Tax Tribunal Adjusts Profit Estimation, Reduces Interest Levy

The Tribunal partially allowed the appellant's grounds by directing the Assessing Officer to estimate profit at 6% on gross turnover instead of the initial 8% based on cash deposits. The appellant's unintentional non-compliance with notices led to the dismissal of the case ex-parte, but the Tribunal considered the circumstances and made the adjustment in profit estimation. The challenge against the levy of interest under Section 234B was partially successful, with the Tribunal restricting the charging of interest based on the revised profit estimation. The judgment was delivered by Hon'ble Judicial Member Shri Duvvuru Rl Reddy.

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Issues involved:
The issues involved in the judgment are related to the assessment of income tax for the Assessment Year 2017-18, specifically focusing on the estimation of income based on cash deposits, non-compliance with notices, and levy of interest under section 234B.

Estimation of Income based on Cash Deposits:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) which upheld the Assessing Officer's decision to treat cash deposits as business income and estimate profit at 8% of turnover. The appellant argued that the estimation was too high and requested a lower percentage. The Tribunal directed the AO to estimate profit at 6% on gross turnover, partially allowing the appellant's grounds.

Non-Compliance with Notices:
The appellant failed to respond to notices issued by the department, leading to the dismissal of the case ex-parte by the lower authorities. The appellant claimed that non-compliance was unintentional due to the closure of business and vacation of premises. The Tribunal considered the circumstances and directed the AO to estimate profit at 6% on gross turnover instead of the initial 8%.

Levy of Interest under Section 234B:
The appellant challenged the levy of interest under section 234B, arguing that it was not correct in the circumstances of the case. The Tribunal noted that charging interest is mandatory and not discretionary, citing relevant court decisions. However, the Tribunal directed the AO to restrict the charging of interest based on the profit estimated at 6% on gross turnover, partially allowing the appellant's ground.

Separate Judgment by Judge:
The judgment was delivered by Shri Duvvuru Rl Reddy, Hon'ble Judicial Member.

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