Major Suresh Yadav Vs ITO (ITAT Delhi)
Income Addition Rejected Due to Reliance on Borrowed Satisfaction from External Authorities; ₹1.20 Crore Addition Set Aside Due to Lack of Evidence on Actual Subscriber Base; Ex-Parte Assessment Overturned Due to Arbitrary Profit Estimation Method; Cable Income Addition Deleted Due to Failure to Verify Assessee’s Claims.
The appeal concerned reassessment proceedings for Assessment Year 2001–02, where the Assessing Officer (AO) estimated the assessee’s income from cable operations based on information received from the entertainment tax department indicating approximately 28,000 subscribers, as against 2,000 reported by the assessee. Relying on an Inspector’s local inquiry estimating ₹200 per month per subscriber, the AO computed gross receipts at ₹6.72 crore and, after allowing 50% expenses, assessed income at ₹3.36 crore under sections 147/144 due to non-compliance. The Commissioner (Appeals) partly upheld the addition, estimating subscriber base as reasonable considering area coverage and business scale, but reduced the profit margin to 20% after allowing 10% rebate, resulting in a sustained addition of ₹1.20 crore.
Before the Tribunal, the assessee challenged the assessment as being based on “borrowed satisfaction” and lack of independent verification, arguing that the AO relied solely on third-party information and estimation without substantiating actual subscriber numbers. It was also noted that similar issues for other years had been adjudicated earlier. In a prior order, the Tribunal had restored the matter to the AO for fresh examination, emphasizing the need to consider past records and factual accuracy. Upon remand, the AO accepted the returned income after verification.
