RAMA CHANDRA PATRA,CUTTACK vs. ITO, WARD-2(1),CUTTACK, CUTTACK

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ITA 235/CTK/2026Status: DisposedITAT Cuttack14 May 2026AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that applying the GP rate would be excessive and the net profit rate too low. Considering expenses are already accounted for, the profit on undisclosed turnover was estimated at 6% in the interest of justice.

What were the facts?

The assessee mistakenly reported lower gross sales in the audit report than the actual sales. The Assessing Officer added the gross profit on the difference, applying a GP rate of 8.95%. The assessee argued for a net profit rate of 5.3%.

What were the issues?

The primary issue was the correct estimation of profit on undisclosed turnover, specifically whether to apply a gross profit rate or a net profit rate, and what rate to use.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “CUTTACK BENCH, CUTTACK

Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR

For Appellant: Shri Mohit Sheth, AR
For Respondent: Shri Vijay Singh, Sr. DR
Hearing: 14.05.2026Pronounced: 14.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “CUTTACK BENCH, CUTTACK VIRTUAL HEARING AT KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA No.235/CTK/2026 Assessment Year: 2017-18 Rama Chandra Patra ITO, Ward-2(1), Cuttack

Prop. Sai Ram Traders, Parida Vs Sahi, Sankarpur, Arunodaya Market, Cuttack, Odisha- 753012. (PAN: BMNPP7284F) (Appellant) (Respondent)

Assessee by : Shri Mohit Sheth, AR Revenue by : Shri Vijay Singh, Sr. DR Date of Hearing : 14.05.2026 Date of Pronouncement : 14.05.2026

ORDER PER BENCH: This is an appeal filed by the assessee against the order of the ADDL/JCIT(A)-9, MUMBAI [hereinafter referred to as the ‘CIT(A)’] in appeal no.CIT(A), Cuttack/10710/2019-20 dated 07.11.2025 for the assessment year 2017-18.

2.

Shri Mohit Sheth, AR, represented on behalf of the assessee and Shri Vijay Singh, Sr DR represented on behalf of the revenue.

ITA No.235/CTK/2026

3.

It was submitted by the ld. AR that in the course of assessment, it is noticed that the assessee had by mistake shown the gross sales at lower figure. The actual sales of the assessee was at Rs.2,12,25,898/- whereas in the audit report, the sales has been shown at Rs.82,60,192/- . In the course of assessment, the Assessing Officer had added the gross profit in respect of difference of Rs.1,29,65,706/-. It was the submission that the GP rate at 8.95% was taken by the Assessing Officer on the ground that P&L A/c has already been considered. It was the submission that the net profit rate of 5.3% may be applied.

4.

In reply, the ld. Sr. DR submitted that the expenditure in P&L A/c has already taken into consideration when the net profit rate at 5.3% has been considered. It was the submission that a higher net profit rate would be applied because the expenses have already taken into consideration.

5.

We have considered the rival submissions. Admittedly, applying GP rate would be excess and applying net profit rate on the excess turnover would also be too low. Considering the fact that expenses have already taken into consideration when the turnover is disclosed and the profits determines. This being so, in the interest of justice, we are of the view that the profit of assessee on the undisclosed turnover can be estimated at 6%. The Assessing Officer is directed to estimate the income of the assessee on the suppressed turnover at 6%.

ITA No.235/CTK/2026

6.

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

Kolkata, the 14th May, 2026.

Sd/- Sd/- [Rajesh Kumar] [George Mathan] लेखा सदस्य/Accountant Member न्याययक सदस्य/Judicial Member

Dated: 14.05.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent – 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar

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