The Income Tax Appellate Tribunal (ITAT), Bangalore Bench ruled that the income of the assessee be estimated at 8% of the gross turnover if books of accounts not maintained by the assessee.
In these assessment years, the income of the assessee, Atul Dinesh Seth estimated at 10% of gross turnover. The contention of the assessee is that it is too high and it should be restricted to the income offered by the assessee and the percentage of income offered by the assessee is more the trade norms in this kind of assessee.
On the other hand, the department submitted that the assessee’s argument is not based on any documents or evidence to support the same. Accordingly, it was submitted that assessee’s books of accounts are not verifiable as such, AO made a reasonable estimate of 10% of the total turnover of the assessee.
The assessee has challenged the estimation of income at the rate of 10% of the total turnover.
The coram headed by the Vice President, N.V. Vasudevan noted that the assessee is not maintaining books of accounts, as such, the income of the assessee was estimated by AO by invoking the provisions of section 44AF of the Act at the rate of 10% of the total turnover as income of the assessee.
“The assessee has adopted the net profit rate at 4.08% to 7.91% from one year to another. There is high volatility in adopting the rate of profit by the assessee. In our opinion, to meet the ends of justice, it is appropriate to estimate the income of the assessee at 8% of the gross turnover instead of 10% adopted by the AO,” the ITAT ruled.
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