TaxTMI 
TaxTMI 
2025 (12) TMI 29
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....r delay was because of the mistake of the Tax Consultant of the assessee, which may kindly be condoned in the interest of the justice. 3. On the other hand, Ld. DR for the Revenue opposed the prayer of the assessee for condonation of delay. 4. I have heard both the parties and perused the materials available on record. I note that the assessee has explained the sufficient cause in the petition for condonation of delay and the reasons explained by the assessee are convincing in nature. Therefore, I find that the reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this appeal. Having heard both the parties and after having gone through the affidavit as well the delay condonation, application, I am of the considered opinion that in the interest of justice, the delay deserves to be condoned. I, accordingly, condone the delay. 5. The grounds of appeal raised by the assessee are as follows: "1. The ld.CIT(A) erred in law as well as on fact in upholding in addition of Rs. 39,82,206/- made by Id.AO by estimating profit @4% on gross sales turnover and in adopting ....
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....ssessee vide AO letter dated 08/03/2021 wherein the difference of Rs. 87,55,424/- (Rs.95,46,436- Rs. 7,91,012) was proposed to be taxed as per provisions of section 44AD of the Act. 7. In response, the assessee filed reply on 22/03/2021, the essence of the assessee's submissions are as under: "Your honour has proposed to adopt profit rate of 8% on turnover of Rs. 11,93,30,453/-. In this regard, your honour may kindly appreciate that we have submitted following documents. 1. Details of sales with sales register with name, address, quantity, rate amount. 2. Details of purchases with purchase register with name, address, quantity, rate, amount and all purchase bills 3. Stock Details. 4 All GST returns. 5. Profit and loss account indicating profit of Rs. 6,43,314/- from entire turnover of Rs. 11,93,30,453/- it comes to 0.54%. 6. Hence, your honour may kindly appreciate that we have not earned profit of 8% on said turnover of Rs. 11,93,30,453/- 7. We submit herewith audited profit and loss account for next financial year Le. A.Y. 2019- 20, in which turnover of Rs. 6,06,64,578/- we have earned profit of Rs. 7,....
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.... of Rs. 11,93,30,453. 7. We have also submitted audited profit and loss account of next financial year ie FY 2018-19 AY 2019-20, in which on turnover of Rs. 6,06,64,578/- we have earned profit of Rs. 7,65,441 which in % terms come to 1.26%. 8. From above, your honour may kindly appreciate that we have not earned profit of Rs. 63,68,815/- as proposed by your honour as addition. The income tax act mandates to assess real income of the assessee and not hypothetical income. 9. We have submitted that the profit for current year as well as subsequent year must be taken as guiding principle for estimation of income. Since, appellant had not earned income at the rate of 6% as proposed by your honour. 10. We have submitted all purchase and sales bills, quantitative details of purchase, sales and closing stock. In the said details as submitted, your honour has not pointed out any defects in maintenance of the same. The real income earned by assessee should be taxed rather than hypothetical income. In this regard, we invite your honour kind attention to following judicial decisions.........." 9. However, based on the above submissions of the assessee, th....
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....7.65%. For the reasons stated above under para 6.2 and considering the % of GP suggested by the assessee considered very low when compared to GP declared in the ITR for the current assessment year, the assessing officer estimated the G.P at 4% on the total actual turnover of Rs. 11,93,30,453/- which worked out to Rs. 47,73,218/- considered fair and reasonable. As the assessee has already declared income of Rs. 7,91,012/-, the balance of Rs. 39,82,206/- ( Rs. 47,73,218- Rs. 7,91,012) was added to the total income of the assessee. 11. Aggrieved by the order of the AO, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the addition made by the AO by observing as under: "5.5 Considering the above observation/findings, the ld AO came to the conclusion on the admittance by the assessee to estimate his income. The guiding principle the assessee suggested to consider the audited profit and loss account of next financial year ie. FY 2018- 19 AY 2019-20, in which on turnover of Rs. 6,06,64,578/- profit earned is at Rs. 7,65,441 which in % terms come to 1.26%. However, the Id AO observed that for the year under consideration the assessee has declared....
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....- and offered Net profit at Rs. 7,91,012/- as his income. The income declared in the return on the admitted turnover works out at 7.65%. During the scrutiny, the assessee admitted that the turnover shown at Rs. 1,03,43,628/- was factually wrong and the actual turnover is Rs. 11,93,30,453/-. Since the assessee has declared the income under "no account case" u/s 44AD of the Act, in the return of income filed. Further, the assessee has not complied with the provisions of sec. 44AB of the Act, to get his accounts Audited as required u/s 44AB of the Act. The assessee's turnover falls under "compulsory Audit" the income to be admitted on a turnover of Rs. 11,93,30,453/- should have been 8% on the gross turnover, which works out to Rs. 95,46,436/-, whereas the assessee has declared only Rs. 7,91,012/-, as his income in the return filed. This was brought to the notice of the assessee vide AO letter dated 08/03/2021 wherein the difference of Rs. 87,55,424/- (Rs.95,46,436- Rs. 7,91,012) was proposed to be taxed as per provisions of section 44AD of the Act. However, the assessing officer, finally, after considering the reply of the assessee, made the addition at the rate of 4% on the gros....