TaxTMI 
TaxTMI 
2026 (3) TMI 1276
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..... 11,79,387/-) purely on conjectures, disregarding the Appellant's declared Net Profit of 2.05% (Rs 4,85,200/-) which is reasonable for the wholesale medicine business. 3. Disregard of Audit Report: That the Ld. CIT(A) failed to appreciate that the Appellant's books were audited u/s 44AB of the Income Tax Act, 1961. Rejecting the book results without pointing out specific defects in the Audit Report is bad in law. 4. Ignored Nature of Business: That the Ld. CIT(A) failed to consider that the Wholesale Medicine trade operates on government-regulated thin margins (DPCO), where a 5% net profit rate is excessive and impossible to achieve. 5. Inconsistent Approach: That the Ld. CIT(A) accepted the turnover of Rs. 2,35,85,740/- as per the Appellant's books but arbitrarily rejected the profit result flowing from the same books. 6. Opportunity to Produce Books: That the non-production of books earlier was due to reasonable cause (reliance on tax consultant/lack of technical knowledge). The Appellant prays for an opportunity to produce the books of accounts before the Hon'ble Tribunal to substantiate the returned income. 7. Intere....
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....m a rural area, are not technology-savvy, and were entirely dependent on a tax consultant who failed to inform them of the notices or file timely responses. 2. Short Notice Period: The Ld. Assessing Officer [AO] allegedly provided very short timeframes to respond to the statutory notices, making compliance difficult. 3. No Intentional Default The failure to comply was unintentional and occurred due to genuine hardship, rather than a deliberate attempt to frustrate the assessment proceedings. 4. Error in Upholding Partial Penalty: The Ld. Commissioner of Income Tax (Appeals) [CIT(A)] erred in upholding a penalty of Rs.20,000. Having accepted the appellant's explanation for three defaults to delete Rs.30,000, the same logic of "reasonable cause" (reliance on an erring consultant and lack of technical knowledge) should apply to all five defaults, warranting a total deletion of the penalty. 5. Ex-parte Assessment Context: The underlying assessment was also ex-parte and is currently under appeal; therefore, the consequential penalty for technical non-compliance should be reconsidered in light of the substantive merits of the main case." 3. We s....
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....stances of the case. I find merits in the arguments of the assessee and the assessee has already showed turnover of Rs. 2,35,85,740/- in the Rol. Thus, the assessee considered the turnover as reflected in the GST returns. However, the assessee's profitability is only at 2.05% of total turnover. Further, the assessee did not file any relevant details/books of accounts before the AO. Therefore, to safe guard the interests of revenue and to meet the ends of justice income of the assessee is estimated at 5% of the turnover as shown by the assessee i.e. 2,35,85,740/-. Thus income comes at Rs. 11,79,387/- and addition to this extent is hereby upheld. Accordingly, addition is hereby restricted to Rs. 11,79,387/- and the balance addition is hereby deleted. In the result, the assessee's appeal is partly allowed." 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 5. Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR that the assessee is a wholesaler of medicines and the case was reopened by issuing notice u/s 148 of the Act on the basis of details in GSTR1R and GST....
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....see is estimated @20% of total turnover which comes to Rs. 47,17,148/- as against shown by the assessee at Rs. 4,85,200/-." 6. It was argued by the Ld. AR that the same was estimated at the rate of 5% of the total turnover by the Ld. CIT(A) and the appeal was partly allowed but the assessee had shown the profit rate of 2.05% in the audited books of accounts and in the earlier year the same was shown @1.53% and in the subsequent year it was @1.42% but the returns were not scrutinised by the Ld. AO. In the impugned AY 2020-21, the income declared was Rs.4,85,200/-, the assessee had declared turnover of Rs.2,35,85,000/- in the audit report. However, no return of income was initially filed but the same was filed in response to the notice u/s 148 of the Act. It was stated that the gross profit rate was higher than what is normally available in this type of business. It was conveyed to the Ld. AR that the assessee is a wholesaler and the margin of profit is reasonable. However, the profit rate applied at 5% was considered to be slightly higher and the Bench was of the view that the net profit rate of 4% may be applied on the turnover shown at Rs.2,35,85,740/- before the GST as against....