Anam Pesticides Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, adjudicated an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre, for Assessment Year 2021–22.
During assessment proceedings, the Assessing Officer observed that out of total purchases of ₹25.73 crore, purchases amounting to ₹23.48 crore from three parties were unverifiable due to lack of supporting evidence and non-response to notices issued under Section 133(6). Physical verification in one case revealed that the supplier was not traceable at the given address. Based on these findings, the Assessing Officer rejected the books of accounts under Section 145(3) and estimated net profit at 12% of total turnover, resulting in an addition of ₹3.07 crore.
On appeal, the CIT(A) held that the assessee failed to establish the genuineness of the purchases. However, it observed that the Assessing Officer erred in applying the profit rate to total turnover and restricted the addition to 12% of the unverifiable purchases, amounting to ₹2.34 crore, granting partial relief.
Before the Tribunal, the assessee contended that the rejection of books of accounts was arbitrary and not supported by findings. It was argued that sales were accepted by the Revenue, and therefore purchases could not be entirely disregarded. The assessee also highlighted that turnover had increased significantly, resulting in lower profit margins, and that the applied rate of 12% was excessive and unsupported by reasoning or judicial precedents.
