Case Law Details
Sanjibar Rahman Vs ITO (ITAT Guwahati)
Conclusion: No addition could be made to an undisclosed contract receipt from the business of purchase and sale of fish as to some extent, the uniform rate of 8% available in Section 44AD applicable on some contractor was not to be applied on every time on every type of business. AO was directed to take an estimated income at 4% and credit of income disclosed by assessee was to be given.
Held: AO had treated the net amount as undisclosed business receipt at Rs.3,1177,632/-. On this amount, he estimated the profit at 8% and made an addition of Rs.24,94,221/-. The case of assessee was that a perusal of this Bank account would reveal that all these amounts had been paid to the suppliers of the fish. He was working as a commission agent of fish market. The suppliers of the fish, i.e. fishermen used to supply him the fish, which were sold by him in the open market on their behalf. The sale proceeds of the fish were deposited in his account and thereafter payments were made to the fishermen. However, AO had estimated the profit at 8%, no basis was discernable either in the assessment order or in the first appellate authority order. Assessee himself had offered profit at Rs.6,03,762/-. AO was of the view that this bank account was not knowingly disclosed by assessee and, therefore, a profit was to be estimated but while taking the profit at 8%, he had not referred any comparative case where an agent like assessee had disclosed the profit at 8%. The estimation of profit was always involved a guess work. It could never be accurate but there must be some material justifying the guess work of the adjudicating authority. However, to some extent, the uniform rate of 8% available in Section 44AD applicable on some contractor was not to be applied on every time on every type of business. Therefore, AO was directed to take an estimated income at 4% and credit of income disclosed by assessee was to be given of Rs.6,03,762/-. In other words, at 4%, the total addition would be Rs.12,47,110/- out of this Rs.6,03,762/- was to be further reduced [Rs.24,94,221/2 =Rs.12,47,110/- minus Rs.6,03,762/-] =Rs.6,43,348/-. A net addition of Rs.6,43,348/- was retained in place of Rs.24,94,221/-.
FULL TEXT OF THE ORDER OF ITAT GUWAHATI
The assessee is in appeal before the Tribunal against the order of ld. Principal Commissioner of Income Tax (Appeals), Shillong dated 24.07.2018 passed for A.Y. 2015-16.
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