RESHMA,QUERESHI vs. ITO, WARD - 1(1)(3), DEHRADUN

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘DB’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 174/DDN/2026 (Assessment Year : 2013-14) Reshma Vs. ITO 17, Dispensary Road Ward – 1(1)(3) Dehradun – 248 001 13A, Subhash Road, Irrigation Uttarakhand Colony, Dehradun – 248 001 Uttarakhand PAN No. AADPQ 2678 K (APPELLANT) (RESPONDENT) Assessee by Shri Rohit Agarwal, C.A. Revenue by Shri Akash Barnwal, Sr. D.R. (VC) Date of hearing: 29.05.2026 Date of Pronouncement: 29.05.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)/NFAC, Delhi (hereinafter referred as ‘CIT(A)/NFAC’) order dated 09.01.2026 arising from the assessment order dated 15.03.2016 under section 143(3) of the Income-tax Act, 1961 (hereinafter referred as ‘the Act’) for the Assessment Year 2013-14.

ITA No. 174/DEL/2026 [A.Y 2013-14] Reshma vs ITO 2. Grounds of appeal filed by the assessee are as under : “1. That the Ld. CIT(A) has erred in law and the facts of the case by confirming the addition of Rs.3,68,65,460/- made by estimating the net profit @ 8% of the total turnover as the various findings made by the lower authorities are contrary to the law and are inconsistent with the facts on record. 2. Without prejudice to the above, the Ld. CIT(A) has erred in law and on facts of the case by the confirming the action of the Ld. A.O. of estimating the net profit @ 8% as the same is highly excessive in comparison to the profit margin earned in the nature of business being carried upon by the appellant, without bringing any comparables on record. 3. That the Ld. CIT(A) has erred in law and facts of the case by confirming the impugned addition of Rs.1,00,10,000/-, holding that the source of cash deposits made in the bank account of the appellant was unexplained as various findings made by the lower authorities are contrary to the law and are inconsistent with the facts on record. 4. That the appellant respectfully craves leave to add alter omit or substitute any or all of the above grounds of appeal at any time before or at the time of hearing of appeal to enable your good self to decide the appeal in accordance with law.” 3. Brief facts of the case are that the assessee is an individual carrying on trading business of purchase and sales of buffalo carcasses in her proprietary concern under the name & style of M/s Reshma Meat Traders. Year under consideration was the first year of operations. The assessee filed her ITR for the relevant year on 30.09.2013, declaring a turnover of Rs.46,75,00,000/-. The ITR filed by the assessee was selected for scrutiny assessment through CASS and notice u/s 143(2) of the Act, was issued on 01.09.2014. The assessment proceedings were completed vide order dated 15.03.2016 passed u/s 143(3) of the Act,

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ITA No. 174/DEL/2026 [A.Y 2013-14] Reshma vs ITO at an assessed income of Rs.6,09,10,000/- thereby making the following additions: - a) An addition of Rs.3,68,65,460/-, was made by estimating the net profit 8% of total turnover as declared as against the declared Net Profit of Rs.5,34,540/- b) An addition of Rs.1,00,10,000/-, was made holding that the cash deposits in the assessee’s bank account were unexplained. c) An addition of Rs. 1,35,63,072/-, was made holding that the sundry creditors outstanding as on 31.03.2013 were bogus. 4. Aggrieved by the above the assessee filed an appeal wherein the additions at sl. no. a & b hereinabove were confirmed and addition at Sl. no. c was deleted. Aggrieved by the order of learned CIT(A), assessee is now in this appeal before the Tribunal. 5. The ld AR of the assessee submitted that the business of the assessee consisted of purchase of carcasses from small producers of animal husbandry, who took their animals to slaughterhouse, got them weighed, slaughtered, dressed up and sold to the assessee. The assessee sold the dressed-up carcasses so purchased, from the small producers to the meat plants/exporters in wholesale. The small animal husbandry producers, who supply the carcasses to the assessee are normally illiterate and do not maintain any bills for supplies and also do not maintain books of account. At the time of weighment of animals & supply of carcasses, the clerk of the slaughterhouse issues a

