INCOME TAX OFFICER, WARD-44(2), KOLKATA, KOLKATA vs. RAGHIB ALI, KOLKATA

IN THE INCOMETAX APPELLATE TRIBUNAL “Kolkata”D”, Kolkata Before Rajesh Kumar, AccountantMember AndShri Pradip Kumar Choubey, Judicial Member I.T.A. No.2547/Kol/2025 Assessment Year: 2022-23 I.T.O, WARD- 44(2)…....……….…….....................…….…………...... Appellant Kolkata 3, Govt. Olace (West), Kolkata- 700001 vs. Raghib Ali...............................................………………………………....Respondent 30 Madan Mohan Burman St, Jorasanko, Burabazar, Kolkata- 700007, [PAN: AHTPA2818E] C.O No. 4/Kol/2026 (A/O I.T.A. No. 2547/Kol/2026) Assessment Year: 2022-23 Raghib Ali………………………………....Cross-Objector 30 Madan Mohan Burman St, Jorasanko, Burabazar, Kolkata- 700007, [PAN: AHTPA2818E] vs. I.T.O, WARD- 44(2)…………………….…..….......……...…..Respondent Kolkata 3, Govt. Olace (West), Kolkata- 700001 Appearances by: Shri Devesh Poddar, Advocate,appeared on behalf of the appellant. Shri Sanat Kumar Raha, CIT (DR) ,appeared on behalf of the Respondent. Date of concluding the hearing :20 May , 2026 Date of pronouncing the order :May 29 , 2026 ORDER

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 Per Pradip Kumar Choubey, Judicial Member: These matters consist of an appeal filed by the Revenue vide ITA No.2547/Kol/2025, and Cross Objection No.4/Kol/2026, filed by the assessee, both arising out of the same order passed by the Ld. CIT(A) dated 11.08.2025, for the assessment year 2022-23. At the very out set it appears from the report of the registry the revenue has filed all these appeals after a delay of four days, Revenue has filed a petition to condone the delay. Going over the contents of the petition, we condoned thedelay. 2. The brief facts of the case of the assessee are that the assessee filed return of income for the A.Y 2022-23 electronically on 06/11/2022 vide acknowledgment no.784750031061122 declaring income of Rs. 83,03,883/-. The case was selected for scrutiny under the CASS to examine the following reason: a. Substantial payments shown to entitles not registered under GST. B. Higher liabilities as compared to low income/receipts. During the course of assessment proceedings in query annexed to notice u/s 142(1) of the I.T. Act, dated 22/06/2023, the appellant was asked to furnish computation of income, balance sheet, Profit and Loss Account, Audit Report for the year under consideration alongwith details of all bank accounts, secured/unsecured loans, details note on nature of business. In response to the notices issued, the appellant submitted response. The Assessing Officer observed that the appellant did not submit details regarding the identity of the sellers and bank accounts statement to corroborate the claim of payments made to the purchasers totalling to Rs.6,74,90,437/- On the basis of above, the Assessing Officer issued show cause notice to the appellant on 04.03.2024. In response dated 07.03.2024 to the show-cause notice issued on 04.03.2024, the appellant reiterated its earlier submission. The Assessing Officer

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 observed following discrepancies in the books of account of the appellant: (i) it is noticed that at S.No.48 of the details of purchases, the purchases shown are sundry creditors of Rs. 11,66,850/-. The appellant has not submitted any details regarding the sundry creditors. If purchases are made from some person orentity, the same should be summarized. Since the identity of these sundry creditors are not known, the genuineness of the transaction is also not established. The appellant has claimed that payment for the purchase are routed through bank. However, in the case of Sheetal Agro, the purchases shown at Rs.14,83,500/- is not reflected in the Bank account of the appellant. (ii) On verification of the ledger account of the parties submitted it is seen that in most of the cases, the payment is made before the date of purchase shown. It is seen that the payments were shown to be made in respect of the purchases claimed at least 4-5 months before the purchases are made. The appellant had admitted that the goods purchased and sold are perishable goods. The reason as to why a prudent businessman would make the payments for such perishable goods 5 months before the purchase of goods is not fathomable and does not give credibility to the submission made in respect of the purchases made. Hence, it is clear that the appellant has not presented true and correct financial statement in respect of the purchases shown (iii) In the ledger account submitted in respect of the purchases claimed to be made, it is seen that in some cases excess payments is found to have been made than the purchases made. Hence, it is clear that the appellant has not presented true and correct financial statement in respect of the purchases shown.

