Jai Bajrang Gur Bhandar Vs ITO (ITAT Allahabad)
The Income Tax Appellate Tribunal (ITAT), Allahabad partly allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) dated 08.11.2023, which had confirmed the addition of ₹12,25,364 by applying the gross profit (GP) rate of the subsequent assessment year (AY 2018-19) to AY 2017-18. The appeal was confined to the enhancement of gross profit, as the additions relating to estimated net profit and Section 69A had already been deleted by the CIT(A).
The assessee, a partnership firm engaged in wholesale trading of Gur, sugar, dal and other commodities, filed its return for AY 2017-18 declaring a total income of ₹2,38,450. During scrutiny, the Assessing Officer (AO) found that bank transactions were not commensurate with the purchases and sales disclosed, gross profit remained 1.76% despite an increase in sales exceeding ₹2 crore, discrepancies existed in cash-in-hand balances, and the assessee had not produced complete books of account, sales and purchase vouchers, or day-to-day sales records for part of the financial year. The AO also noted that the assessee did not fully comply with notices and that the stock position as on 08.11.2016 could not be verified. Accordingly, the AO rejected the books of account under Section 145(3) and estimated the gross profit at 3.6%, being the GP rate disclosed by the assessee in AY 2018-19. Based on this, the AO made an addition of ₹12,25,364 towards gross profit, an addition of ₹5,80,953 towards net profit, and a ₹45 lakh addition under Section 69A taxable under Section 115BBE.
