2022 (7) TMI 684 - AT - Income Tax

Validity of Best Judgement assessment u/s 144 - GP rate estimation - unexplained bank deposits - HELD THAT - AO offered sufficient opportunity to the assessee issuing notices u/s. 142(1) and 143(2) of the Act, which were duly served upon the assessee. This fact has not been controverted by the assessee. Under these given circumstances, the ld. AO was justified in framing the best judgment assessment u/s. 144 of the Act. Ground no.1 raised by the assessee is dismissed. Addition @ 8% on the turnover not declared by the assessee - On going through the observations of the ld. AO in the assessment order, we find that the assessee has declared net profit at Rs. 2,92,780/- on turnover of Rs.19,73,155/-. The assessee declared net profit rate @ 14.80% approx - as based on the information received by the ld. AO, it was revealed that the assessee was operating 12 bank accounts and total amount deposited during the year under consideration is Rs. 95,65,429/-. The turnover shown by the assessee is only Rs.19,73,155/- and remaining amount Rs.75,92,274/- is suppressed turnover, not declared by the assessee in the return. We also find that the ld. AO has fairly applied net profit @ 8% on the total amount deposited in the bank accounts at Rs.95,65,429/- treating it as turnover and calculating net profit at Rs. 7,65,234/- and after giving benefit of income of Rs. 2,92,780/- declared by the assessee remaining amount of Rs.4,72,454/- has been added. In our view, this finding of the ld. AO stands rightly confirmed by the ld. CIT(A). We, thus, find no infirmity in finding of the ld. CIT(A). Therefore, ground no. 2 raised by the assessee is dismissed. Addition of interest income - As the assessee could not controvert this fact that Rs.87,749/- was appearing in the interest received by the assessee in 26AS statement on which tax of Rs.9077/- was deposited is not offered for taxation in the I.T return. CIT(A) has rightly confirmed the impugned addition of Rs.87,749/- made by the ld. AO for interest income not disclosed by the assessee. Ground no. 3 raised by the assessee is dismissed.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Justification of framing assessment under section 144 of the Income Tax Act.
3. Addition of Rs. 4,72,454 as undisclosed turnover.
4. Disallowance of Rs. 87,749 for interest income not disclosed.

Condonation of Delay:
The appellant's appeal was found to be time-barred by 354 days, but the delay was condoned due to the reasonable cause of the appellant's illness preventing timely filing. The Tribunal admitted the appeal for adjudication after considering the cause of delay and the interest of justice.

Assessment under Section 144:
The appellant challenged the assessment under section 144, claiming it was unjustified. However, the Tribunal noted that the assessing officer had provided sufficient opportunities to the appellant by issuing notices under sections 142(1) and 143(2) of the Act, which were duly served. As the appellant did not contest this fact, the Tribunal upheld the justification of the assessment under section 144.

Undisclosed Turnover Addition:
The appellant contested the addition of Rs. 4,72,454 as undisclosed turnover, challenging the calculation method used by the assessing officer. The Tribunal reviewed the assessment order and observed discrepancies in the turnover declared by the appellant compared to the actual bank deposits. The assessing officer applied a net profit rate of 8% on the total bank deposits to determine the undisclosed turnover. The Tribunal found the assessing officer's approach reasonable and confirmed the addition, dismissing the appellant's challenge.

Disallowed Interest Income:
The appellant disputed the disallowance of Rs. 87,749 for interest income not disclosed in the return. The Tribunal noted that the interest amount was reflected in the appellant's 26AS statement but was not offered for taxation in the return. Consequently, the Tribunal upheld the assessing officer's decision to add the undisclosed interest income, rejecting the appellant's argument.

In conclusion, the Tribunal dismissed the appellant's appeal after thorough consideration of the issues raised regarding the assessment under section 144, addition of undisclosed turnover, and disallowed interest income. The Tribunal found no merit in the appellant's challenges and upheld the decisions of the lower authorities.