2025 (9) TMI 422 - AT - Income Tax

Revenue's 12% net profit presumption on undisclosed receipts held excessive; 7.8% net profit adopted for assessment

M/s. Manish Kumar., Patna Versus ACIT, Circle-4, Patna

ITAT held that the AO's application of a 12% net profit rate on the assessee's undisclosed receipts was excessive; the assessee demonstrated, via ... Net profit rate on the undisclosed business receipts of the assessee - AO applied the net profit rate @ 12% on the said undisclosed receipts - Case of the assessee is that the assessee in respect of the disclosed income has duly proved that the net profit rate of the assessee comes at 7.8% of the receipt. HELD THAT:- The assessee in this respect has relied on the past data to show that the average net profit rate of the assessee is to that extent only. DR could not rebut the aforesaid fact that the net profit rate of the assessee from its disclosed business receipts comes to 7.8% only. AO is directed to restrict the net profit rate on the undisclosed receipt of the assessee @ 7.8%. The appeal of the assessee is treated as partly allowed. The appeal arises under section 250 of the Income Tax Act, 1961 for AY 2016-17 against the CIT(A)'s order. The sole issue is the appropriate 'net profit rate on the undisclosed business receipts' where the assessee omitted receipts of Rs. 1,05,10,500/-. The AO applied a 'net profit rate @ 12%' on the undisclosed receipts. The assessee demonstrated, using disclosed business receipts and past data, that its average net profit rate is 7.8%. The Departmental Representative did not rebut that the net profit rate on disclosed receipts is 7.8%. On these facts, the Tribunal directed the AO to restrict the net profit rate on the undisclosed receipt to '7.8%'. The appeal is therefore 'partly allowed'. Order pronounced 15 January 2025.