PVN CONSTRUCTIONS,ERODE vs. ACIT CIRCLE -2 , ERODE

PDF · subscribers
ITA 1042/CHNY/2024Status: DisposedITAT Chennai03 July 2024AY 2017-18Bench: HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL (Accountant Member)3 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the AO to accept a profit rate of 6.5% instead of the 8% estimated by him. This was considered a reasonable estimation given the assessee's turnover.

What were the facts?

The assessee, engaged in civil contract works, had its income estimated by the AO at 8% of total turnover due to a low net profit rate. The assessee argued for a 6% profit rate based on previous years. The Tribunal considered the turnover and the assessee's plea for estimation.

What were the issues?

Whether the AO's estimation of net profit rate was justified, and if a lower rate based on past performance could be accepted.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, CHENNAI

Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 30-10-2023 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) of the Act on 06-12-2019.

2.

The registry has noted delay of 108 days in the appeal, the condonation of which has been sought by Ld. AR on the strength of affidavit of one of the partners of the assessee-firm. It has been submitted that delay occurred due to adverse medical conditions being faced by the partner of the assessee firm. Considering the same, we condone the delay and proceed for adjudication of the appeal on merits.

3.

The assessee firm is engaged in civil contract works. In the absence of any explanation forthcoming from assessee regarding low net profit rate, Ld. AO estimated income @8% of total turnover. Accordingly, the income was assessed at Rs.191.75 Lacs as against Rs.139.03 Lacs as admitted by the assessee. The position remained the same during first appeal and accordingly, the assessment was confirmed against which the assessee is in further appeal before us.

4.

The Ld. AR submitted that in earlier years, the assessee has reflected Net Profit of 6% which may be adopted in this year. In the earlier year, this rate has been accepted. The Ld. Sr. DR has opposed the same.

5.

Considering the facts and circumstances and keeping in view the plea of Ld. AR to make suitable estimations, we direct Ld. AO to accept profit rate of 6.5% as against 8% estimated made by him. The rate of 8% is for small businesses only whereas the assessee is having turnover of more than Rs.23.96 Crores and therefore, aforesaid estimation is a reasonable estimation. The Ld. AO is directed to re-compute the income of the assessee. No other ground has been urged in the appeal.

6.

The appeal stand partly allowed. Order pronounced on 3rd July, 2024

Recent GST High Court judgments

Search GST case law →