ACIT Vs Eplast Build Techno Industries LLP (ITAT Ahmedabad)
Ahmedabad ITAT Holds Only 8% Profit on Unaccounted Sales Taxable, Not Entire Receipts
The Ahmedabad ITAT partly allowed the Revenue’s appeals by holding that only the profit element embedded in unaccounted sales is liable to tax and not the entire unaccounted receipts. During a survey, data extracted from the assessee’s accounting software revealed unaccounted sales receipts, which the Assessing Officer had added in full as income. The CIT(A), however, restricted the addition to 6% of the unaccounted receipts, accepting the assessee’s contention that corresponding unaccounted purchases had also not been recorded.
The Tribunal observed that the assessee, engaged in the business of purchase and sale of second-hand furniture, had not maintained an item-wise stock register and failed to establish that every unaccounted sale was backed by a corresponding unaccounted purchase. Considering the overall facts, the Tribunal held that the profit embedded in the unaccounted sales should be estimated at a higher rate than adopted by the CIT(A).
Accordingly, the Tribunal modified the CIT(A)’s order and directed that 8% of the unaccounted sales be brought to tax instead of 6%, while reiterating that the entire unaccounted sales could not be assessed as income. The Revenue’s appeals were partly allowed, and the assessee’s cross-objections were dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeals by the Revenue and the corresponding Cross Objections preferred by the assessee are against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as ‘Ld. CIT(A)’] dated 26/11/2025 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Years (AYs) 2018-19 & 2019-20 respectively. ITA No. 107/Ahd/2026 is taken as the lead case for the purpose of narration of facts.
