ANKIT GOYAL, SIRSA,HARYANA vs. THE INCOME TAX OFFICER WARD-1, SIRSA, SIRSA

ITA 598/CHANDI/2026Status: DisposedITAT Chandigarh06 October 2026AY 2023-20246 pages
AI SummaryAllowed

What were the facts?

The assessee, Ankit Goyal, engaged in commission agency for agricultural produce and trading, filed an income tax return for AY 2023-24 declaring Rs. 7,82,530. The Assessing Officer (AO) selected the case for scrutiny due to discrepancies in turnover between the income tax return (Rs. 6.64 crore) and GSTR-9C (Rs. 25.72 crore), and high-value cash withdrawals. The AO rejected the assessee's books of account under Section 145(3) and estimated profit at 8% on the GSTR-9C turnover, leading to an addition of Rs. 1,97,95,032. The CIT(A) upheld the AO's order. The assessee appealed to the ITAT, challenging the rejection of books and the estimation of income.

What did the Tribunal hold?

The Tribunal held that the rejection of the assessee's books of account under Section 145(3) and the consequential estimation of income at 8% could not be sustained. The Tribunal reasoned that to reject books, a defect affecting their correctness or completeness must be established. In this case, the primary basis for rejection was the difference in turnover with GSTR-9C. The assessee, acting as a Kachha Arhatia, provided a detailed reconciliation explaining that a significant portion of the GSTR-9C turnover represented sales on behalf of principals, which, as per CBDT Circular No. 452, are not to be treated as the assessee's own turnover. The Tribunal found that the reconciliation was not merely a general explanation but provided figures for agency sales and reconciled the balance with audited books. Furthermore, the AO's estimation of 8% profit lacked any supporting comparable cases, past history, or material. Therefore, the AO was directed to accept the returned income of the assessee. The issue of the specific amount of commission income was not expressly left undecided, but the AO was directed to accept the returned income.

What were the issues?

1. Whether the Tribunal could sustain the rejection of the assessee's books of account under Section 145(3) solely based on the difference between the turnover reported in GSTR-9C and the assessee's books, and consequently estimate profit at 8% on the GSTR-9C turnover? (Question of law and fact, turning on Section 145(3)). Assessee's contentions: The assessee argued that the lower authorities' premise was factually incorrect. As a licensed Kachha Aartia, sales on behalf of principals reflected in GST returns do not constitute the assessee's own turnover; only commission is taxable. A reconciliation was provided showing that out of Rs. 25.72 crore GST turnover, Rs. 18.89 crore were agency sales, with the balance reconciled with trading sales, commission income, and intra-day trading profit. The assessee's books were audited, and no specific defects were found. They relied on CBDT Circular No. 452 dated 17.03.1986, stating that for a Kachha Arhatia, only gross commission is relevant, not principal's sales. Revenue's contentions: The Revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM

RAJESH DAMODARLAL SHARMA (Judicial Member)

1.

Aforesaid appeal by assessee for Assessment Year (AY) 2023-24 arises out of an order of Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 13.01.2026 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s 144B of the Income Tax Act on 09.03.2025. In the assessment order, Ld. AO

rejected books of account u/s 145(3) and estimated profit of 8% on sales reported to GST in Form GSTR-9C.

2.

The assessee has raised va

The order continues below.

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