Case Law Details
Naresh Kumar & Sons HUF Vs ITO (ITAT Raipur)
In the case of Naresh Kumar & Sons HUF vs. ITO (ITAT Raipur), the main issue involves the determination of the nature of the assessee’s business and the resulting addition made by the Assessing Officer (AO) under section 44AD of the Income Tax Act, 1961.
Background: The assessee, a Hindu Undivided Family (HUF), filed its return of income for the assessment year 2015-16, declaring an income of Rs. 2,60,160. The case was selected for scrutiny assessment under section 143(2) of the Income Tax Act.
AO’s Observations: The AO observed that the assessee, despite claiming to be a commission agent, had made sales and purchases of fruits and vegetables in its own name. The AO concluded that the assessee was engaged in the business of trading fruits and vegetables. The AO determined the income under section 44AD at 8% of the turnover of Rs. 81,39,050, resulting in an addition of Rs. 3,91,016 to the assessed income.
CIT(A) Decision: The CIT(A), after considering the AO’s observations, upheld the addition. The CIT(A) noted that the sales and purchase invoices were in the name of the assessee, indicating direct involvement in the trading business. The CIT(A) mentioned that the assessee had accepted to offer income at 8% of the total turnover during the assessment proceedings.
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