What did the Tribunal hold?

The Tribunal upheld the rejection of the assessee's books of account due to improper maintenance. However, it found the estimated gross profit rate of 11.25% to be excessive.

The assessee, engaged in the liquor business with a turnover of approximately Rs. 14 crores, disclosed an income of Rs. 45,15,700/-. The Assessing Officer rejected the books of account and estimated the income at 11.25%. The assessee argued this estimation was excessive compared to previous years' disclosed GP rates.

What were the issues?

Whether the estimation of income by the Assessing Officer at 11.25% was justified, considering the assessee's disclosed GP rates in the current and preceding years.

Udya Prasad, Ramgarh vs ITO | ITAT Ranchi 2026

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: S/SHRI GEORGE MATHAN & RATNESH NANDAN SAHAY

For Appellant: Shri Naresh Prasad Singh, ld AR

For Respondent: Shri Sandipan Khan, ld Sr. DR

Hearing: 30/07/2026Pronounced: 30/07/2026

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE S/SHRI GEORGE MATHAN, JUDICIAL MEMBER AND RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER Uday Prasad, Patratu Basti Vs. ITO Ward-2(3), Ramgarh. Near Ramgarh Block, Ramgarh-829122, Jharkhand. PAN/GIR No. (Appellant) .. ( Respondent)

Assessee by : Shri Naresh Prasad Singh, ld AR Revenue by : Shri Sandipan Khan, ld Sr. DR Date of Hearing : 30/07/2026 Date of Pronouncement : 30/07/2026 O R D E R Per Bench This is an appeal filed by the assessee against the order of the ld CIT(A), NFAC, Delhi dated 11.12.2025 in Appeal No. NFAC/2021-22/10347930 for the assessment year 2022-23.

Shri Naresh Prasad Singh, ld AR appeared for the assessee and Shri Sandipan Khan, ld Sr DR appeared for the revenue.

It was submitted by ld AR that the assessee is in liquor business. The turnover of the assessee is nearly Rs.14 crores. It was the submission that the

P a g e 1 | 3 assessee had disclosed an income of Rs.45,15,700/-. It was the submission that the Assessing Officer had rejected the books of account of the assessee and estimated the income of the assessee at 11.25%. It was the submission that the assessee had in the immediately preceding assessment year disclosed income AT 9.56% and for the impugned assessment year, the gross profit was disclosed at 10.25%. It was the prayer that the estimation at 11.25% is excessive. It was the prayer that the estimation as made by the AO at 11.25% may be deleted.

In reply, ld Sr DR submitted that the reasonable estimation has been made. It was the prayer that the order of the AO and that of the ld IT(A) be upheld.

We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee has in the immediately assessment year disclosed the gross profit rate at 9.56% and the gross profit ratio of the current year is shown at 10.25%. The business of the assessee has ceased on account non-availability of license. The Assessing Officer has estimated the gross profit at 11.25%. The Assessing Officer has not given any comparative method. In the present scenario, estimating the income of the assessee by using a comparative method would make the average GP go below the disclosed GP of the assessee. This being so, in the interest of justice, on account of non-maintenance of books of accounts properly and production of the same before the AO, the rejection of the books of accounts by the AO stands upheld.

P a g e 2 | 3

In regard to the estimation of the GP, we are of the view that the GP rate should be fixed at 10.75% as against 11.25%. With this direction, we direct the AO to estimate the GP of the assessee at 10.75% as against 11.25% adopted by the AO.

In the result, appeal of the assessee stands partly allowed.

Order dictated and pronounced in the open court on 30/07/2026. Sd/- sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi; Dated 30/07/2026 Amit (Sr.PS) Copy of the Order forwarded to : 1. The Appellant : Uday Prasad, Patratu Basti Near Ramgarh Block, Ramgarh-829122, Jharkhand. 2. The Respondent: ITO Ward-2(3), Ramgarh. 3. The CIT(A)-NFAC, Delhi 4. Pr.CIT, Ranchi 5. DR, ITAT, 6. Guard file. //True Copy//

By order

Sr.Pvt. Secretary ITAT, Ranchi

P a g e 3 | 3

UDYA PRASAD,RAMGARH vs. ITO WARD 2(3), RAMGARH, RAMGARH

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