Devaraj Ilavarasan Vs ITO (ITAT Chennai)
Assessee originally filed ROI showing turnover of ₹10.76 crore & income of ₹9.26 lakh, but without audit report. He later filed a revised return on 01.08.2019 declaring turnover of ₹13.76 crore along with audit report. AO treated the revised return as non est, rejected books & completed best judgment assessment u/s 144. AO estimated 8% profit on turnover & also added ₹60,00,000 as alleged unexplained investment based on survey u/s 133A conducted in the “D. Devaraj group”. CIT(A)/NFAC confirmed the additions.
Before ITAT, assessee argued that (i) estimation of 8% is wholly arbitrary, (ii) AO failed to consider past financial history, (iii) in identical cases of assessee’s father (Shri D. Devaraj) & mother (Smt. Ellammal)—both arising from the same survey of 07.02.2018—the ITAT had already restricted profit estimation to 4%, and the assessee cannot be placed in a worse position than similarly-situated family members, and (iv) the ₹60 lakh investment addition was unjustified because the source was explained in the revised return.
Tribunal noted that AO adopted 8% without citing comparables, industry norms, past margins or defects in accounts. Crucially, Tribunal accepted that in the cases of the assessee’s parents—arising from identical search/survey material—the very same Bench had fixed reasonable profit at 4%, holding 8% excessive.