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 (iv) Theappellant has not submitted any preliminary evidences like invoices/bills to substantiate the purchases made/ expenses claimed.. Hence, it is clear that the appellant has not presented true and correct financial statement in respect of the purchases shown. ΜΕ ΤΑΧ ΠΕΡARTMEN (v) On verification of the ledger account submitted bythe appellant in respect of purchases made by the person/ entities (supra) to establish that the trading liabilities are genuine, it is seen that the ledger account of Sanjay Kumar Mohanlal Solanki shows sales being made to the appellant. However, in the list of details of purchases made during the year as submitted by the appellant during the assessment proceedings, an amount of Rs.5,62,98,350.35 is shown as amount of purchase from Sanjay Kumar Mohanlal Solanki. Further, it is stated by the appellant that all the transactions relating to purchases are routed through account maintained with ICICI Bank and SonaliBank. However, the bank statements do not reflect any payment made to Sanjay Kumar MohanlalSolanki. In the ledger account, receipt are being shown from the above person/ entity. The name of the above person/ entity is included in the list of purchase shown whereas sales have been made to the above person/entity. It clearly shows the discrepancy in the financial statement which cannot be relied upon. In view of above observation, the Assessing Officer rejected the books of accounts of the appellant and estimated the income of the appellant taking @ 8% of the turnover of Rs. 124,70,71,473/-. The business income of the appellant was assessed at Rs.9,97,65,718/-. 3. Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been partly allowed by observing thus: - 5.0 Decision:

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 Impugned assessment order, grounds of appeal and submission of the appellant have been perused. Only plea in the grounds of appeal taken by the appellant is against the addition made by the Assessing Officer on estimate basis and rejection of books of accounts.

5.1 During the Assessment proceeding, the Assessing Officer observed following discrepancies in the books of account of the appellant:

Discrepancy No. 1

(i) it is noticed that at S.No. 48 of the details of purchases, the purchases shown are sundry creditors of Rs. 11,66,850/- The appellant has not submitted any details regarding the sundry creditors. If purchases are made from some person or entity, the same should be summarized. Since the identity of these sundry creditors are not known, the genuineness of the transaction is also not established. The appellant has claimed that payment for the purchase are routed through bank. However, in the case of Sheetal Agro, the purchases shown at Rs. 14,83,500/- is not reflected in the Bank account of the appellant.

5.2 With regard to the above observation, the appellant submitted invoice of Rs. 14,83,500/- raised on SheetalAgrifresh Products Pvt Ltd and ledger account along with bank account statement showing the transaction details. The invoice raised and bank account statement showing transactions are extracted hereunder:

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18

5.3 The appellant has further submitted that the ledger account and bank account statement was submitted before the Assessing Officer during the assessment proceeding. Therefore, the view taken by the Assessing Officer that the payments are not reflected into the bank account of the appellant are not factually correct. 5.4 Discrepancy No. 28 3:

(ii) On verification of the legder account of the parties submitted it is seen that in most of the cases, the payment is made before the date of purchase shown. It is seen that the payments were shown to be made in respect of the purchases claimed at least 4-5 months before the purchases are made. The appellant had admitted that the goods purchased and sold are perishable goods. The reason as to why a prudent businessman would make the payments for such perishable goods 5 months before the purchase of goods is not fathomable and does

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 not give credibility to the submission made in respect of the purchases made. Hence, it is clear that the appellant has not presented true and correct financial statement in respect of the purchases shown.

