A typographical error in the return of income, where gross profit is inadvertently entered as gross receipts, should not lead to an addition for suppressed turnover if the assessee opts for the presumptive taxation scheme under Section 44AD and the error is commercially improbable.

O R D E R

PER SANDEEP SINGH KARHAIL, J.M.

The assessee has filed the present appeal against the impugned order dated 25/09/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income Tax (Appeals)-1, Gurugram, [“learned Addl./Joint CIT(A)”], for the assessment year 2016-17.

In the appeal, the assessee has raised the following grounds: -

“Being aggrieved by the order of the Assessing Officer, 27(3) - 4, Mumbai and learned Commissioner of Income-tax (Appeal), NFAC Delhi, this appeal petition is filed on the following amongst other grounds of appeal, which it is prayed may be considered without prejudice to one another.

1. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-lax (Appeal) erred in upholding order of the Assessing Officer estimating net profit margin of 51% on alleged suppressed turnover of RS. 5,467,520 and adding Rs. 2,788,435 to income without appreciating reconciliation placed on record demonstrating that actual reported turnover of the Appellant was RS. 6,457,550 and net profit was RS. 518,564 (8.03%), and the figure of RS. 1,016,637 placed in Return of Income in turnover column was just reproduction of Gross profit figure owing to typographical error.

2. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in unilaterally holding that, the Appellant had not opted for presumptive scheme of declaring income under section 44AD without appreciating that, the Appellant had opted for section 44AD of the Income-tax Act 1961 while filing the Return of Income as is evident from the Return filed.”

The solitary grievance of the assessee, in the present appeal, is against the addition on account of the alleged suppressed turnover.

The brief facts of the case are that the assessee is an individual and has a business of exporting various items. For the year under consideration, the assessee filed its return of income on 08/03/2017, declaring a total income of 5,18,564. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was noticed that the assessee had exported goods of Rs. 64,84,157. However, from the perusal of the return of income, it was observed that the assessee had shown a turnover of Rs. 10,16,637. Since, the assessee has shown less turnover by Rs. 54,67,520 (Rs. 64,84,157 minus Rs. 10,16,627 equal to Rs. 54,67,520), the assessee was asked to show cause as to why an amount of Rs. 27,88,425, being 51% (the profit percentage declared by the assessee) of Rs. 54,57,520 be not added to total income of the assessee. In response, the assessee submitted that it duly disclosed the turnover of Rs. 64,57,550 in its profit and loss account and computed the income of Rs. 5,18,564, which was duly offered to tax under section 44AD of the Act, being 8.03% of the turnover. The assessee further submitted that at the time of filing the return of income, inadvertently, the amount of gross profit was also entered in the column of gross receipts, which is a completely inadvertent and bona fide error.

The Assessing Officer (“AO”), vide order dated 28/11/2018 passed under section 143(3) of the Act, disagreed with the submissions of the assessee and held that the assessee was not maintaining the books of accounts as turnover was reflected in column 53, which pertains to the cases where regular books of account of business or profession are not maintained. The AO held that the assessee’s reliance upon the profit and loss account and balance sheet showing full turnover is not maintainable and is merely an afterthought. The AO placed reliance upon the decision of the Hon’ble Supreme Court in Goetze India Limited v/s CIT , reported in (2006) 157 Taxman 1 (SC), and held that even if the asses