Case Law Analysis
|Income Tax Appellate Tribunal
Estimated Income Under Section 145(3) | 2% Turnover Ratio Rejected When Actual Gross Profit Margin Is 0.29% : ITAT Delhi
The ITAT Delhi has ruled that tax authorities cannot impose a mechanical 2% income estimation on businesses with a demonstrably lower and consistent gross profit margin of just 0.29%. This sets a binding precedent for traders and pass-through entities, ensuring estimated income assessments must reflect commercial reality, not arbitrary benchmarks, and deletes penalties imposed on such taxpayers.