(iii) In the ledger account submitted in respect of the purchases claimed to be made, it is seen that in some cases excess payments is found to have been made than the purchases made. Hence, it is clear that the appellant has not presented true and correct financial statement in respect of the purchases shown.

With regard to the above, the appellant has submitted that the goods are booked in advance from farmers and it is the prevalent trade practice in the business of fruit and vegetables. The fruits business is highly competitive in nature. In this business, the farmers and agents books crops in advance due to price uncertainty, perishable nature of the goods, requirement of farmers to meet farming expenses etc. Therefore, the adverse view taken by the Assessing Officer on the issue of money paid in advance to farmers is highly unjustified. 5.5 Discrepancy No. 4:

(iv) The appellant has not submitted any preliminary evidences like invoices/bills to substantiate the purchases made/ expenses claimed.. Hence, it is clear that the appellant has not presented true and correct financial statement in respect of the purchases shown.

5.6 With regard to the above, the appellant has submitted that the goods purchased and sold are perishable goods. Most of the purchases are from farmers & agents and payments are made in advances in order to book the purchases. The appellant has submitted the ledger account and bank account statement reflecting the payment made to the entities. The

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 appellant has stated that these evidences were also submitted before the Ld. Assessing Officer during the assessment proceeding. 5.7 Discrepancy No. 5

(v) On verification of the ledger account submitted by the appellant in respect of purchases made by the person/ entities (supra) to establish that the trading liabilities are genuine, it is seen that the ledger account of Sanjay Kumar Mohanlal Solanki shows sales being made to the appellant. However, in the list of details of purchases made during the year as submitted by the appellant during the assessment proceedings, an amount of Rs.5,62,98,350.35/- is shown as amount of purchase from Sanjay Kumar Mohanlal Solanki. Further, it is stated by the appellant that all the transactions relating to purchases are routed through account maintained with ICICI Bank and SonaliBank However, the bank statements do not reflect any payment made to Sanjay Kumar MohanlalSolanki. In the ledger account, receipt are being shown from the above person/ entity. The name of the above person/entity is included in the list of purchase shown whereas sales have been made to the above person/entity. It clearly shows the discrepancy in the financial statement which cannot be relied upon observed that the appellant has made purchase from Sanjay Kumar Mohanlal Solankiof Rs. 5,62,98,350.35/- whereas sales have been made to the above person/entity.

5.8 With regard to the above, the appellant has submitted hat both sale and purchase have been made from Shri Sanjay Kumar Mohanlal Solanki during the year under consideration. The appellant submitted the sale and purchase ledger along with the transaction details and bank account statement showing the transactions details. The appellant has submitted that fruits being perishable in nature have to be sold off within short span of time. Due to fluctuating demand and supply of goods, sale and

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 purchase from the same party is very common trade practice in this business.

TAX DE

5.9 The appellant has submitted that the Assessing Officer on the one hand has rejected the books of account of the appellant and on another hand has taken the gross turnover of the appellant for calculating the net profit on estimate basis. The appellant has stated that the Assessing Officer has invariably accepted that the turnover reported by the appellant in his books of account is correct. Therefore, the views taken by Assessing Officer are contradictory.

5.10 Further, the appellant has submitted that the books of accounts are duly audited and no infirmity has been reported by the auditor in his books of account. The appellant has submitted that the reasons recorded by the Assessing Officer for rejecting the books of accounts are not factually correct.

