2026 (7) TMI 125

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....ated 18 March 2025, passed under section 147 read with sections 144 and 144B of the Income-tax Act, 1961, determining the assessee's total income at Rs.3,645,440, was dismissed. 2. The assessee is in appeal before us. Its grievance is that, although its turnover for Assessment Year 2020-21 was Rs.4.55 crores, it suffered a loss of Rs.3,935,062 due to the impact of COVID-19. Because of these losses, the return could not be filed within time and the audit under section 44AB could not be completed for the year. The Assessing Officer reopened the assessment by issuing notice under section 148 of the Act on 23 February 2024. According to the assessee, because of technical glitches, the assessment was thereafter completed by estimating income ....

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....cial year was its first year of business. The assessee stated that it incurred substantial losses, and that the business was ultimately closed after the onset of the pandemic. It explained that it had entered into fixed-rate contracts with companies for providing transport services to their staff. Diesel prices, which touched an all-time high of Rs.69.35 per litre on 29 May 2018, substantially increased its operating costs and resulted in heavy losses. The Assessing Officer, however, noted that no return had been filed in response to the notice under section 148, that the assessee had reported a loss despite substantial receipts, and that its accounts had not been audited. He therefore estimated business income at 8% of gross receipts of Rs....

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.... on the ground that the assessee ought to have filed its original return within the time prescribed under section 139, and its failure to do so led to the reopening of the assessment. The return sought to be filed in response to notice under section 148 showed a loss of Rs.3,935,066 against aggregate receipts of Rs.45,568,000. The assessee explained that the loss arose because it had entered into fixed-rate rent-a-cab contracts while diesel prices had risen sharply, increasing operating costs. Although the assessee did not get its books audited, that is a separate matter under the Act. Merely because the books were not audited, the book results could not be rejected and profit estimated at 8% unless the assessee failed to substantiate the e....