Tribunal dismisses appeal over assessment notice timing, deems profit rate arbitrary for reassessment.

The Tribunal dismissed the appeal challenging the assessment due to lack of notice under section 143(2) of the Income Tax Act, as the notice was served within the limitation period. Regarding the addition made by the Assessing Officer based on a 10% net profit rate, the Tribunal found the calculation arbitrary and set aside the matter for reassessment with the opportunity for the assessee to provide relevant details. The Tribunal also set aside the assessment process for reassessment, emphasizing the need for proper verification and reasonable criteria for income estimation.

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Issues:
1. Validity of assessment due to lack of notice under section 143(2) of the Income Tax Act.
2. Addition made by the Assessing Officer on account of income estimation at 10% net profit rate.
3. Challenge against the addition and assessment process by the Assessing Officer and CIT(A).

Issue 1: Validity of assessment due to lack of notice under section 143(2) of the Income Tax Act:
The appeal challenged the assessment for not serving a notice under section 143(2). The Tribunal found that the notice dated 14.09.2016 was served on the assessee on 16.09.2016, within the limitation period. The department provided evidence of service, which the assessee did not dispute. Consequently, the appeal ground was devoid of merit and dismissed.

Issue 2: Addition made by the Assessing Officer on account of income estimation at 10% net profit rate:
The Assessing Officer estimated the income at 10% net profit rate based on bank deposits, later reduced to 5% by CIT(A). The assessee argued that the turnover was incorrectly calculated, and the net profit rate was arbitrary. The Tribunal noted the lack of necessary details in the return filed by the assessee. It found that the Assessing Officer did not consider all relevant bank account details and applied the net profit rate without proper basis. The CIT(A) also failed to provide a basis for the 5% rate. The Tribunal set aside the matter for reassessment, providing the assessee with an opportunity to submit relevant details for a proper computation of income.

Issue 3: Challenge against the addition and assessment process by the Assessing Officer and CIT(A):
The assessee disputed the assessment process, arguing that past history and reasonable criteria were not considered. The Tribunal observed that the assessee did not respond to notices or provide necessary details. It highlighted the arbitrary nature of the Assessing Officer's approach and the lack of proper criteria for the net profit rate. The Tribunal set aside the matter for reassessment, emphasizing the need for proper verification and reasonable criteria for income estimation.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, setting aside the assessment for reassessment by the Assessing Officer to consider all relevant details and apply reasonable criteria for income estimation.

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