5.11 The Assessing Officer after rejecting the books of account has estimated the income taking 8% net profit margin on the gross turnover of Rs. 124,70,71,473/-reported by the appellant, The appellant submitted that fruits being perishable in nature, the assessee most of the times have to dispose off the goods on lower rates and alsosome times has to throwaway due to its perishable nature. The appellant submited that the fruits business is highly competitive in nature and based on the prevailing market rates, the appellant has to sell the goods with lower margins. Some times, due to crop failure, the advances given to the farmers are lost, which cause lot of hardship. The above things were brought to the notice of the Assessing Officer during the course of assessment proceedings, The appellant has submitted that similar issue was taken up by Hon'ble ITAT HYDERABAD in the case of ITO vs was

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 Shri Y. Jaya Prakash in ITA No. 1693/HYD/2012 for A.Y2009-10. The relevant portion of the Hon'ble ITAT order is extracted hereunder:

"Briefly the facts of the case are that the assessee is carrying on the business of supply of fruits and vegetables. He filed the return of income for the AY 2009-10 on 30/09/2009. declaring total income of Rs. 3.82.980/- During the course of assessment proceedings, the assessee was requested to produce the books of account, bills and vouchers in support of the expenditure claimed, bank account statements, invoices for purchase of fruits etc. The AR of the assessee submitted part of information but had not produced the books of a/c, bills and vouchers for the expenditure claimed and lease agreements entered into by the assessee in support of agricultural income. While completing the assessment, ITA NO. 1693/Hyd/12 Sri Y Jaya Prakash the AO had opined that since the assessee had not submitted the books of account, the AO had rejected the book results u/s 145(3) of the IT Act and had estimated the income @ 8% on the net profit on total sales of fruits of Rs. 2,83,15,050/-, which comes to Rs. 22,65,204/- and commission receipts of Rs. 5,64,800/- and hire receipts of Rs. 65,280/- and the same were brought to tax as these receipts do not have correlation with the trade in fruit & vegetables.

Aggrieved the assessee carried the matter in appeal before the CIT(A) on the ground that the Assessing Officer was not justified in estimation @8% of the turnover and the Assessing Officer was also not justified in making addition of gross commission and hire receipts without allowing any expenditure incurred for the same.

Before the CIT(A), the AR of the Assessee filed written submissions.

"The assessee's nature of business is selling fruits and vegetables, buying from the farmers directly. The supply chain includes buying from remote areas at odd times, transported in tractors in smaller units, pooled

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 from various places and dispatched in bulk to various places. The customary practice predominantly present is cash and carry basis, without any formal bills.

We submit that we have admitted net profit of Rs. 382980/-, which comes to about 2% of gross turnover, which is highly reasonable in this line of fruits business. We submit that fruits being perishable in nature, the assessee most of the times have to dispose off the goods on lower rates and alsosome times has to throwaway due to its perishable nature. We submit that the fruits business is highly competitive in nature and basing on the prevailing market rates, the assessee has to sell the goods with lower margin. Some times, due to crop failure, we have to loose the advances given to the farmers, which cause lot of hardship to the ITA NO. 1693/Hyd/12 Sri Y. Jaya Prakash assessee. The above things were brought to the notice of the Assessing Officer during the course of assessment proceedings, but however, the AO has not taken into consideration the arguments put forth by us and has estimated the income 8%, which is highly unjustified and unreasonable."

5.12 Further, the appellant has submitted that the decision of the Assessing Officer to take the net profit margin @8% is arbitrary in nature and no reasoning whatsoever has been given by the Assessing Officer before taking such high net profit margin. The appellant has submitted that on the issue of determining a net profit ratewhere the books of account are rejected, Hon'ble ITAT in the case of M/s Jagson construction vs ACIT has held that:

"The first question relates to the nature of power exercised while determining a net profit rate. The question must necessarily be answered by holding that where the books of account are rejected or not produced, the Assessing Officer would be well within the limits of his jurisdiction to appellant Income by applying a fictional net profit rate. The power so

