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2023 (12) TMI 136 - ITAT KOLKATAEstimation of income - estimation of net profit @ 8% in AY 2018-19 as against the net profit rate of 2.5% declared by the assessee - presumptive taxation for business u/s 44AD relied upon - AO based on the income tax return wherein the assessee inadvertently tick the column for ‘no account case’ and based on such act at the part of the assessee in filing the return, ld. AO resorted to apply the provisions of Section 44AD of the Act and estimated the profit of the assessee @ 8% - HELD THAT:- So far as Section 44AD is concerned the same relates to special provision for computing profits and gains of business on presumptive basis in the case of an eligible assessee engaged in an eligible business. So far as estimating of profits is concerned, we notice that in the income tax return filed by the assessee on ITR 3 even though it has taken the column ‘no account case’ but in the Form complete details of the audit report u/s 44AB of the Act are mentioned wherein the assessee stated that it is covered u/s 44AB of the Act and books of accounts have been audited by a Chartered Accountant. The assessee also mentioned the details of the Chartered Accountant company along with date of audit report which is 29.10.2018 and the same stands duly uploaded on the income tax portal. These glaring facts are very much available in the income tax return copy of which was placed before the AO and he ought not to have directly resorted to the provisions of Section 44AD of the Act and should have examined the tax audit report and, if necessary, should have got the limited scrutiny converted to complete scrutiny and thereafter, carry out the assessment proceedings to examine the complete books of accounts and then if any discrepancy could have been noticed then estimation of profits could have come in picture. Since in the instant case, the assessee has properly maintained the books of accounts which have been duly audited and ld. AO has not disputed the book results appearing in the audited financial statement uploaded on the income tax portal we fail to find any justification in the action of ld. AO of estimating the net profit rate of 8% and the book results declared by the assessee showing net profit rate of 2.5% ought to have been accepted. We, thus, set aside the finding of ld. CIT(A) and delete the addition made by ld. AO towards estimating profits over and above the income declared by the assessee. Thus, ground no. 1 & 2 raised by the assessee are allowed.
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