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Facts
The assessee, running a vegetable shop, had their income estimated by the AO at 12% of turnover after a specific assessment. The CIT(A) reduced this estimation to 8%. The assessee further appealed as they found the estimation still high, considering their business margins.
Held
The Tribunal acknowledged that the vegetable business operates on low margins due to perishable nature and wastages. Considering the business background, the Tribunal reduced the profit estimation from 8% to 4% of the turnover.
Key Issues
Whether the estimated profit margin on turnover for a vegetable business is justified, and if not, what should be the appropriate rate.
Sections Cited
147, 144, r.w.s
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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आयकर अपीलीय अिधकरण “ए” "ायपीठ चे"ई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI माननीय "ी महावीर िसंह, उपा ! एवं माननीय "ी मनोज कुमार अ%वाल ,लेखा सद( के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा)रण वष) / Assessment Year: 2018-19) Shri Ramuservai Ganesan ITO बनाम/ #42, Florentina Apartments, Non-Corporate Ward-15(1) Gandhi Nagar, 3rd Main Road, Adyar, Chennai. Vs. Chennai-600 020. "थायीलेखासं./जीआइआरसं./PAN/GIR No. AADPG-9534-E (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant by : Shri N. Arjun Raj (Advocate) - Ld. AR " थ"कीओरसे/Respondent by : Ms. Deeptha (JCIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 01-10-2024 घोषणाकीतारीख /Date of Pronouncement : 09-10-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 09-05-2024 in the matter of an assessment framed by the Ld. AO u/s 147 r.w.s 144 of the Act on 29-03-2022. In the assessment order, Ld. AO made addition of Rs.53.87 Lacs on estimate basis which was computed as 12% of receipts / deposits in the bank accounts. The Ld. CIT(A) granted partial relief to the assessee and directed Ld. AO to reduce the estimation to 8%. Still aggrieved, the assessee is in further appeal before us.
The Ld. AR made limited arguments and stated that the assessee is a vegetable trader and work on thin margins of 1% to 2% and therefore, the estimation is on a very higher side. The Ld. Sr. DR opposed the same on the ground that adequate relief has already been granted in the first appeal. 3. From the facts, it emerges that the assessee is running a vegetable shop in the name and style of M/s. Sri Ganesh Vegetable shop at Chennai. This is perishable commodity and prone to higher wastages etc. In this line of business, the margins would be low. The books of accounts are subjected to tax audit. The assessee has reflected turnover of Rs.437.40 Lacs. The Ld. AO has made profit estimation of 12% which has been reduced to 8% in first appeal. Considering the business background of the assessee, we reduce the estimation to 4% of turnover. The Ld. AO is directed to recompute the income of the assessee. No other ground has been urged in the appeal. 4. The appeal stands partly allowed for statistical purposes. Order pronounced on 9th October, 2024 (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा34 / VICE PRESIDENT लेखा सद6 / ACCOUNTANT MEMBER चे8ई Chennai; िदनांक Dated : 09-10-2024 DS आदेशकीIितिलिपअ%ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. " थ"/Respondent 3. आयकरआयु@/CIT Chennai. 4. िवभागीय"ितिनिध/DR 5. गाडEफाईल/GF