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ITA No. 174/DEL/2026 [A.Y 2013-14] Reshma vs ITO weighment slip to the supplier on behalf of the traders like the assessee. The weighment slip is produced by the suppliers for getting their payment on scheduled time to the trader, who in exchange of the weighment slip make payment to the suppliers. Under the circumstances, in the trading of animal carcasses, no purchase bills are normally available with the traders. However, sales are made to the organized sector purchasers and therefore bills for supplies are issued by the trader and payments are received normally through banking channel except cash sales, which are made under disposal pressure because the product is perishable.

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ITA No. 174/DEL/2026 [A.Y 2013-14] Reshma vs ITO assessment order. Hence, the estimation of net profit without rejecting the books of account of the assessee is bad in law and is liable to be quashed. In this regard, reliance is placed on the following judicial pronouncements:  PCIT vs. Forum Sales (P) Ltd. [2024] 468 ITR 392  CIT vs. Anil Kumar & Co. [2016] 286 ITR 702 (Kar HC) 7. Learned Counsel for the assessee submitted that without prejudice to the above, even if any estimation is to be made, the same ought to have been made on the basis of comparable figures. The audited balance sheets and assessment orders of all the parties whose data has been used as comparable are placed at page nos. 80 to 136 of the paper book. From the said details it is noticed that the assessee net profit rate is between 0.02% to 0.66% varying with the total turnover ranging from the 62.09 crore to 12.63 crore at 0.02%, 0.12% and 0.17% at sales of Rs.50.00 Crore, Rs.62.09 crore & Rs.39.90 crore respectively of the comparatives. The declared net profit rate of the assessee is 0.11% on sales of Rs.46.75 crore, which is within the range accepted by the revenue. Learned Counsel for the assessee submitted that the impugned addition of Rs.3,68,65,460/- may be deleted so made by the Id. AO and confirmed by the Id. CIT(A) by applying vague estimated Net Profit Rate and order of the Ld. CIT(A) be set aside.

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ITA No. 174/DEL/2026 [A.Y 2013-14] Reshma vs ITO 8. Per contra, learned DR has no objection and relied upon the order of the AO. 9. We have heard the rival submissions and perused the material available on record. In the instant case, we find that the assessee has attempted to justify the total sales receipts from four parties by filing only their ledger accounts. The assessee did not file any sale invoices, freights bills, details of purchase. The AO however could verify sale to only two parties u/s 133(6) and the sales to one other party were not verified. The AO therefore, doubted the genuineness of sales and show caused the assessee vide letter 29.02.2016 as to why the books should not be rejected and income be assessed @ 8% of gross receipts. In absence of any response and necessary documents such as sale invoices, freights vouchers/bills, the AO adopted 8% of gross receipt as income of the assessee. The decision relied upon by the assessee in PCIT vs. Forum Sales (P) Ltd. and CIT vs. Anil Kumar & Co (supra) are thus, distinguishable in facts. 10. We find that although the assessee, prima facie, appears to have partially discharged its onus of explaining it sales, it’s contentions to prove the genuineness of entire sales, hardly deserves to be accepted in entirety. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that sales have actually been made and his

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ITA No. 174/DEL/2026 [A.Y 2013-14] Reshma vs ITO action to estimate the gross profit at the rate of 8% of total turnover, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the sales turnover and profit embedded in it, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of 1.75% of gross profit of the sales only, would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. This estimation of gross profit shall take care of the addition made on account of cash deposits in bank and thus no separate addition is called for cash deposits. The ground of appeal no 1 to 3 are partly allowed. 11. In the result, appeal filed by the assessee in ITA 174/Del/2026 is partly allowed. Order pronounced in the open court on 29.05.2026 Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 17.08.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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