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Judgment
O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 19.12.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by NFAC, Delhi. In this case, there is considerable finding at the Ld. AO’s level that the assessee has a publication business, whereby certain newspapers and magazines are brought out. The Ld.AO is seen to have asked for considerable details in justification of the turnover of business (Rs.17,12,12,382/-), which were not provided. Thereafter, the Ld. AO estimated net profit at Rs.15% of the total turnover and made an addition of Rs.2,56,81,857/-.
The aggrieved assessee approached the Ld. CIT(A), where the appeal was dismissed on the ground that the assessee did not remove the defects in Form 35 and thereafter, the appeal was held to be non-maintainable by the Ld. CIT(A).
Further aggrieved, the assessee has approached the ITAT with grounds challenging the action of the authorities below.
The Ld. AR and the assessee were present in the court and it was explained to the Bench that the newspaper business was largely a loss-making proposition and in case there was any surplus after meeting expenses then the same would be a very small amount. It was the submission that the Ld. AO was unjustified in assessing net profit at 15%, which was improbable in this line of business. It was the prayer by the assessee himself that he was old and not able to look after the tax matters properly at this stage. It was a further prayer that an appropriate decision may be rendered by this Bench on the basis of facts already on record.
The Ld. DR relied on the orders of the authorities below and stated that in the absence of compliance before the Ld. AO there was no option but to estimate the income of the assessee.
We have heard the rival submissions and have gone through the records before us. It is obvious that in this line of business, there are wafer thin margins and there is absolutely no justification for estimating net profit at 15% of the turnover. It is also a fact that turnovers in this line of business tend to be high, which fact again would not justify a high net profit estimation. Considering the totality of facts and circumstances, we deem it fit to estimate the net profit at 0.5% of the total turnover of business as a reasonable estimation of the net profit of the assessee. The Ld. AO would grant consequential relief and assess the income after working out net profit at 0.5% of the turnover.
In the result, the appeal is partly allowed.