2022 (12) TMI 944 - AT - Income Tax

Estimation of profit @5% of the turnover - profit from liquor business - HELD THAT - As in the instant case, as mentioned by the AO neither the assessee has maintained any books of accounts nor any books of accounts were produced for verification either at the time of search proceedings or during the post search proceedings or assessment proceedings. Therefore, the same decision, in our opinion, is not applicable to the facts of the present case. Even other wise also, the assessee during the course of assessment proceedings as well as appeal proceedings before theCIT(A) had requested to adopt the net profit rate of 5%. We do not find any infirmity in the order of the CIT(A) restricting the profit rate at 5% of the turnover. The ground raised by the assessee on this issue is accordingly dismissed. Addition as non agricultural income - HELD THAT - Assessee, during the course of assessment proceedings, had not produced the requisite details as called for by the AO. However, before the ld.CIT(A), the assessee had filed the copy of certificate from the VRO regarding agricultural income along with other documents. Although, during the remand proceedings, the assessee did not appear, however, these documents were very much available with the AO and he could have conducted necessary enquiries. However, the AO was waiting for the assessee to appear and did not conduct any independent enquiry. Since, the agricultural income shown by the assessee is very less and since the assessee had filed a certificate from the VRO regarding the agricultural income along with other documents, therefore, considering the totality of the facts of the case including the smallness of the amount and this being an old matter, we direct the AO to restrict such disallowance to 10% of the income shown. Assessee ground is partly allowed.

Summary

Issues:
1. Delay in filing appeals and condonation application.
2. Estimation of profit from liquor business.
3. Treatment of agricultural income.
4. Additional ground challenging assessment under section 153C.

Analysis:
1. The appeals were filed against orders dated 04.09.2019 by the Commissioner of Income tax for AY 2015-16 & 2016-17. The delay of one day in filing the appeals was condoned after the assessee provided reasons. The Tribunal recalled its earlier orders dismissing the appeals for want of prosecution.

2. In the first appeal, the assessee challenged the estimation of profit from liquor business at 5% of turnover. The AO estimated profit at 8% due to lack of maintained books of accounts. The CIT(A) restricted profit at 5%, which the assessee contested, seeking 3% based on a Tribunal decision. The Tribunal upheld the CIT(A)'s decision, considering the absence of maintained accounts and the assessee's admission of 5% profit.

3. Regarding treatment of agricultural income, the AO added Rs.52,500 as income from other sources due to lack of details provided by the assessee. The CIT(A) sustained the addition, but the assessee submitted a VRO certificate later. The Tribunal partially allowed the appeal, directing the AO to restrict the disallowance to 10% of the income shown, sustaining Rs.10,500 addition.

4. In the second appeal for AY 2016-17, similar issues were raised. The Tribunal upheld the CIT(A)'s decision to estimate liquor business profit at 5% and treat 10% of agricultural income as income from other sources. The additional ground challenging assessment under section 153C was not pressed.

In conclusion, both appeals were partly allowed with the Tribunal upholding the estimation of profit from liquor business at 5% and treating a portion of agricultural income as income from other sources. The additional ground challenging assessment under section 153C was dismissed as not pressed.