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 conferred is quasi-judicial and, therefore, not unbridled as it must be guided by reason and though it may involve a degree of guess work, must be based upon a rational analysis of facts. The first question of law is answered accordingly. The second question of law, namely, factors required to be taken into consideration while applying a net profit rate has come up for consideration, as on the same set of facts the Assessing Officer, the Commissioner of Income-tax(Appeals) and the Income-tax Appellate Tribunal have applied different rates of net profit. The discretion to determine an adequate net profit rate undoubtedly vests with the authorities under the Act but the discretion so vested is neither unbridled nor unguided as it must be guided by reason, ie., should be preceded by reasons which, in tum, should be preceded by a perceptible process of reasoning based upon due consideration of all relevant facts. However, the authorities under the Act appear to construe their jurisdiction as a discretion to apply a thumb rule dependent almost entirely upon the whims of a particular officer. The discretion to determine a net rate must profit necessarily be exercised on the basis of relevant factors which we shall enumerate but before doing so, would clarify that these factors are neither exhaustive nor a final word on relevant factors that may be considered while determining the net profit rate. A few significant factors are the past tax history of the appellant, if avallable, assessment orders that may have been passed and accepted by the Department, the nature of the appellant's business, an appraisal of the value of the contract prevailing economic conditions vis-a-vis the appellant's business, the price of raw material, labour etc. the rise in price index as notified by the Central Govt. from time to time if applicable and if the Assessing Officer proceeds to rely upon assessments of other appellants engaged in similar business to do so only after determining points of similarity, etc. At this stage, it would be appropriate to clarify that the word "similar" is not synonymous with the word "identical".

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 Factors referred to above are merely Illustrative and not exhaustive of the circumstances that may or may not be taken into consideration."

5.13 The Assessing Officer took the net profit margin @8% of the turnover, however no finding has been recorded in the assessment order for taking net profit margin. On Similar issue, finding of Hon'ble ITAT Indore in ITA No. 260/Ind/2023 in the case of Shri Sidhi Vinayak vs Income Tax Officer for A.Y 2015-16 are extracted hereunder:

"The background facts leading to present appeal are such that the assessee is a partnership firm engaged in the wholesale trading of grain and pulses. For AY 2015-16, the assessee filed return declaring a turnover of Rs. 31,40,27,378/-, gross-profit of Rs. 20,52,563/- thereon giving rise to a gross-profit rate of 0.653% and total income of Rs. 1,66,710/-. The case was taken for scrutiny under CASS for certain reasons and one reason was low profit from large gross-receipts'. The notices u/s 143(2)/142(1) were issued and ultimately the assessment- order was passed u/s 143(3) wherein the AO rejected book results of assessee by invoking section 145(3), estimated gross-profit at Rs. 65,51,239/- by applying GP rate of 2.0862% as per assessee's own book- results of other years and thereby made an addition of Rs. 44,98,676/- on account of 'low gross-profit (65,51,239 (-) 20,52,563). Aggrieved, the assessee carried matter in first-appeal but did not get any relief. Now, the assessee has come before us in next appeal.

"3. The assessee firm is doing the business of Grain merchant and pulses and during the year under consideration assessee has shown the gross profit ratio @ 0.65% of gross turnover. During the course of assessment

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 proceedings assessee was asked to justify the low profit results and also to produce the Siddhi Vinayak, Indore complete details of earlier three years GP ratio as declared. As per the details submitted the bank result for the years mentioned below are:

Asst. Year Total Sales Purchases G.P. G.P. ratio Rs. Rs. % 2013-14 21265992 21086548 827483 3.891 2014-15 93442341 90241397 2267842 2426 2015-16 314027378 316064710 2052563 0.653 2016-17 354257609 349092924 4871175 1.375 Average of above 2.0862 Thus it is seen from the above that irrespective turnover and market conditions assessee firm is shown the book result for the year under consideration is very low gross profit ratio whereas in the earlier or subsequent year assessee has shown good amount of gross profit. In view of the above book results as shown for the year as mentione4d above and considering the reason or selection assessee was asked to justify such low gross profit as shown. Assessee has not furnished any cogent reply. In these circumstances assessee was asked to produce the complete bill vouchers and ledger accounts for purchase, sales and expenses for verification. Assessee has produced the above required documents. The above bill vouchers and ledger accounts for purchase, sales and expenses was verified with the help of inspector of this office. On verification it was noticed that-

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 a) Bill number was not quoted or bill number was written with pencil even the other contents of the bills were written with pen.

