Pan Tutorials Private Limited Vs CIT (Appeals) (ITAT Patna)
Suppressed Turnover Cannot Be Added in Full: ITAT Patna Directs GP Addition on Estimated Receipts Excluding GST
The Patna Bench of the ITAT partly allowed the assessee’s appeal for AY 2018-19 arising from a survey u/s 133A conducted in the case of a coaching institute. Based on the survey, the Assessing Officer estimated gross receipts at ₹2.00 crore as against ₹1.19 crore disclosed, and treated the difference of ₹81.16 lakh as undisclosed income. The CIT(A) upheld the addition.
The Tribunal observed that while the assessee failed to satisfactorily explain the difference in receipts—amounting to suppression of turnover—the Revenue erred in adding the entire differential amount as income. Relying on settled jurisprudence, the ITAT held that in cases of suppressed sales/receipts, only the net profit (GP) element embedded therein can be brought to tax, and not the gross receipts. The Bench further noted that the estimation appeared to include GST, which must be excluded while computing taxable income.
Accordingly, the ITAT set aside the full addition and remanded the matter to the AO to compute income by applying an appropriate gross profit rate on the suppressed turnover after excluding GST, after granting reasonable opportunity to the assessee. The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PATNA
