2023 (10) TMI 1237 - AT - Income Tax

Estimation of gross profit @8% on total gross receipts - Assessee argued it on higher side - assessee is doing business of buying bananas from farmers and selling them to traders - HELD THAT - As assessee has not placed any material to establish that the estimation of 8% is exorbitant and on higher side. Therefore, in the absence of such evidence, no hesitation to come to the conclusion that 8% of gross receipts is reasonable and therefore dismiss the ground raised by the assessee. Wrong assessment of income by the AO - excess amount Profit estimation as wrongly adopted by the Learned Assessing Officer in the computation sheet - HELD THAT - It is undisputed fact that profit is estimated @8% on gross receipts of Rs. 3,60,84,530/- which comes to Rs. 28,86,760/-, but an amount of Rs. 29,68,705/- was taken wrongly by the AO in the computation. Hence,direct the AO to adopt the correct amount of Rs. 28,86,760/- instead of Rs. 29,68,705/- in the computation and pass order accordingly. Accordingly, the ground raised by the assessee is allowed.

Summary

Issues involved:
Condonation of Delay; Estimation of Profit by AO; Wrong Assessment of Income by AO.

Condonation of Delay:
The appeal was filed with a delay of 119 days, and the assessee sought condonation of the delay due to being unaware of the requirement to send hard copies to the ITAT after filing the appeal online. The delay was unintentional, and the assessee requested for the delay to be condoned. The Tribunal, after perusing the petition, found a reasonable cause for the delay and admitted the appeal for hearing.

Estimation of Profit by AO:
The AO estimated the income of the assessee at 8% on total credits in the bank accounts, as the assessee failed to provide documentary evidence to support his claims regarding business transactions. The AO initiated penalty proceedings under section 270A due to underreporting of income. The CIT(A) dismissed the appeal of the assessee challenging the estimation of profit by the AO.

Wrong Assessment of Income by AO:
The assessee contended that the AO wrongly assessed the income by taking an excess amount in the computation sheet. The AO had estimated the profit at 8% on total receipts, resulting in a specific amount. However, in the computation sheet, a higher amount was considered. The Tribunal, after considering the contentions and material on record, directed the AO to adopt the correct amount in the computation, resulting in the appeal being partly allowed.