(b) Date was not mentioned on bill.

(c) Bills were printed on plain paper without letter head or any seal of seller.

(d) Photocopy of bills was produced instead of original bill.

Bill Date Name of the biller Bill Amount Discrepancy found 09.10.2014 Sunil Shyam 38226 Date is not mentioned on the bill Siddhi Vinayak, Indore 04.04.2014 Ramesh K.Mangilal 23856 Bill is printed on plain paper 04.06.2014 Agrozan India P.Ltd. 1028130 Photocopy of the bill isproduced. 02.04.2014 Ankur Agro Pulses 24668 Bill is not available 17.04.2014 Vipul Corporation 956119 Bill is not available 03.10.2014 Madan Mohan 41496 Bill is not available Traders 09.10.2014

Ravi Foods 29085 Bill is not available 10.12.2014 Madan Mohan 37720 Bill is not available

Traders

05.10.2014 Alok Food Grain 34932 Either no bill no. or written with pencil 05.10.2014 Alok Food Grain 39010 Either no bill no. or written with pencil 09.10.2014 Alok Food Grain 22048 Either no bill no. or written with pencil 10.10.2014 Ramesh K.Mangilal 35432 Either no bill no. or written with pencil 10.10.2014 Anjali Traders 39200 Either no bill no. or written with pencil 10.10.2014 Anjali Traders 35733 Either no bill no. or written with pencil 10.10.2014 Alok Food Grain 35275 Either no

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 bill no. or written with pencil In view of the above observation the correctness of the purchases shown and the expenses claimed cannot be fully verified. This means no proper documents have been provided to the Auditor also. In the absence of any supporting evidence/documents the genuineness of these sales purchases and expenses cannot be verified. The books results are, therefore, rejected by invoking provision of section 145(3) of Income-tax Act, 1961. In the interest of justice, the average gross profit as computed above i.e. 2.0862% are adopted. Thus the gross profit @ 2.0862% on the total sales of Rs. 314027878 is worked out and assessed at Rs. 65,51,239/-. Since, assessee has already deducted the expenses, therefore, difference in gross profit declared and assessed at Rs. 4498676/-(Rs.6551239-Rs. 2052563) is hereby added to the total income of the assessee."

Siddhi Vinayak, Indore

(i) It is submitted that the AO has noted 15 instances of discrepancies in the purchases of assessee in a tabular format and thereby rejected assessee's gross-profit. But the discrepancies noted by AO are not warranted due to following reasons:

(a) Invoices of all 15 purchase-transactions were available with assessee and filed in Paper-Book at Page No. 48 to 62.

(b) Out of 15 instances, one major item is purchase of Rs. 10,28,130/- on 04.06.2014 from Agrozan India Pvt. Ltd. The discrepancy noted by AO is that the photocopy of purchase-bill was produced. But the assessee is having original bill. The original bill is produced in open court for perusal. Referring to Page No. 63-68 of Paper-Book, Ld. AR further showed that the assessee also filed Ledger A/c of the party to AO which itself shows

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 that there was aggregate purchase of more than Rs. 11 Crore from that party during the year and all payments were made through banking channel. Therefore also, the AO should not have made adverse observation.

(c) Out of 15 instances, another major item is purchase of Rs.9,56,119/- on 17.04.2014 from Vipul Corporation. The discrepancy noted by AO is such that the purchase-bill was not Siddhi Vinayak, Indore available. But the assessee is having bill. Copy of bill is filed at Page 52 of Paper-Book and original bill is also produced in open court for perusal. Referring to Page 69 of Paper-Book, Ld. AR further showed that the assessee also filed Ledger A/c of the party to AO which itself shows that the purchase price of Rs. 9,56,119/- was paid through banking channel. Therefore also, the AO should not have made adverse observation.

(d) That, in some cases, the AO has noted "Either no bill no. or written with pencil but the AO has overlooked that the parties are 'unregistered dealers'.

