Non-filing of tax returns leads to lawful income estimation by assessing authorities.

आदेश/ORDER

PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

This appeal is filed by the Assessee as against appellate order dated 30-07-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the reassessment order passed under section 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2020-21.

2. Brief facts of the case is that the assessee is a Cooperative Bank has not filed the Return of Income for the Asst. Year 2020-21. The assessee had made total sales as reported under GSTR-1 and GSTR-3B of Rs.6,32,19,719/- and also made cash withdrawal amounting to Rs.2,38,60,796/- from the Banaskantha District Central Co Op Bank Ltd. Therefore the assessment was reopened by issuing a notice u/s. 148 of the Act. The assessee filed the return on 15-02-2025 which is beyond 30 days time given to the assessee. The assessing officer called for details u/s. 133(6) from the banks and a final show cause notice dated 11-02-2025 requesting that assessee to submit the information, details regarding the cash deposits and why not to estimate 8% of the business activity amounting to Rs.50,57,577/- as the net income of the assessee.

2.1. The assessee explained that it is working as Primary Co- operative Society (i.e. Animal Keepers) engaged in Supply of Milk produced by them. The assessee worked under the Banaskantha District Milk Producers Co-operative Union Ltd., Palanpur (hereinafter referred as Banas Dairy) as Member. The management of the Society is run by the committee and the said committee is appointed by the members of Co-operative Society and worked on the basis of Cooperative method. They collect the milk from members (Animal Keepers) and sell the whole milk to the Banas Dairy. Further the society also provides various goods to members at very nominal cost like cattle-feeds, Ghee, butter milk, Tea, etc. All the goods which are sold to members are on cash basis or against the Milk Bill payable of that member. Therefore considering the above facts on record and the profitability of the said business activities, the net profit has been determined at 1% of the total turnover of 6,32,19,719/- amounting to Rs. 6,32,197/- as its net profit for the Asst. Year 2020-21. The Assessing Officer considering the above facts on record on profitability of the said business activities carried out by the assessee Society and accepted the 1% of the total turnover as the net profit for the Asst. Year 2020-21 and demanded tax thereon.

3. Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A), who considered the submissions of the assessee, however confirmed the order passed by the assessing officer by observing as follows:

“7.1 At the very outset, it is important to note that in this case the appellant had neither filed return of income as per the provisions of section 139(1) of Income Tax Act nor the return of income was filed in response to notice issued under section 148 of Income Tax Act. Moreover, even during the course of assessment proceedings, absolutely no details were filed by the appellant before the AO. Accordingly, it is very important to note that appellant has been totally non-compliant with the law.

7.2 As far as the estimation of income by the AO in the assessment order is concerned, suffice it to say that if the appellant chose not to comply with none of the notices issued by the AO, then as per the provisions of section 144 of the Income Tax Act, AO was left with no other option but to estimate the income of appellant. Needless to mention that AO had computed the income of appellant at 1% of total turnover owing to the fact that it is a Co- operative Society.