TaxTMI 
TaxTMI 
2024 (11) TMI 640
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....p the appeal of the Revenue as well by the assessee for the Assessment Year 2014-15 i.e. ITA No.678/Del/2024 and 3236/Del/2023 for adjudication purposes. 4. Briefly stated, the assessee, a partnership firm, did not file return of income for Assessment Year 2014-15 in question. Based on the information available on the Departmental software ITBA, the Assessing Officer ("AO") observed that the assessee has earned income by way of commission or brokerage, rent on plant & machinery earned professional or technical fee etc. Consequently, notices u/s 148 of the Act were issued and assessment was framed making an addition of INR 46,50,05,403/- u/s 147 r.w.s. 144B of the Act. Based on TDS deductions and other information received and in the absence of any cogent explanation offered on behalf of the assessee, gross receipts in the hands of the assessee under the various heads were adopted as taxable income and assessed accordingly. 5. Aggrieved, the assessee preferred appeal before Ld.CIT(A). It was contended before Ld.CIT(A) that while the requisite information is not available at the end of the assessee, the AO, on his part, has also completed the assessment in a mechanical manner witho....
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....e question of rental receipts on plant and machinery etc. does not arise. The appellant submitted that in form No. 26AS, the sections under which TDS has been made, i.e. 194H, 194 1 (a), 194 I (b) and 194 J have been wrongly quoted and the nature of entire receipts is one and the same, i.e. contractual receipts. The appellant submitted that the form No. 26AS itself discloses that the deductors are also engaged in the business of advertising and they have wrongly quoted different section while making deduction at source as under:- S.No. Name of the deductor Quoting of wrong section Remarks 1. Soni India P.Ltd. 194I(1) Receipts are of contractual nature 2. Shree Vardhman Infra Heights P.Ltd. 194I(b) Receipts are of contractual nature 3. Shree Vardhman Infra Heights P.Ltd. 194J Receipts are of contractual nature 4. Metro Shoes Ltd. 194(1)(b) Receipts are of contractual nature 5. Max Publicity & Communication P.Ltd. 194 I(b) Receipts are of contractual nature 6. M/s. M3M India Pvt.Ltd. 194 I (b) Receipts are of contractual nature 5.4. The appellant submitted that when the partners were inimical to each other and were not on reconciliat....
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....t of the assessee. In the case of Commissioner of Income Tax Vs. President Industries (2002) 258 ITR 0654, the Hon'ble Gujarat High Court held that it cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. 5.8. The question that arise is then, what will be the profit margin of the appellant. I find from the assessment order, that the AO has not doubted that the income of the appellant is from its legal business income. The addition was made of the gross amount because the appellant did not file return of income not claimed any expenses, deduction or exemption. However, it is also clear from the submission of the appellant that it has not maintained proper books of accounts as the partners were inimical to each other and were not on reconciliatory terms and the firm was also not in a position to furnish the return of income. No other supporting evidences or documents have also been submitted by the appellant during the appeal proceedings. As it is clear ....
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....ent on plant & machinery receipt, Profit/technical fees receipt u/s 194J and Rental income receipt cannot be taxed on the basis of Profit margin @ 12.5%. Appellate is prays to add/delete grounds." 11. At the time of hearing, the Ld. Counsel supported the action of the AO and contended that the burden was on the assessee to explain and corroborate the expenditure incurred and in the absence of any corroboration, the AO was having no option but to assess the whole of receipts attributable to the assessee. It was thus contended that the Ld.CIT(A) was not justified in modifying the assessment and estimate income at 12.50% as chargeable income in the hands of the assessee instead of gross receipts assessed by the AO as taxable income. 12. The assessee, on the other hand, appearing through online platform for hearing, defended the estimated income theory applied by Ld.CIT(A) but however, assailed the first appellate order on the ground that the estimations made are highly excessive. The Ld. Counsel for the assessee pointed out that the advertisement business in which the assessee was engaged, operates on a wafer- thin margins and estimations @12.50% of gross receipts do not accord with....
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....axable income. It goes without saying indeed that gross receipts derived in the business cannot be taxed in its entirety and the Revenue is entitled to make suitable estimations of the profits in a given business where the documentary evidences are not available to support the correctness of the profits derived from the business to the satisfaction of the AO. The action of the AO is ostensibly beyond any comprehension and rather capricious exercise of his judgement. In the instant case, having regard to the facts and circumstances of the present case, the Ld.CIT(A) rightly displaced the additions of gross amount made by the AO and correctly resorted to estimations. The CIT(A) determined the estimated profits @ 12.5% of the gross business receipts. However, the assessee seeks to controvert the estimations to be highly elevated and excessive in view of the very ordinary profits ranging from 1.69% to 1.05% earned by other assessee, engaged in the same business. 15. We straightaway agree with the pragmatic & judicious approach adopted by the CIT(A) on first principles in determining the chargeable income by way of estimations. The approach adopted by the AO to tax entire gross receipt....