Al Quresh Exports Vs ACIT (ITAT Mumbai)
Summary: The appeal by AL QURESH EXPORTS arose from reassessment proceedings for AY 2020-21. The original assessment under section 143(3) read with section 144B had been completed on 22.09.2022 substantially accepting the returned income of ₹7,95,49,735. Following a survey under section 133A on 04.01.2023, digital material including Excel sheets was found and impounded. Reassessment proceedings were subsequently initiated under sections 147 and 148, following the procedure under section 148A.
The assessee, a partnership firm engaged in production, trading and export of buffalo meat and related products and by-products, challenged additions based principally on Excel sheets recovered from computers used by employees and consultants. The Assessing Officer treated alleged cash components not reflected in the regular books as suppressed sales. Four categories were quantified: ₹2,94,32,100 relating to offals, bone and fat from the Sangamner plant; ₹45,93,700 relating to alleged cash receipts from Al-Shakir Foods in respect of Solapur offal sales; ₹25,11,630 relating to horn sales; and ₹1,35,74,360 representing the balance of receipts in the “Extranal Sale” sheet after excluding an overlap. The aggregate suppressed sales addition under section 28 was ₹5,01,11,790. A further disallowance of ₹23,61,778 was made under section 40A(3).
The assessee disputed the evidentiary character of the Excel sheets, contending that they were projections or working sheets rather than authenticated business records. Affidavits from employees and consultants were relied upon, along with regular ledgers, confirmations and other supporting material. The assessee also relied upon quantitative reconciliation of procurement, production and sales and contended that no additional unexplained stock or purchases had been identified. In the alternative, it argued that even assuming the disputed amounts represented unrecorded sales, the entire turnover could not be treated as income because the underlying goods arose from its existing business and the purchases were not disputed. It therefore sought taxation only of the profit element embedded in the alleged suppressed turnover, relying on its historical profitability and an average net-profit ratio of approximately 1.5% for FYs 2016-17 to 2021-22.
