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2022 (2) TMI 380 - AT - Income Tax


Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961
2. Addition of Gross Profit (G.P.) by the Assessing Officer
3. Confirmation of G.P. addition by the CIT(A)

Issue 1: Validity of notice issued under Section 148 of the Income Tax Act, 1961:
The appeal was filed against the order passed by the CIT(A) for the Assessment Year 2009-10. The assessee challenged the notice issued under Section 148 dated 26th March, 2016, claiming it was bad in law as it was based on suspicion without verifying if the relevant facts were disclosed in the return. The Tribunal noted that the reasons recorded prior to issuing the notice mentioned the business dealings of the assessee's proprietary concern, which were not disclosed in the return filed earlier. The Tribunal held that the notice was issued with proper approval and satisfaction, dismissing the contention that it was bad in law.

Issue 2: Addition of Gross Profit (G.P.) by the Assessing Officer:
The Assessing Officer made an addition of ?11,23,617 as Gross Profit at 9.5% on a specific sum. The assessee disputed this addition, arguing that the estimation of income was not proper and that the GP calculation by the Assessing Officer was unjust. The Tribunal observed that both the quantification provided by the assessee and the calculations by the Assessing Officer lacked clarity, and historical figures were not presented. Consequently, the Tribunal decided to remand the matter back to the Assessing Officer for proper adjudication and quantification of the actual Gross Profit, ensuring the assessee is given a fair hearing. Thus, the issue was partly allowed for statistical purposes.

Issue 3: Confirmation of G.P. addition by the CIT(A):
The CIT(A) confirmed the addition of Gross Profit at 9.5% on the cash deposit in the bank account and another sum not specified in the assessment order. The assessee contended that the CIT(A) erred in confirming these additions. The Tribunal, after considering the arguments, found that the basis for the Gross Profit calculation was unclear and required proper assessment. As a result, the Tribunal partly allowed the appeal for statistical purposes, remanding the matter back to the Assessing Officer for a fair determination of the Gross Profit.

In conclusion, the Tribunal upheld the validity of the notice issued under Section 148, remanded the assessment of Gross Profit back to the Assessing Officer for proper quantification, and partly allowed the appeal against the confirmation of Gross Profit additions by the CIT(A) for statistical purposes.

 

 

 

 

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