Mohd. Amzad Vs ITO (Telangana High Court)
The Telangana High Court heard two writ petitions together since they involved the same issue and parties. The facts were discussed with reference to Writ Petition No. 21351 of 2006. The petitioner, a retail timber dealer and an income-tax assessee, filed his return for Assessment Year 2003-04 on 16 September 2003 and claimed a refund of ₹1,25,098. His claim was based on Section 44AF of the Income Tax Act, 1961, a special provision introduced with effect from 1 April 1998 for computing profits and gains of retail business.
The petitioner did not maintain books of account and only had purchase records. While submitting the return, he estimated his total sales turnover by adding an estimated gross profit of 20%, calculated income at 5% of that turnover, and declared income of ₹1,83,750. According to the petitioner, from Assessment Year 1998-99 onward he had consistently filed returns using Section 44AF and claimed income and refund accordingly.
The Assessing Officer (AO), through an order dated 13 December 2004, informed the petitioner that his return was defective and therefore no refund was permissible. The AO held that the return did not include statements or details of turnover and gross receipts, and unless rectified, it would be treated as non est. The petitioner informed the Department that he had no books of account and that his estimated turnover of ₹35,59,425 was reasonable. Later, by letter dated 14 September 2004 (served on 16 October 2004), the AO treated the return as invalid for failure to comply with Section 139(9).
