M/S PRASHANT FRUIT COMPANY,ALWAR vs. ITO, WARD-1(1), ALWAR, ALWAR

ITA 1557/JPR/2025Status: DisposedITAT Jaipur30 September 2026AY 2018-1912 pages
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What were the facts?

The assessee, M/s Prashant Fruit Company, is a partnership firm engaged in the commission agency business of agriculture produce (Onion) in Alwar. The appeals concern Assessment Years (AY) 2018-19 and 2019-20. The Assessing Officer (AO) initiated reassessment proceedings under Section 148 of the Income Tax Act, 1961, due to cash deposits and withdrawals in the assessee's bank accounts. For AY 2018-19, the AO added Rs. 85,79,240 by estimating profit at 12% on a total turnover of Rs. 7,14,93,674, as the assessee failed to provide proof for sales/purchases outside the mandi amounting to Rs. 3,75,09,510. For AY 2019-20, the AO treated cash deposits of Rs. 74,67,820 and withdrawals of Rs. 3,04,39,420 as unexplained income, rejected the assessee's books, and estimated net profit at 8% on clearing deposits of Rs. 3,30,96,598, resulting in an addition of Rs. 26,47,727. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed these additions. The assessee is in appeal before the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal held that for AY 2018-19, the assessee proved sale/purchase of Rs. 33,98,41,064 inside the mandi. However, the sale/purchase of Rs. 3,75,09,510 outside the mandi was not substantiated with any evidence before the AO, CIT(A), or the Tribunal. The Tribunal found that the AO and CIT(A) erred in treating this amount as trading receipts and estimating profit at 8%. Instead, this amount of Rs. 3,75,09,510 was held to be income from unknown sources and required to be taxed accordingly. For the mandi sales of Rs. 33,98,41,064, the Tribunal directed the AO to apply a profit rate of 6% as per the license, as the 8% rate was not justified. For AY 2019-20, the Tribunal agreed with the AO and CIT(A) that the total credit of Rs. 3,30,96,598 in the bank account could not be treated as turnover, especially since the assessee failed to provide evidence, file returns, and its books were rejected. This amount was considered income from unknown sources and to be taxed under the relevant provisions. The appeal for AY 2018-19 was partly allowed, and the appeal for AY 2019-20 was dismissed.

What were the issues?

1. Whether the addition of Rs. 85,79,240 made by the AO by applying a profit rate of 12% on the total turnover of Rs. 7,14,93,674 for AY 2018-19 is justified, considering the assessee is a commission agent earning commission at 4% (or a maximum of 6% as per license) and declared a net profit of Rs. 1,23,788 after expenses. 2. Whether the addition of Rs. 26,47,727 made by the AO by applying a profit rate of 8% on clearing deposits of Rs. 3,30,96,598 for AY 2019-20 is justified, given the assessee is a commission agent earning commission receipts of Rs. 15,24,604 and a net income of Rs. 2,74,329 after expenses. Assessee's Contentions: - The assessee is a commission agent and earns commission at 4%, which cannot exceed 6% as per the license issued by the Mandi Board. - Even if sales outside the mandi (Rs. 3,75,09,510) are not verifiable, a profit rate of 12% for AY 2018-19 is not applicable. - The Revenue itself accepted a 4% commission rate in AY 2020-21. Revenue's Contentions: - The assessee suppressed sales, failed to file returns, and did not provide evidence during assessment or appellate proceedings. - The assessment orders and sustained additions by the CIT(A) are liable to be confirmed.

Which sections of the Income-tax Act were involved?

Section 148,Section 40(b),Section 143(3),Section 147,Section 144B,Section 148A(b),Section 148A(d),Section 142(1),Section 68,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR “B” BENCH, JAIPUR

Before: SHRI KULDIP SINGH & SHRI PRAKASH, ACCOUNTANCT MEMBER

PER : KULDIP SINGH, JUDICIAL MEMBER:-

The Appellant, M/s Prashant Fruit company (hereinafter referred to as the ‘assessee’) by filing aforesaid interconnected appeals, sought to set aside the impugned orders both dated 17.09.2025 & 11.09.2025 passed by the National Faceless Appeals Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] qua assessment year 2018-19 & 2019-20 on the grounds inter-alia that:- I.T.A No. 1549 & 1557/JPR/2025 Page No 2 M/s Prashant Fruit Company

“1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs. 85,79,240 made by AO by applying profit rate of 12% on the total turnover of Rs. 7,14,93,674/- ignoring th

The order continues below.

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