TaxTMI 
TaxTMI 
2026 (9) TMI 134
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..../NFAC/S/250/2025-26/1086289852(1)arising out of the order dated 11.12.2019 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') passed by ITO, Ward 23(2) Delhi, for AY: 2017-18. 2. Heard and perused the records. The assessee filed the return declaring loss and the case of assessee was selected for scrutiny for the reasons of high revenue from operations and no scrutiny is last five years. After giving assessee an opportunity of hearing the ld. AO, rejected the books and gross profit was estimated at 2% of the turnover and an addition of Rs. 4.10 Cr. was made to the assessee's income. Ld. CIT(A) has sustained the rejection of accounts but held that addition be restricted to .5% of the turnover. Thus both the sides....
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....s, and absence of supporting evidence for purchases, sales, and stock. The explanation that shares transactions were routed through a broker and the statement of the appellant that the details of buyers/sellers were unknown to it, was rejected. Consequently, the books of account were also rejected, gross profit was estimated at 2% of total turnover, and an addition of Rs. 4.10 crore was made to the appellant's income. With this addition, the AO has passed the assessment order u/s. 143(3) of the act dated 11.12.2019 and assessed the total income at Rs. 4,10,86,788/-. ....................... 4.5 Considering the assessment order, the material available on record, and the written submissions of the appellant. The Assessing Off....
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....not produce books of account and other documents as sought by Assessing Officer, Assessing Officer had rightly rejected books of account of assessee under section 145(3)". 4.5.2 The Assessing Officer, considering the scale of operations and absence of verifiable evidence, estimated gross profit at 2% of turnover, which cannot be said to be arbitrary or without basis, particularly in light of the appellant's complete failure to cooperate during assessment proceedings. However, during the appellate proceedings the appellant has made some relevant submissions. 4.6 On perusal of the submissions, the records available and at the same time, keeping in view the nature of the business of share trading, where turnover is characteri....
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.... for ex-parte assessment dated 20.09.2019 and penalty imposed u/s 272A(1)(d) order dated 22.10.2019 and the notice mentions that there is no compliance and in the absence of response of the assessee the assessment has been completed on the basis of material available on record. Thus here the assessment was conducted by the jurisdictional Assessing Officer outside the scope of section 144B and the detailed procedure of section 144B, such as the faceless Assessment Unit procedure, electronic show-cause mechanism, etc., does not apply. The necessary mandatory notices u/s 143(2) and 142(1) of the Act were issued. Therefore, failure to follow section 144B, by itself, cannot invalidate an assessment if section 144B was not applicable to that asse....
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....n of the Id. Assessing officer that no detail of party wise purchase and sale of shares is furnished, in this connection it was submitted that ld. Assessing Officer failed to appreciate that in online stock market trading of shares, no one can have the knowledge of person by whom shares are purchased which is sold by assessee and the person by whom shares are sold and purchased by appellant assessee. 5. A conjoint reading of section 144 and 145 of the Act indicate that the AO wields an authority to make additions on the basis of estimation of income upon fulfillment of the conditions mentioned in Section 145(3) of the Act. Once the AO is satisfied about the existence of irregularities in the books of account as per Section 145(3) of the ....
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.... contention that the given the nature of business of assessee, expenses and turnover ratio or lack of corresponding credit entries to the turnover, cannot have been basis of rejection of books of accounts. There is no allegation that the method of accounting has not been regularly followed by assessee more so when one of the reasons for scrutiny was that in past five years there has been no scrutiny assessment. 8. We find that both the authorities below have proceeded to reject the books and then made the addition attributing possible profit but have failed to substantiate the same with any methodical reasoning. Profit estimation has to be by thoroughly understanding the nature of business activity. There is nothing on assessee's pas....