What did the Tribunal hold?

The Tribunal found that neither the assessee could prove its claim of net profit nor could the Revenue establish a comparable for estimating at 5%. Therefore, in the interest of justice, a lump sum estimated net margin of 3% was applied to the turnover.

The assessee appealed against the NFAC's order which affirmed the addition of net profit estimated at 5% of total turnover. The assessee argued that the rejection of books of accounts and the estimation were based on incorrect facts and violated natural justice.

What were the issues?

Whether the rejection of books of accounts and estimation of net profit at 5% by the lower authorities was justified.

Parasnath Foods Private Limited vs ITO | ITAT Delhi 2026

Income Tax Appellate Tribunal, DELHI BENCH “E’’ : NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

Hearing: 25.06.2026Pronounced: 25.06.2026

PER MAHAVIR SINGH, VP: This appeal by the assessee is emanating from the order of the NFAC, Delhi in Appeal No. NFAC/2017-18/10008180 dated 12.1.2026. 2. Heard both the parties and perused the records.

At the time of hearing, Ld. AR has submitted that NFAC has erred in affirming the addition on account of estimation of net profit and that too @5% of total turnover and further erred in confirming the action of AO in rejecting the books of accounts of the assesse and that too by recording incorrect facts and findings and in violation of principles of natural justice. 4. Ld. DR vehemently argues during the course of hearing that both the learned lower authorities herein have rightly added the addition on

2 account of estimation of net profit @5% of total turnover, which deserve to be upheld. 5. We have given our thoughtful consideration to the assessee’s contention made in the grounds of appeal and Revenue’s foregoing vehement contentions. We are of the considered view that neither party’s submissions herein deserve to be accepted in entirety as the assessee on the one hand has not been pleaded and prove his claim of net profit nor the department could draw any comparable in the very line of business for estimating the net profit @ 5%. We therefore, deem it appropriate in the larger interest of justice to assess the assessee’s foregoing turnover to a lump sum estimated net margin of @3% with a rider that the same shall not be treated as a precedent. AO shall finalize his computation in very terms. Ordered accordingly. 6. This assessee’s appeal is partly allowed. Order pronounced in the Open Court on 25.06.2026.

Sd/- Sd/- (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT Dated: 29.06.2026 SR BHATANGAR

PARASNATH FOODS PRIVATE LIMITED,DELHI vs. INCOME TAX OFFICER-WARD 19(3), CR BUILDING

What did the Tribunal hold?

What were the facts?

What were the issues?

Recent GST High Court judgments