(ii) It is submitted that the books of account of assessee were duly audited and the auditors have not made any adverse remarks in audit report. Further, the auditors have reported quantitative details of all items traded by assessee in audit-report, copy at Page No. 33 of Paper- Book. Ld. AR also filed a sheet titled "Stock Summary" extracted from books of assessee giving quantity details as well as values of opening stock, purchases (inwards), sales (outwards) and closing stock of each item traded by assessee. Ld. AR submitted that the AO has not disputed these details of assessee and still rejected books of assessee which is not correct. Ld. AR further submitted that there is no deviation in the method of accounting or the manner in which accounts have been maintained by assessee from other years. Therefore, in such a case, the AO cannot reject book-results of Siddhi Vinayak, Indore assessee and cannot make

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 any addition as held in CIT Vs. Anand Kumar Modi (2014) 44 taxmann.com 21 (Jharkhand). IME TAX DEPAR

(iii) It is further submitted that the assessee is engaged in the business of agricultural commodities where the market remains highly volatile giving rise to fluctuations in profit but the AO has ignored this very nature of assessee's business.

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 3. During the verification of purchase and sale bills with ledger certain discrepancies found in purchase bills are -

(a) Bill number was not quoted or bill number was written with pencil even the other contents of the bills were written with pen.

(b) Date was not mentioned on bill.

(c) Bills were printed on plain paper without letter head or any seal of seller.

(d) Photocopy of bills was produced instead of original bill.

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 is no specific provision for printed bill. However, bill was signed by authorized signatory of firm". Before us also, Ld. AR has repeated the same submission that the parties are unregistered dealers. This submission by assessee does not appeal to us. We are not able to understand that if the parties were unregistered dealers, how could the bill numbers be not mentioned or they would be written with pencil? Needless to mention that the 15 instances are just exemplary and the AO has noted broader discrepancies about (i) non-production of complete books, (ii) discrepancies in purchase-bills, and (iii) non-production of sales-bills. The AO has categorically noted that these discrepancies were noticed on verification "with the help of inspector of this office". Thus, the AO's notings are forceful, as well as meritorious and cannot be said to be vague or baseless. Faced with this situation, we are of the view that the AO was justified in invoking section 145(3) due to discrepancies in assessee's books and therefore rejecting book-results. The decisions relied by Ld. AR are distinguishable and do not help assessee due to specific facts of assessee's case.

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 in preceding 2 years, (ii) GP rate of 0.653% in current year, and (iii) GP Rate of 1.375% in subsequent year. So far as GP rates of preceding 2 years is concerned, the turnover of those years were only Rs. 2,12,65,992/- and Rs. 9,34,42,341/- which are not comparable with the whopping turnover of Rs. 31,40,27,378/- of current year. It is a generally acceptable phenomenon that as the turnover increases, the profitability comes down. Therefore, the GP rates of preceding years are not considerable. Then, there is no justification in considering the GP rate of current year when the same is already rejected by AO. However, the turnover of subsequent AY 2016-17 is Rs. 35,42,57,609/- which is very near to the turnover of Rs. 31,40,27,378/- of current year. Therefore, the GP rate of 1.375% declared by assessee himself in subsequent AY 2016- 17 could be taken as a better yardstick. The adoption of GP rate of subsequent year by Siddhi Vinayak, Indore us is based on specific facts and figures of present case available on record and should not be followed as a precedent. Accordingly, we find that Gross-Profit of current year may be taken at 1.375% of Rs. 31,40,27,378/- which comes to Rs. 43,17,876/-. This would mean that the AO's estimation at Rs. 65,51,239/- needs to be restricted to Rs. 43,17,876/-. This would result in giving a relief of Rs. 22,33,363/- to assessee and at the same time upholding excess addition of Rs. 22,65,313/-.

