Tribunal Adjusts Net Profit Rate from 8% to 6%, Deletes Tax Addition on Notes Deposit, Cites Insufficient Evidence.

The Tribunal partially allowed the appeal, adjusting the net profit rate from 8% to 6% due to insufficient evidence from both parties. It directed the deletion of the addition related to specified notes deposit, concluding these were part of cash sales and should not be taxed separately. The Tribunal acknowledged the appellant's claim of inadequate opportunities during faceless assessment but based its decision on available information. The judgment was delivered by Shri K. Narasimha Chary, Judicial Member of the Appellate Tribunal ITAT Hyderabad.

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Issues involved:
The issues involved in the judgment are related to the estimation of income by the Assessing Officer based on cash deposits during demonetization, treatment of unexplained cash deposits, and the adequacy of opportunities granted to the assessee during the assessment proceedings.

Estimation of Income:
The Assessing Officer estimated the income of the assessee at 8% of gross sales due to the absence of a filed income tax return and audited statement. The CIT(A) upheld this estimation as the assessee failed to prosecute the appeal and provide material to contradict the findings. The appellant argued that the net profit should be accepted at 3% due to the nature of the fertilizer business and requested a fair opportunity to cooperate. The Tribunal, considering the lack of evidence from both sides, decided to adopt a net profit rate of 6% instead of 8% to conclude the assessment.

Treatment of Unexplained Cash Deposits:
The Assessing Officer treated the cash deposits made by the assessee during demonetization, including a specific amount in specified notes, as 'unexplained' and brought it to tax under section 69A of the Income Tax Act. The Tribunal, after examining the details of cash sales and deposits, concluded that the specified notes deposit was part of cash sales and should not be taxed separately. Therefore, the Tribunal directed the Assessing Officer to delete the addition related to the specified notes deposit.

Adequacy of Opportunities Granted:
The appellant contended that inadequate opportunities were granted during the faceless assessment proceedings, leading to exparte proceedings. The Tribunal noted the lack of evidence presented by both parties and decided on the assessment based on the available information. The Tribunal allowed the appeal in part, adjusting the net profit rate and directing the deletion of the specified notes deposit from taxation.

Separate Judgement:
The judgment was delivered by Shri K. Narasimha Chary, Judicial Member of the Appellate Tribunal ITAT Hyderabad.

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