Hansraj Vs ITO (ITAT Delhi)
The Delhi Bench of the ITAT, in the case of Hansraj, partly allowed the assessee’s appeal arising from a reassessment for AY 2014-15 involving large cash deposits treated as unexplained money under section 69A and taxed under section 115BBE.
While the Tribunal upheld the validity of reassessment proceedings under sections 147/148, it found the ad-hoc estimation of income at 20% of gross receipts by the CIT(A) to be arbitrary and excessive. The assessee, engaged in small-scale milk trading, had declared gross receipts of about ₹1.94 crore, and contended that margins in milk retail trade are inherently low due to spoilage and wastage.
The ITAT observed that rejection of books may justify estimation, but such estimation must be reasonable and industry-aligned. Taking note of practical business realities and comparable precedents, the Tribunal held that gross profit at 5% of gross receipts would meet the ends of justice, and directed the AO to compute income accordingly after allowing eligible deductions under law.
Accordingly, the appeal was partly allowed, granting substantial relief to the assessee by sharply reducing the estimated profit rate from 20% to 5%.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the Assessee is directed against the order of the National Faceless Appeal Centre (NFAC), New Delhi, dated 06.06.2025 [hereinafter referred to as the ‘Ld. CIT(A)’] arising out of the assessment order dated 29.03.2022 passed under Section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) pertaining to Assessment Year (A.Y.) 2014-15.
