Bhaveshbhai Haribhai Kanani Vs ITO (ITAT Rajkot)
Rajkot ITAT Moderates Estimation- Assessee Admits Wrong Turnover; No Rejection of Books but Serious Lapses: ITAT Balances Equity by Applying 3.5% GPb
In this appeal, Assessee challenged the addition of Rs.39,82,206/- sustained by CIT(A), arising from AO’s estimation of income @4% on the gross turnover of Rs.11,93,30,453/-. The appeal was delayed by 70 days which Tribunal condoned after accepting the explanation regarding mistake of the tax consultant.
Assessee had originally declared turnover of only Rs.1,03,43,628/- with income of Rs.7,91,012/- @7.65% under “no-account case” u/s 44AD. During scrutiny, Assessee admitted that actual turnover was Rs.11.93 crore & furnished sales, purchases, GST returns, stock details & P&L account showing net profit of merely 0.54%. However, Assessee had not got accounts audited u/s 44AB & certain discrepancies were noticed in purchases, bank entries & TCS on scrap. AO held that GP declared on actual turnover was unreasonably low when compared with GP declared in ITR on the incorrect turnover & estimated profit @4% resulting in addition of Rs.39,82,206/- after reducing income already offered.
CIT(A) upheld AO’s action by relying on comparative GP of the year & by holding that Assessee’s reliance on next year’s results (1.26%) was not acceptable.
