ATUL PETKAR,RATNAGIRI vs. INCOME-TAX OFFICER, RATNAGIRI

आदेश / ORDER PER Dr. DIPAK P. RIPOTE, ACCOUNTANT MEMBER :

This is an appeal filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeal) / [NFAC], Delhi passed u/s 250 of the Income Tax Act, 1961 for A.Y 2017-18 dated 13.06.2024, emanating from assessment order passed u/s 144 dated 27.12.2019. The assessee has raised the following grounds of appeal: 1. On facts and in law, the Learned CIT(A) erred in confirming the additions made by the Learned AO merely on the basis of gross profit rate of the preceding year, without properly appreciating the books of account duly maintained by the appellant. The addition so sustained is unjustified and liable to be deleted. 2. On facts and in law, the Learned CIT(A) erred in confirming the addition made by the Learned AD under section 68 of the Act without appreciating that the appellant's books of account are duly audited. The addition has been made purely on guesswork,

ITA No. 2152/Pun/2025, surmises and conjectures, without proper understanding of the nature of the appellant's business. The addition so sustained is arbitrary and deserves to be deleted. 3. Without prejudice to the above grounds, and on the facts and circumstances of the case, the Learned CIT(A) as well as the Learned AO failed to appreciate that the impugned addition amounts to double addition, inasmuch as both the alleged income as well as the cash balance have been simultaneously added. Such action is contrary to law and deserves to be quashed. 4. The appellant craves leave to add, amend, alter, vary, or withdraw any of the above grounds of appeal at the time of hearing. Submission of Ld. AR 2. Ld. Authorized Representative for the assessee (in short ”Ld. AR”) filed a paper book. Ld. AR submitted that during assessment proceedings assessee had filed cash book, purchase and sales register, list of sundry creditors & debtors, bank statements, explanations regarding cash deposits during demonetization, audit report. Ld. AR submitted that assessee is a distributor for cigarettes. Assessee’s main customers are various pan vendors and small vendors. Therefore, assessee’s main business is in cash. Ld. AR further submitted that AO has not rejected the books of accounts. Ld. AR submitted that AO has not brought on record any defect in the books. AO made addition only because during the year gross profit was less as compared to earlier years. Submission of Ld. Departmental Representative 3. Ld. DR relied on the orders of Ld. CIT(A) and AO. Findings and analysis 4. We have heard both the parties and perused the records. In this case there was a delay in filing the appeal of 383 days. Assessee filed an affidavit, we are convinced that there were sufficient reasons for delay. Substantial justice is more

ITA No. 2152/Pun/2025, important than procedural delay. Assessee is not going to gain anything by delay in the appeal. Therefore, we condone the delay. 4.1 In this case, assessee had filed return of income for A.Y 2017-18 electronically on 27.11.2017 declaring total income at Rs. 623740/- on a total turnover of Rs. 7,98,46,137/-. Assessee’s case was selected for scrutiny. The AO i.e ITO, Ward -3, Ratnagiri issued various notices. It is mentioned in assessment order at para 3 that assessee filed reply on 14.12.2019 along with details of cash deposits during the demonetization period, cash register, purchase and sales register, list of sundry creditors & debtors, bank statements and etc. Thus, admittedly assessee had filed all the basic details before the AO. The AO in para 9 of the assessment order has mentioned that assessee’s gross profit for earlier year was 4.45% on a turnover of Rs. 3,98,91,169/-. AO further mentioned that assessee’s gross profit for the impugned year was 1.63% on a turnover of Rs. 7,98,46,137/-. AO mentioned that since assessee failed to explain the reason for fall in GP, AO made an addition of Rs. 22,54,612/- considering the GP for earlier year of 4.45%. AO in para 10.1 made an addition of Rs. 37,74,878/- which was cash in hand on 08.11.2016, alleging that the entire amount was not deposited in one day but was deposited on different dates. 4.2 Thus, in the assessment order, AO has merely taken earlier year’s GP of 4.45% and made addition of Rs. 22,54,612/-. Admittedly, assessee’s books of accounts are audited. Assessee had filed all the documents during assessment proceedings. AO has not pointed out any defect in the books of accounts or documents filed by assessee. In this facts and circumstances of the case without pointing any defect the addition made is baseless. Accordingly, we direct the AO to delete the addition of Rs. 22,54,612/-. 5. AO has made addition of RS. 31,74,878/-, which was cash in hand on 08.11.2016. Admittedly assessee had filed cash book

ITA No. 2152/Pun/2025, during the assessment proceedings. AO has not brought on record any defect in the cash book. Assessee had explained that cash was received during the normal business. Once the assessee had filed the cash book, books of accounts without bringing on record any defects in this documents AO cannot made addition. Accordingly, we direct the AO to delete the addition of Rs. 37,74,878/-. 6. In the result, the grounds of appeal raised by the assessee are allowed. Order pronounced on this day of 05 May, 2026.

Sd/- Sd/- (VINAY BHAMORE) (DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; िदनांक / Dated : 05 May, 2026. KRK, Sr. PS

ITA No. 2152/Pun/2025, आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��थ� / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड� फ़ाइल / Guard File.

आदेशानुसार / BY ORDER,

// True Copy // Assistant Registrar, आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.