Case Law Details
Al-Aali Exports Pvt Ltd Vs DCIT (ITAT Delhi)
The Delhi Income Tax Appellate Tribunal (ITAT) partly allowed four appeals filed by the assessee relating to Assessment Years 2020-21 to 2023-24 concerning additions made on account of alleged unaccounted sales of buffalo meat products. The additions arose from a search conducted on 03.01.2023.
For Assessment Years 2020-21 and 2021-22, the Tribunal observed that the additions were made solely on the basis of extrapolation without any seized material or evidence discovered during the search or subsequent inquiries. Relying on judicial precedent, the Tribunal held that such extrapolated additions were not justified and deleted the additions for these years.
For Assessment Years 2022-23 and 2023-24, the Tribunal noted that actual evidence of unaccounted sales amounting to ₹24,11,786 and ₹2,33,39,943, respectively, had been detected during the search. However, it accepted the assessee’s contention that the entire unaccounted sales could not be treated as income and that only the profit element embedded in such sales was taxable. Considering the facts of the case, the Tribunal directed that net profit be estimated at 3% of the unaccounted sales for both years, clarifying that the estimation was case-specific and should not be treated as a precedent. Accordingly, two appeals were allowed and two were partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee/appellant, M/s Al-Ali Exports Private Ltd.’s four appeals ITA Nos. 8710 to 8713/Del/2025, arise against the Commissioner of Income Tax (Appeal)-30 [in short, “CIT(A)”], New Delhi’s as many DINs & Order Nos.ITBA/APL/M/250/2025-26/1082940747(1), ITBA/APL/M/ 250/2025-26/1082940985(1), ITBA/APL/M/250/2025- ITA No. 8710 to 8713/Del/2025 26/1082941768(1) & ITBA/APL/M/250/2025- 26/1082941972(1), all dated 24.11.2025, involving proceedings u/s 148 r.w.s 147 (A.Ys. 2020-21 & 2021-22) and u/s 143(3) of the Income Tax Act, 1961; hereinafter referred to as ‘the Act’ for A.Y.2022-23 & 2023-24; respectively.
Heard both the parties. Case files perused.
2. It transpires during the course of hearing that the assessee/appellant herein is aggrieved against bot the learned lower authorities’ respective assessment and lower appellate findings on identical lines adding the alleged unaccounted sales of Rs. 3,29,96,874/-, Rs. 3,85,55,960/-, Rs. 26,92,38,738/- & Rs. 3,36,59,980/-; assessment year wise, respectively, in its hands. They have admittedly proceeded on the bases of the department’s search action carried out in the asessee’s case on 03.01.2023 allegedly detecting its unaccounted sales in the regular business activity of buffalo meat products etc.
3. It is in this factual backdrop that the tribunal hereby notices from a combined perusal of the case records that the learned departmental authorities had come across actual evidence of the assessee’s unaccounted sales in the assessment year 2022-23 and 2023-24 only, indicating sums of Rs. 24,11,786/- and Rs. 2,33,39,943/-; respectively. There is further no quarrel between the parties that they after proceeded to make the impugned additions in all these four years based on extrapolation bases after setting into motion section 148/147 proceedings in the twin former and added the entire sales unearthed during search in the latter twin assessment years; as the case may be. This is what leaves the assessee aggrieved.
4. We next notice that the first and foremost issue which arises for our apt adjudication in the former twin assessment years is that of correctness of the impugned identical addition of unaccounted sales based on extrapolation method. We wish to clarify here that the same is admittedly not based on any seized material whatever unearthed during search or the detailed inquiries carried out thereafter. That being the clinching case, learned counsel quotes Sampark Laminators Pvt Ltd. vs DCIT Central Circle-19 in ITA No. 6111/Del/2025, decided on 20.03.2026 that such a method is not justifiable going by Zohra The Emporium 372 ITR 381(Del). We thus reject the Revenue’s vehement contentions supporting the impugned unaccounted sales addition in these former twin assessment years in question in very terms. The assessee succeeds in its appeals ITA Nos. 8710 & 8711/Del/2025 therefore.
5. Next comes the assessee’s latter twin appeals ITA Nos. 8712 & 8713/Del/2025 in assessment years 2022-23 & 2023-24. Learned counsel pleads very fairly that the impugned addition of unaccounted sales is very much based on the evidence gathered during the case of search. His only contention is that only a net profit element thereof could have been added which read 2.64% & 1.78% as per its books of accounts. This clinching factual position has gone unrebutted from the Revenue side. We thus take into account totality of all these facts and circumstances to conclude that the lumpsump NPA estimation @ 3% in both these latter assessment years; qua the alleged unaccounted sales actually detected during search than the entire addition herein; would be just and proper with a rider that the same shall not be treated as a precedent. The Revenue’s vehement contentions stand partly upheld to the very extent. Necessary computation shall follow as per law.
6. These assessee’s four appeals ITA Nos. 8710 & 8711/Del/2025 are allowed and ITA Nos. 8712 & 8713/Del/2025 are partly allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 19.05.2026 .
Author Bio
