AL BARKAT ENTEREPRISES,DELHI vs. CENTRAL CIRCLE 2, JHANDEWALAN DELHI

ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA Nos. 1539 and 1540/Del/2026 (Assessment Years : 2018-19 and 2019-20) AL Barkat Enterprises Vs. Central Circle – 2 2nd T-290, Floor, Ahata Income Tax Department Kidara, Quresh Nagar, Central Circle Sadar Bazar, Delhi – 1100 06 Jhandewalan, Delhi-110 006 PAN : AAAFA 1009 M (APPELLANT) (RESPONDENT) Assessee by Shri Majeedullah, C.A. and Shri M. N. Khan, C.A. Revenue by Shri Bhogendra Prasad, Sr. D.R. Date of hearing: 18.08.2026 Date of Pronouncement: 24.08.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

The above-captioned twin appeals preferred by assessee are directed against the orders dated 30.09.2025. These orders were passed by the Learned Commissioner of Income Tax (Appeals)-23, Delhi (hereinafter referred to as the ‘ld. CIT(A)’) under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), arising out of the following respective assessment orders:

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ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise  Assessment Year 2018-19: Assessment orders dated 28.03.2025 passed by the Asst Commissioner of Income Tax, Central Circle 2, Delhi (in short ‘the AO’) u/s 147 r.w.s. 144 of Income Tax Act, 1961(hereinafter as Act) for A.Y. 2018-19.

 Assessment Year 2019-20: Assessment orders dated 29.03.2025 passed by the Asst Commissioner of Income Tax, Central Circle 2, Delhi (in short ‘the AO’) u/s 147 r.w.s. 144 of Income Tax Act, 1961(hereinafter as Act) for A.Y. 2016-17 to 2019-20.

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ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise 3. The Id. CIT(A) is not justified in not considering the fact that during the year the appellant has made high local wholesale trading of livestock in comparison to the earlier years, such local wholesale trading bears low margin of profitability in comparison to the Exports Sales, thereby affecting and reducing the gross profitability. 4. The Id. CIT(A) has erred in law and on the facts & circumstances of the case in not considering the fact that there were no findings of unaccounted sales, unrecorded receipts, undisclosed assets, or any incriminating material during the survey or post survey assessment proceedings, and whereas the Audited Income Tax Returns for all the years were found tallied with the Books of Accounts maintained by the appellant, soundly evidencing the genuine gross profitability and net profitability of the appellant. 5. The Id. CIT(A) has erred in law and on the facts & circumstances of the case in not considering the fact that the appellant has made purchases of livestock etc. of Rs. 84,48,70,250 out of which cash purchases are of Rs. 7,56,026 only as against the impugned order citing incorrect cash purchases of Rs. 3.03 crores. All the purchases have been made from the Suppliers having name, address and PAN /Aadhaar to whom banking payments have been. 6. The Appellant craves leave to add, alter, amend or withdraw any ground at the time of hearing.”

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ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise payment records. Physical vouchers and Aadhaar were claimed but not verifiable. 5. Due to these deficiencies, books were rejected under section 145(3), and assessments completed under section 147 r.w.s 144 of the Act. The AO applied a uniform GP rate of 5% as against 2.36% in AY 2018-19 and 2.25% in AY 2019-20, declared by the assessee and differential income was taxed. Penalty proceedings were initiated under sections 270A/271A and 271(1)(c) of the Act. 6. Aggrieved by the above, the assessee filed an appeal before the ld. CIT(A), wherein the ld. CIT(A) restricted the gross profit to 3% of the turnover. Aggrieved the assessee is now in this appeal before us. 7. The ld AR submitted that the assessee is involved in the business of meat export and operates in a cash-intensive, unorganized sector, many suppliers do not issue formal bills. While most purchases are claimed to be bank-routed, a small portion is in cash, purportedly covered under Rule 6DD read with section 40A(3) of the Act. The ld AR stated that the books of account of the assessee were audited in terms of section 44AB of the Act. 8. Per contra, the ld DR vehemently relied on the order of the AO and submitted that books of account were rejected and the AO took a comparative figure for making the addition. The ld DR submitted that

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ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise major discrepancies were noted: missing bank entries, unverifiable purchases, absence of bills and transport records, and transactions with non-filers or stop-filers. Stock registers were not maintained, and quantity mismatches were observed between purchases, exports, and closing stock. 9. We have heard the rival submissions and perused the material available on record. In the instant case, we find that the assessee has shown gross profit ratio in terms of Turnover, of 2.36% in AY 2018-19 and a GP of 2.25% in AY 2019-20 while the AO has estimated the same to be 5% of the turnover. We find that the ld CIT(A) has restricted the G.P. addition to 3% of the turnover for both the years. We note that the assessee has tried to justify its gross profit ratio for both the years on the ground of low profitability in domestic wholesale trading of live animal business. On the other hand, the Revenue found, in the course of survey, several discrepancies such as missing bank entries, unverifiable purchases, absence of bills and transport records, and transactions with non-filers or stop-filers; non maintenance of Stock registers. 10. We find that although the assessee, prima facie, appears to have partially discharged its onus of explaining its gross profit ratio, it’s contentions to prove the correctness of its books of account, hardly

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ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise deserves to be accepted in entirety. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that gross profit is comparable to the industry standard and Revenue’s action to estimate the gross profit at the rate of 3% of total turnover for AY 2018-19 and 2019-20 respectively, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the GP rate to turnover, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of 2.5% of gross profit of the turnover as against gross profit of 2.36% for AY 2018-19 and GP of 2.25% for AY 2019-20, declared by the assessee, would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The grounds of appeal are partly allowed. 11. In the result, the two appeals filed by the Assessee in ITA Nos. 1539 & 1540/Del/2025 are partly allowed. Order pronounced in the open court on 24.08.2026 Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 24.08.2026 Priti Yadav, Sr. Ps*

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ITA Nos. 1539 and 1540/DEL/2026 [A.Ys 2018-19 & 2019-20] AL Barkat Enterprise Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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