ITAT Remands Addition Due to Failure to Verify GST Turnover Instead of Bank Credits

Tajshree Motors Pvt. Ltd. Vs DICT/ACIT (ITAT Nagpur)

The appeal before the Income Tax Appellate Tribunal, Nagpur, arose from an assessment for AY 2018–19 where the assessee failed to file a return of income and did not respond to notices issued during reassessment proceedings under Sections 147 and 148. In the absence of financial statements and supporting documents, the Assessing Officer treated total bank credits of ₹55.88 crore as gross receipts and applied a gross profit rate of 6.35%, resulting in an addition of ₹2.94 crore after allowing depreciation. The Commissioner of Income Tax (Appeals) upheld the addition due to continued non-compliance by the assessee.

Before the Tribunal, the assessee submitted that non-compliance was due to internal disputes and argued that estimation based on bank credits was arbitrary. It was contended that turnover as per GST and VAT returns should have been considered and that net profit, rather than gross profit, ought to have been computed. The assessee also furnished documents and sought another opportunity.

The Tribunal observed that the addition was made without proper verification and that the assessee had now produced relevant records. Considering these factors, the matter was remanded to the Jurisdictional Assessing Officer for a de novo assessment. The officer was directed to verify turnover from GST and VAT returns, compute net profit considering past records, allow statutory deductions, and provide a reasonable opportunity of hearing. The assessee was instructed to submit a detailed cash flow statement and cooperate in proceedings. The appeal was allowed for statistical purposes.