DILIP TILLUMAL LALWANI,AMALNER vs. DY. COMMISSIONER OF INCOME-TAX, JALGAON

The brief facts of the case are that, the assessee is engaged in the retail trade of liquor business. The assessee has filed the return of income for the A.Y. 2022-23 on 03.112022 disclosing a total income of Rs. 49,35,610/-. The case was selected for scrutiny through CASS on the issue ”Low income from TCS receipts Liquor”. Subsequently, the notice under Section 143(2) and u/sec142(1) of the Act was issued on various dates calling for specific information through ITBA and the assessee has filed details and submissions on e portal. The Assessing Officer (A.O) find that the assessee is engaged in the business of liquor sale and holding license for the retail sale of country liquor in FLII and also of retail sales of Foreign liquor. Further the A.O on examination of the financial statements and details submitted on various dates find that the assessee has not properly offered the business income. And the expenses claimed are in violation of provisions of section 40A(3) of the Act and the A.O has also dealt on the details of cashbook, purchases, sales and closing stock and was not satisfied with the explanations and rejected the books of account and has estimated business income by applying Gross Profit Rate @10%on the turnover, which works out to Rs.65,80,538/- and assessed the total income of Rs. 1,15,16,148/- and passed the order under Section 143 r.w.s. 144B of the Income Tax Act dated 21.03.2024. 3. Aggrieved by the order, the assessee has filed an appeal with the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statements of facts, submissions and finding of the A.O but sustained the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon'ble Tribunal.

At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in sustaining estimated addition@10% of turnover after rejection of the books of account and CIT(A) overlooked the facts that the assessee is only a retail trader of liquor and is entitled to the nominal profits. The Ld.AR mentioned that the assessee has substantiated with all the documents and there is no dispute that the assessee is engaged in the liquor business and the margin of income in declining over the years and filed a chart. The Ld.AR substantiated the submissions with the factual paper book and prayed for allowing the appeal. Per contra, Ld.DR relied on the order of the CIT(A).

We heard the rival submissions and perused the material on records. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the addition of estimated business income @ 10% of the turnover overlooking the facts that the assessee is only retail trader of liquor and the margin of profit is nominal. The Ld.AR explained that the assessee has substantiated the transactions with the documents/information and there is no dispute that the assessee is engaged in the business of sale of liquor. The Ld.AR contentions are that the addition on estimated basis @10% is very high compared to other liquor traders ignoring the average profit ratio of @ 5.67 % earned by the assessee in previous years. Further the sales are made at less than the Maximum Retail Price (MRP) due to unstable market conditions. The Ld.AR demonstrated Gross Profit &Net profit ratios as per audited financial statements for the A.Y.2014-15 to A.Y.2024-25 to substantiate the decline in the profit margins placed at page 21 of the paper book. We consider the facts, circumstances, submissions and nature of business in the unorganized market conditions and set aside the order of the CIT(A) and direct the Assessing officer to restrict the estimated income@ 7% of turnover and We partly allow the grounds of appeal raised by the assessee.

In the result, the appeal filed by the Assessee is partly allowed. Order pronounced in the open Court on 17th August, 2026. RAMA KANTA PANDA PAVAN KUMAR GADALE (VICE PRESIDENT) (JUDICIAL MEMBER) Pune, Dated: 17th August, 2026 Abhishek Mohan Abhishek Mohan Mohan Date: 2026.08.18 15:40:58 +05'30' आदेश की प्रतितिति अग्रेतिि / Copy of the Order forwarded to : अिीिार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

The Pr. CIT concerned. 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, “A” बेंच, पुणे/ DR, ITAT, “A” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////