The Delhi Bench of Income Tax Appellate Tribunal (ITAT) limited the addition to ₹1 lakh after the net profit rate was increased to 6% following the rejection of books of account.
Manoj Kumar,appellant-assessee,appealed against the order dated May 22, 2024, passed by Commissioner of Income Tax(Appeals)[CIT(A)] for the assessment year 2020-21 under section 143(3) of the Act.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
Section 143(3) of the Act deals with scrutiny assessment, where the Assessing Officer (AO) examines the taxpayer’s return in detail. If selected for scrutiny, a notice under Section 143(2) is issued, asking for documents and explanations. The AO reviews the information, conducts inquiries if needed, and allows the taxpayer to present their case. Based on the findings, an assessment order is passed, determining the final taxable income, tax liability, or refund. The assessment must be completed within the prescribed time, ensuring accuracy and compliance with tax laws.
With assistance from the Departmental Representative, it emerged that the appeal challenged the addition of ₹4,00,008 made after rejecting the books of account. The authorities increased the net profit rate from 5.04% to 6%, including interest on FDRs and refunds. Both parties presented their arguments for and against the addition.
A single member bench comprising Satbeer Singh Godara (Judicial Member) observed that the assessee declared a net profit rate of 5.04%, including interest from FDRs and refunds, while the department applied a 6% rate after excluding these amounts. To ensure fairness, the Tribunal limited the addition to ₹1 lakh, stating it would not be a precedent. This granted relief of ₹3,00,008, with necessary computation to follow as per law.
In short, the appeal filed by the assessee was partly allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
