Jitanshu Goswami Vs ITO (ITAT Kolkata)
Summary: The ITAT Kolkata partly allowed the assessee’s appeal concerning estimation of business income for AY 2017-18 arising from trading in agricultural products. The Assessing Officer had rejected the declared net profit of 1.297% on turnover of ₹3.50 crore after the assessee failed to produce books of account and cash book, and estimated income at 8% of turnover, resulting in an addition of ₹23.50 lakh. The CIT(A) upheld the addition by invoking Section 44AD presumptive taxation provisions. However, the Tribunal held that Section 44AD was inapplicable because the assessee’s turnover exceeded the statutory threshold of ₹2 crore applicable for the year. While the Tribunal agreed that rejection of books and estimation of profit was justified due to non-production of records, it found the 8% rate excessive considering the nature of agricultural trading business and past profit history. Accordingly, the Tribunal reduced the estimated net profit rate to 4%, sustaining addition only to the extent of ₹9.47 lakh and deleting the balance addition.
Core Issue :
The controversy before the Tribunal was whether the Assessing Officer and CIT(A) were justified in estimating net profit at 8% of turnover despite non-applicability of section 44AD and without proper basis for adopting such rate.
