GNG Exports Vs ACIT (Calcutta High Court)
Calcutta High Court has upheld the estimation of income at an average rate derived from the previous three financial years in the case of GNG Exports versus the Assistant Commissioner of Income Tax. The court’s decision on October 8, 2024, came after the Income Tax Appellate Tribunal (ITAT) dismissed the assessee’s appeal for the assessment year 2013-14. This ruling reinforces the practice of income estimation even when the initial rejection of books of account by the Assessing Officer (AO) is deemed untenable.
The core of the dispute arose when the Assessing Officer (AO) rejected GNG Exports’ books of account and estimated the income at 2% of the contracted work for the assessment year 2013-14. This rejection was primarily based on the non-response from some sundry creditors to notices issued under Section 133(6) of the Income Tax Act, 1961. The assessee subsequently challenged this assessment before the National Faceless Appeal Centre (NFAC).
During the assessment proceedings, GNG Exports had, in an alternative submission, offered to have their net profit determined based on the average net profit of the preceding three financial years (2009-10, 2010-11, and 2011-12), which was calculated to be 0.77% of the total turnover. The assessee claimed this offer was made “under protest.”