5.14. In view of above, it will be more appropriate to apply GP rate of the appellant as per the Hon'ble ITAT finding in the order placed supra. The turnover and G.P & NP rate of the appellant are extracted hereunder:

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18

Turnover for A.Υ 2020-21, 2021-22 & 2023-24 are for calculating the GP rate of the appellant as per the finding given by Hon'ble ITAT in order placed supra. The average GP is (1.45+1.51.1.60)/3 1.52. The Gross profit of the appellant comes to 1.52% x 1,24,70,71,473 1,89,55,486/-, The Gross profit reported by the appellant is Rs. 1,87,95,497/-, Therefore, the difference i.e Rs. 1,89,55,48,639 minus Rs. 1,87,95,497 Rs. 1,59,989/- is being upheld and remaining addition of Rs. 9,15,48,991/- is hereby deleted.

5.15 In the result, the appeal is "partly allowed."

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 4. Contrary to that Ld. AR supports the impugned order thereby submitting that the Assessing Officers in its order has stated that payments are not reflected into the bank account of the Assessee, indeed, factually incorrect as the Assessee has submitted the ledger account of bank account statement during the assessment proceedings. The Ld. AR submits that goods are booked in advance from farmers and it is the prevalent trade practice in the business of fruits of vegetables so ledger account reveals that payments as made before the date of purchase and that cannot be a ground to taken adverse view as taken by the Assessing Officer. The Ld. AR further submitted that most of the purchases are from farmers and agent and payments are made in advance in order to book the purchase that reflects in the ledger account and bank statement. It has further been submitted by the AR that sell and purchase ledger along with the transaction details and bank statement showing the transaction details and due to the fluctuating demand and supply of goods, sale and purchase from the same partyis very common trade practice in this business.It has further been submitted that Assessing Officers on the one hand has rejected the books of account and on another hand has taken the gross turnover of the assessee for calculating the net profit on estimate basis. The Ld. AR further submits that AO has taken the net profit margin @8% which is arbitrary in nature and no reasoning has been recorded in the assessment order for taking such high net profit margin. The Ld. AR supports the impugned order of the CIT(A) as CIT(A) has taken the GP rate of the assessee and deleted the addition of Rs. 915,48,991/-. 5. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that assessee is engaged in the business of trading and export of fruits and vegetables. The claim of the assessee that he procures the said items from farmers and agents.The Assessing Officers in course of assessment has found

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 discrepancies in the books of accounts of the appellants that has been mentioned by the CIT(A) in its order. We find that first discrepancy has been noted by the Assessing Officers regarding the purchase shown as sundry creditor of Rs. 11,66,850/- and as per the Assessing Officers the assessee did not submit that details regarding the Sundry Creditors. Assessee submitted invoice of Rs. 14,83,500/- raised on Shetal Agrifresh Products Limited and ledger account along with bank account statement showing the transactions details. It is pertinent to mention here that assessee has submitted the ledger account and the bank statement before the Assessing Officers during the assessment proceedings. 6. There is no denying to this fact that fruit business is highly competitive in nature and in such type of business the farmers and agents books crops in advance due to the price uncertainty, perishable nature of the goods and requirement of farmers to meet farming expenses. It is pertinent to mention here that assessee has submitted the books of accounts being duly audited and no infirmity has been reported by the auditor in books of an account. The Ld. CIT(A) in its order have applied the GP Rate of the assessee in view of the several decisions of the Hon’ble ITAT.The CIT(A) has calculated the GP Rate on the turnover for the Assessment Year 2020-21, 2021-22 and 2023-24 and thereafter passed an order. Keeping in view the discussion made above as well as considering the order passed by the CIT(A) we do not find any infirmity in the impugned order. Accordingly, the order passed by the CIT(A) as hereby up held the appeal filed by the Revenue as hereby dismissed. 7. Since we have dismissed the appeal of the revenue on merit, hence the Cross objection filed by the assessee become infructuous and dismissed.

I.T.A. No.2734/Kol/2025& C.O No.23/Kol/2026 AY: 2017-18 As a result, the appeal filed by the revenue and the CO filed by the Assessee are hereby dismissed.

Kolkata, the 29th May, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

Dated:. 29 . 05.2026. DC, PS

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches