Case Law Details
Bulu Ghosh Vs ITO (ITAT Kolkata)
Introduction: In the case of Bulu Ghosh vs. Income Tax Officer (ITO), ITAT Kolkata delivered a significant verdict concerning the estimation of profits without the rejection of books of accounts. This article provides a detailed analysis of the case and its implications.
Background: Bulu Ghosh, the appellant, filed the income tax return for the assessment year 2016-17, which was subsequently selected for scrutiny. The Assessing Officer (AO) raised concerns about the apparent discrepancy between the audited profit and loss account presented by the appellant and the income reflected in Form 26AS. The appellant had reported a net loss from contractual business, while the Form 26AS indicated a higher total contract value.
The AO’s Action: The AO, after seeking an explanation from the appellant, calculated an additional income of Rs. 1,77,046. This additional income was determined by applying the presumptive taxation provisions of Section 44AD, which allows for the estimation of income at 8% of the total contract value. Notably, the AO did not reject the books of accounts of the appellant.
The Appellant’s Grievance: The primary contention of the appellant was that the AO had not invoked Section 145(3) of the Income Tax Act, which is necessary for rejecting the books of accounts. Without the rejection of the books of accounts, it was argued that the addition could not be made. The appellant also cited the decision of the Rajasthan High Court in the case of CIT vs. Maharaja Shree Umaid Mills Ltd. (192 ITR 565) to support their case.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
