सद� /ACCOUNTANT MEMBER Dated: 16-04-2025 आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF ASSISTANT REGISTRAR
ITAT AMRITSAR
