Gulzar Vs ITO (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal concerned both quantum and penalty proceedings for Assessment Year 2013-14. The assessee challenged the orders passed by the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre sustaining an addition made on estimated income basis. The Tribunal noted that in an earlier round of proceedings, the matter had been remanded to the Assessing Officer with directions to determine the actual turnover of the assessee. During the reassessment proceedings, notices were issued seeking supporting documents and explanations regarding the returned income. According to the Assessing Officer, the assessee failed to furnish satisfactory explanations and complete supporting evidence, leading to the conclusion that the declared net income remained unexplained and unverifiable. Consequently, the Assessing Officer estimated income at 2 per cent of total turnover amounting to Rs. 3,67,87,13,883 and assessed total income at Rs. 7,35,74,277.
Before the Tribunal, the assessee argued that the authorities had arbitrarily estimated income at 2 per cent of turnover without any supporting material or evidence. The assessee contended that its business model involved earning only a thin commission margin ranging between 15 to 20 paise per kilogram of meat supplied. Reliance was placed on the Tribunal’s earlier order in the assessee’s own case for Assessment Year 2012-13, where gross profit declared at 0.29 per cent had ultimately been estimated by the Tribunal at 0.40 per cent of gross sales. The assessee pointed out that for the year under consideration, gross profit disclosed was 0.16 per cent and therefore requested that estimation be made on similar lines rather than at 2 per cent.
