Hajra Trading Company Vs DCIT (ITAT Chennai)
Export Profit Estimated at 10% Without Books; ITAT Admits Reconstructed Records and Sends Case Back
Summary: When books and supporting records were unavailable during assessment, the AO estimated an exporter’s income at 10% of turnover and separately added the duty drawback received. The CIT(A) reduced the estimated rate to 6%, but retained the duty drawback addition. Before the Chennai ITAT, Hajra Trading Company produced reconstructed accounts and export records, explaining that the Chartered Accountant who handled its affairs had become ill, discontinued practice and subsequently died. The Tribunal admitted the records as additional evidence under Rule 29 and sent the matter back to the AO for fresh examination. It did not accept the firm’s declared profit, fix a new profit rate or decide whether the duty drawback had been correctly treated. Those questions must now be examined against the documents produced.
Reassessment Based on Export Transactions
Hajra Trading Company, a partnership firm, had not filed its return for AY 2015-16 within the prescribed time. The Department had information that it had undertaken exports of ₹2,92,91,066 and received duty drawback of ₹13,14,604. The AO reopened the assessment under section 147 by issuing a section 148 notice on 29 March 2021.
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