2018 (11) TMI 1884 - AT - Income Tax

Estimation of assessee s income @ 0.4% of its total turnover - CIT-DR vehemently contends during the course of hearing that CIT(A) has erred in law as well as on facts in estimating assessee s income @ 0.4% of its total turnover - HELD THAT - CIT-A fails to dispute the fact the CIT(A) has gone by his findings in earlier assessment years thereby adopting the judicial consistency. The said estimation in earlier assessment years has admittedly attained finality. There is no other material to dispute correctness thereof failed during the course of hearing. We therefore find no fault in CIT(A) s action estimating the assessee s income @ 0.4% of its turnover. Disallowance u/s. 40(a)(ia) - non-deduction of TDS - Revenue s latter substantive ground seeking to revive u/s 40(a)(ia) (supra) that has no legs to stand since the relevant books forming foundation thereof already stand rejected. The Revenue fails in its both substantive grounds accordingly. Appeal of revenue dismissed.

Summary

Issues:
1. Estimation of assessee's income at 0.4% of total turnover
2. Revival of sec. 40(a)(ia) disallowance

Estimation of Assessee's Income at 0.4% of Total Turnover:
The judgment involves a challenge to the correctness of the Commissioner of Income Tax (Appeals) order regarding the estimation of the assessee's income at 0.4% of the total turnover for assessment year 2009-10. The Revenue contended that the CIT(A) erred in estimating the income without appreciating the relevant facts and sought to revive a disallowance under sec. 40(a)(ia). The CIT(A) considered the submissions and primary documents submitted by the appellant, including audited accounts and tax audit reports. The CIT(A) noted that the appellant had not complied with the Assessing Officer and had repeated non-compliance. Despite this, the CIT(A) agreed with the appellant's contention that disallowing the entire incentive to agents would result in an absurd net profit rate. Therefore, the CIT(A) estimated the total income at 0.4% of the total turnover, providing relief to the appellant. The CIT-DR argued that the CIT(A) erred in law and on facts in estimating the income at 0.4% of the turnover. However, the Tribunal found no fault in the CIT(A)'s action, as the estimation was based on judicial consistency from earlier assessment years.

Revival of Sec. 40(a)(ia) Disallowance:
The second substantive ground raised by the Revenue sought to revive the disallowance under sec. 40(a)(ia). However, this ground had no basis as the relevant books forming the foundation for the disallowance had already been rejected. The Tribunal found that since the books had been rejected, the Revenue's attempt to revive the disallowance under sec. 40(a)(ia) was unfounded. Consequently, the Revenue failed in both substantive grounds, leading to the dismissal of the Revenue's appeal. The judgment was pronounced in open court on 30/11/2018.