Case Law Details
Bimal Ravjibhai Patel Vs DCIT (ITAT Ahmedabad)
This case involves an appeal filed by the assessee challenging the order of the Commissioner of Income-tax (Appeals)-11, Ahmedabad, under Section 250 of the Income-tax Act, 1961, for the Assessment Year 2013-14. The primary grounds include disputing the validity of the notice issued under Section 148 and the subsequent assessment initiated under Section 147 of the Act. The assessee also contested the addition of ₹10,50,528, which was calculated by estimating a 12% profit on unaccounted receipts of ₹87,54,402 from the sale of plots. The grounds raised sought relief by quashing the proceedings and deleting the additions.
The CIT(A) had determined the profit on unaccounted receipts at 12%, relying on evidence obtained during a survey under Section 133A. Despite the assessee disclosing ₹10.27 lakhs in income, the Assessing Officer did not allow deductions for unaccounted cash expenses due to a lack of substantiating details. After reviewing the facts, the Tribunal accepted the assessee’s proposal to calculate profit at 6% instead of 12%, thus providing partial relief. The procedural aspects under Section 148 were not adjudicated further as the matter was resolved based on the merits of income estimation. Consequently, the appeal was partly allowed, reflecting a balanced resolution.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals)-11, Ahmedabad (hereinafter referred to as “CIT(A)” for short), dated 27.05.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for Assessment Year (AY) 2013-14.
2. The assessee has raised following grounds of appeal :-
“1. The grounds of appeal mentioned hereunder are without prejudice to one another.
2. The ld. CIT(A) erred on facts as also in law rejecting ground of appeal related to validity of notice issued u/s 148 of the Income tax Act, 1961. That on facts as also in law, proceedings-initiated u/s. 147 of the Act is invalid and assessment finalized on such invalid initiation deserves to be quashed and may kindly be quashed.
3. The Id. CIT(A) erred on facts as also in law in retaining addition of Rs. 1 0,50,528/- by estimating profit at the 12% on alleged on money receipt of Rs.87,54,402/- on sale of plots. The addition retained is unjustified and deserves to be deleted, may kindly be deleted.
4. Your Honour’s appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of ”
3. The brief issue involved in this case is that the ld. CIT(A) has determined income @ 12% on the unaccounted receipt. We find that the details pertaining to the unaccounted receipt have been impounded in the course of survey conducted u/s 133A of the Act. Based on the impounded material, the assessee has shown unaccounted income as well as the unaccounted expenditure. However, the Assessing Officer has not given any benefit of the cash expenses on the ground that the assessee has failed to provide the exact nature of cash expenses. The ld. CIT(A), after considering the submissions made by the assessee, has determined the profit @ 12%.
4. Having gone through the details of unaccounted cash, we find that the net income was Rs.22.92 lakhs and the share of the assessee was 25% which comes to Rs.5.73 lakhs. The assessee has disclosed the income of Rs.10.27 lakhs in the return of income. Keeping in view the entire facts of the case, we agree with the proposition of the ld. Counsel for the assessee that the assessee is willing to pay 6% of the gross margin instead of 12% as determined by the ld. CIT(A). On going through the entire facts of the case, we find that the proposal of the assessee can be accepted on the basis of the estimation of income. Hence, the profit percentage is directed to be determined @ 6% instead of 12% as determined by the ld. CIT(A).
5. Since the issue is adjudicated on merits of the case, the grounds taken up by the assessee on the issue of 148 are not being adjudicated.
6. In the result, the appeal filed by the assessee is partly allowed.
The order is pronounced in the open Court on 19.11.2024
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