NAVJEET SINGH BHATIA, RAIPUR,RAIPUR vs. ITO, WARD-3(2), RAIPUR, RAIPUR

That as per grounds of appeal, the assessee is aggrieved on the addition of Rs.35,12,804/- on account of excess profit determined by the A.O after rejecting books of account and secondly, by action of the A.O on further disallowance of Rs.1 lakh on account of expenses as per profit & loss account.

The relevant facts are that the assessee is engaged in the liquor business as per liquor license for sale of foreign liquor and country liquor at Tilda. That during the assessment proceedings, various statutory notices were issued to the assessee asking the assessee to explain the genuineness of the sales recorded as per profit and loss account at Rs.233260689/- and showing gross profit of Rs.59,55,196/- @2.55% and net profit of Rs.13,06,961/- @ 0.56%. In reply, the assessee had filed requisite details. The A.O had rejected the gross profit shown @2.55% and had adopted gross profit @4% on the sales by observing as follows: “The reply of the assessee is not acceptable for the following reasons:-

The Ld. CIT(Appeals)/NFAC had upheld the findings of the A.O rejecting the books of account u/s.145(3) of the Act and at the same time, upholding the GP rate as held by the A.O @ 4%.

Being further aggrieved, the assessee had preferred this appeal. The Bench had directed the Ld. Counsel for the assessee to submit comparative GP rate in similar line of business and that in the assessments what is the GP percentage accepted by the Department. In this regard, the Ld. Counsel for the assessee had furnished the assessment order for A.Y.2016-17 in the case of Mr. Gaurav Kumar Singh

The Ld. Sr. DR could not bring on record any evidence to refute these facts on record. He could not answer the question why in the case of similar line of business in one case GP rate is held @ 3.13% and for the assessee it is held @4% and what is the justification regarding the same. In absence of any submission placed by the Ld. Sr. DR in this regard and in view of the fact that in the similar line of business as is done by the assessee as placed on record that the Department had accepted GP rate @3.13%. That there are also no distinguishing facts in the case of the assessee with that of the Shri Gaurav Kumar Singh. Therefore, there exists no justification for the Department to calculate the GP @ 4% in the case of the assessee when in similar business GP rate had been held at 3.13%. Thus, the GP rate is reduced to @3.13% and the A.O is directed to calculate the taxes as per such revised GP rate while providing appeal effect of this order. This ground of appeal is allowed for statistical purposes.

The other issue pertains to ad-hoc disallowance of Rs.1 lakh over and above the estimation of gross profit after rejecting the books of account of the assessee. That when books of accounts are rejected and the GP is estimated there should not be any further disallowance as per the profit and loss account of the assessee. It is thereafter not open to the A.O to make further additions based on the entries reflected in the profit and loss account once books of account had been rejected and gross profit has been arrived at. Similar view has been taken by the Hon’ble High Court of Calcutta in the case of Skyscraper Projects (P) Ltd. Vs. Addl. CIT (2025) 177 taxmann.com 181 (Cal.). The A.O is directed to delete the ad- hoc disallowance. This ground of appeal is allowed.

That as per the above terms, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in open court on 25th day of May, 2026.

�वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 5.