Krimesh Ramesh Divecha Vs DCIT (ITAT Mumbai)
The case of Krimesh Ramesh Divecha Vs DCIT, adjudicated by ITAT Mumbai, involves a dispute over the assessment of income for the Assessment Year 2015-16. The appellant contested an order passed by the NFAC, Delhi, under section 143(3) of the Income Tax Act, 1961, concerning turnover from derivative transactions. The dispute centered on discrepancies between the turnover declared by the assessee and additional turnover assessed by the assessing officer.
Krimesh Ramesh Divecha declared a turnover of Rs. 42,61,003 from derivative transactions under section 44AD, opting for a presumptive tax rate of 8%. However, the assessing officer noted discrepancies, alleging additional turnover based on system information amounting to Rs. 5,24,27,992. This discrepancy led to the addition of Rs. 38,53,359 to the assessed income under section 68 of the IT Act, with penalty proceedings initiated under section 271(1)(c).
The appellant argued that the assessing officer did not provide details or confront the alleged additional turnover during assessment. The CIT(A), while accepting the declared turnover, applied a 50% profit rate without adequate justification, leading to a reduced addition but not entirely in favor of the appellant.
ITAT Mumbai, in its decision pronounced on 29th May 2024, critiqued the assessing officer’s approach for lack of transparency in adding additional turnover. It upheld the appellant’s contention under section 44AD, emphasizing the statutory 8% profit rate. The tribunal found discrepancies in the assessment process, favoring the appellant’s plea for relief from excessive additions.
