HARDAYAL MILK PRODUCTS PRIVATE LIMITED,SHIKOHABAD vs. DCIT CIRCLE-2(2)(1) FIROZABAD, FIROZABAD

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ITA 71/AGR/2026Status: DisposedITAT Agra20 April 2026AY 2015-163 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the CIT(A)'s findings of no specific defects in the books were correct, the estimation of profit at 0.5% was not directly applicable from a previous year's case due to different factual circumstances. The Tribunal directed the AO to estimate net profit at 0.45% of turnover.

What were the facts?

The assessee, a milk products company, declared a net profit of 0.38% of turnover. The AO rejected the books under Section 145(3) and estimated net profit at 1.25%. The CIT(A) upheld the rejection but estimated net profit at 0.5%.

What were the issues?

Whether the CIT(A) was justified in rejecting the book results and estimating net profit, and if so, at what rate, considering the AO did not point out specific defects in the books.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH “DB”: AGRA

For Appellant: Shri Sabib P. Satsangi, CA
For Respondent: Shri Shailendra Srivastava, Sr. DR
Hearing: 20/03/2026Pronounced: 20/04/2026

INCOME TAX APPELLATE TRIBUNAL AGRA BENCH “DB”: AGRA BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 71/AGR/2026 (Assessment Year: 2015-16) Haridayal Milk Products Ltd, Vs. DCIT, 318, Shambhoo Nagar, Circle-2(2)(1), Shikohabad, Uttar Pradesh Firozabad (Appellant) (Respondent) PAN: AABCH7576E Assessee by : Shri Sabib P. Satsangi, CA Revenue by: Shri Shailendra Srivastava, Sr. DR Date of Hearing 20/03/2026 Date of pronouncement 20/04/2026

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No. 71/AGR/2026 for AY 2015-16, arises out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 12.01.2026 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.12.2017 by the Assessing Officer, DCIT, Circle-2(2)(1), Firozabad (hereinafter referred to as ‘ld. AO’).

2.

The only issue to be decided in this appeal is as to whether the learned CITA was justified in upholding the action of the learned AO in rejecting the book results under section 145(3) of the Act and proceeding to estimate the net profit of the business of the assessee @ 0.5% in the facts and circumstances of the instant case.

3.

We have heard the rival submissions and perused the materials available on record. The Assessee is a company engaged in the business of processing Page | 1

ITA No. 71/AGR/2026 Haridayal Milk Products Ltd

of milk, manufacturing of milk products such as pasteurized milk, ghee, butter, etc. The manufacturing plant of the Assessee company is located at Etah Road, Shikohabad, Firozabad. The return of income for the assessment year 2015-16 was filed on 30-9-2015 declaring total income of Rs. 1,18,92,250. The assessment was completed under Section 143(3) of the Act on 30-12-2017 estimating the net profit of the Assessee at Rs. 2,32,64,681 at the rate of 1.25% of turnover after rejecting the books of accounts under Section 145(3) of the Act as against the returned net profit of Rs. 71,10,318 at the rate of 0.38% of turnover. Aggrieved by the said assessment order, the Assessee preferred an appeal before the Learned CITA who after detailed examination of the records categorically gave a finding that no specific defect was pointed out by the Learned AO in the books of accounts. The Learned CITA also observed that the books of accounts were correct and complete and quantitative records and stock registers were properly maintained, the purchase and sales invoices were available and verifiable and that the gross profit rate had actually improved as compared to the preceding years. Despite giving these categorical clear findings, the Learned CITA proceeded to estimate the income by applying the net profit at the rate of 0.5% of turnover as against 0.38% net profit declared by the Assessee by placing reliance on the order of this tribunal in Assessee's own case for assessment year 2013-14 dated 29-12-2025.

4.

We find that this Tribunal in Assessee’s own case for assessment year 2013-14 in ITA No. 342/Agr/2025 dated 29-12-2025 had determined the net profit percentage at (0:28) the rate of 0.5 percent of turnover. But we find that the said profit percentage cannot be directly applied for the year under consideration, as in assessment years 2013-14 and 2014-15, deficiencies were specifically found by the Learned AO based on inquiries made by him with the third parties. Whereas, the Learned AO during the year under consideration had not resorted to make any enquiries with any parties. Hence the facts are

ITA No. 71/AGR/2026 Haridayal Milk Products Ltd

completely different this year. However, the Learned AO in order to put an end to the dispute fairly agreed to reasonable estimation of net profit for the year under consideration by the Tribunal. Considering the categorical findings given by the Learned CITA; the concession given by the Learned AR and also considering the net profit declared at the rate of 0.38 percent of turnover by the Assessee, we hold that estimation of net profit at the rate of 0.45 percent of turnover for the year under consideration would meet the ends of justice. We direct the Learned AO accordingly. The grounds raised by the Assessee are partly allowed.

5.

In the result, the appeal of the Assessee is partly allowed.

Order pronounced in the open court on 20/04/2026.

-Sd/- -Sd/- (SUNIL KUMAR SINGH) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20/04/2026 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi

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