Kannappan Ragupathi Vs ITO (ITAT Chennai)
Notional Turnover ≠ Real Income: ITAT Sends F&O Estimate Back for Fresh Look
Assessee, a taxi driver with limited education, failed to file return for AY 2010-11. Based on AIR/CIB data relating to cash deposits & F&O transactions, AO issued notice u/s 148 & completed ex-parte assessment u/s 144 r.w.s 147, estimating speculative income at Rs.20,80,726 by applying 0.25% on a notional F&O contract value of Rs.83.22 crore, & also adding Rs.11,86,700 u/s 69A as unexplained cash. FAA confirmed additions.
Before Tribunal, Assessee produced broker statements & working sheets showing that actual F&O turnover, computed as per ICAI Guidance Note, was only Rs.1,25,779.71 & that he had in fact incurred a net loss of Rs.6,23,030.12, making AO’s estimation on inflated notional contract value wholly unjustified. Tribunal noted the ex-parte nature of assessment, Assessee’s genuine communication difficulties, & the fact that evidence was not examined either by AO or FAA. On cash deposits, Assessee claimed they were from savings & small borrowings used as margin money for F&O trades—an explanation not verified by lower authorities.
Tribunal held that, in the interest of justice, the entire matter on both issues must be re-examined afresh by AO after giving proper opportunity. Appeal was allowed for statistical purposes.
