2011 (6) TMI 966 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this case are (1) Service of notice u/s 143(2) and legality of assessment, and (2) Addition of income based on alleged receipt without proper evidence.

Issue 1: Service of notice u/s 143(2) and legality of assessment:
The appeal was filed late by 162 days, and the assessee requested condonation of delay citing communication gap with the counsel. The Tribunal accepted the plea for condonation of delay based on reasonable cause and proceeded to decide the appeal on merits. The Ld. Counsel did not press ground No.1 related to notice service, and it was dismissed as not pressed.

Issue 2: Addition of income based on alleged receipt without proper evidence:
The assessee contested the addition of Rs. 2,47,390, arguing that the payment of Rs. 82,46,354 was never received. The AO made the addition based on the alleged statement of payment without substantial inquiry into the mode of payment or evidence of receipt. The Ld. CIT(A) directed to apply a net profit rate of 3% on the gross receipts of Rs. 82,46,354, citing a previous ITAT judgment. The Tribunal found the addition made on surmises and conjectures without concrete evidence. In the interest of justice, the Tribunal restricted the addition to 1.5% of the gross receipts, partially allowing the appeal.