M/S B KRISHNAKUMAR,MAVELIKARA V. WARD 1 & TPS, THIRUVALLA, THIRUVALLA

ITA 677/COCH/2025

AI Insights

The case involves B. Krishna Kumar, a partnership firm engaged in the business of petroleum products, which faced an income tax assessment issue for the Assessment Year 2017-18. Initially, the firm filed a return disclosing an income of Rs. 1,83,110, which was not assessed. However, following information about substantial cash deposits in the firm's bank account, the AO issued a notice under section 148 of the Income Tax Act, 1961, and subsequently made a best judgment assessment due to non-compliance by the appellant. The CIT(A) upheld the AO's decision, leading to the current appeal before the Income Tax Appellate Tribunal. The Tribunal's decision focused on the improper estimation of income without rejecting the audited books of account.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783805 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 27-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: LAKSHMI N.
• Keywords: Additional evidence
• Section: 148; 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 677/Coch/2025 Assessment Years: 2017-18 B. Krishna Kumar .......... Appellant Makamkuzhy, Kallimel P.O., Mavelikara [PAN: AAPFM9503R] vs. The Income Tax Officer, WD-1 & TPS, Thiruvalla ....... Respondent Assessee by: Smt. Lakshmi N., CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 29.10.2025 Date of Pronouncement: 14.11.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 31.07.2025 for Assessment Year (AY) 2017-18. 2. Brief facts of the case are that the appellant is a partnership firm engaged in the business of petroleum products. The return of income for AY 20170-18 was filed on 31.03.2018 disclosing income of Rs. 1,83,110/-. No assessment was made against the said return of income. Subsequently, based on the information that the appellant firm made cash deposits amounting to Rs. 2,55,19,294/- in the bank account maintained with State Bank of India during the previous Printed from counselvise.com 2 ITA No. 677/Coch/2025 B. Krishna Kumar year relevant to AY 2017-18, the AO issued a notice u/s. 148 of the Income Tax Act, 1961 (the Act) on 31.03.2021. The appellant neither complied with the notice issued u/s. 148 nor notices issued u/s. 142(1) of the Act calling for information. In the circumstances, the AO made best judgement assessment by estimating the income at 2% of the gross turnover of Rs. 9,36,11,035/- and made addition of Rs. 16,89,110/-. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO only on account of the fact that the appellant did not respond to the notices u/s. 148 or 142(1) of the Act issued by the AO nor any additional evidence was filed. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 5. The learned counsel for the assessee contends before me that the AO ought not have estimated the income without rejecting the books of account as the books of accounts were audited. 6. On the other hand, the learned Sr. DR submits that since the appellant had failed to respond to the notices issued by the AO, the AO was justified in estimating the income at 2% of the turnover. 7. I heard the rival contentions and perused the material available on record. The only issue in the present appeal is that arises for my Printed from counselvise.com 3 ITA No. 677/Coch/2025 B. Krishna Kumar consideration was whether the AO was justified in estimating the income at 2% of the gross turnover or not. It is undisputed position that the books were audited and submitted to the assessing authority. Without rejecting the books of account, estimation of income is not permissible. Further, estimation of income cannot be subjective but should be based on the material and past history. Therefore, I remand the matter back to the file of the AO for de novo adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant. 8. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 14th November, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 14th November, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin Printed from counselvise.com "