KALPATARU HOUSE FIN & TRADING PRIVATE LIMITED,KOLKATA vs. DCIT, CENTRAL CIRCLE 1(1), , KOLKATA

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ITSSA 63/KOL/2025Status: DisposedITAT Kolkata29 July 2025AY 2015-20164 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee had declared 5% profit on unrecorded sales. The AO's estimation of 8% was reduced to 5.5% by the CIT(A) without substantive basis. The Tribunal agreed with the assessee's contention that the suo moto profit disclosed during the search proceedings was reasonable. The Tribunal also noted that co-ordinate benches of the Tribunal had applied 5% on unrecorded sales in the cited cases. Consequently, the Tribunal modified the order of the CIT(A) and directed the AO to accept the profit at the rate of 5% as declared by the assessee. No issue was expressly left undecided.

What were the facts?

A search action under Section 132(1) of the Income Tax Act, 1961, was conducted on the assessee, Kalpataru House Fin & Trading Private Limited, on January 17, 2019, and subsequent dates, along with searches in the 'Shyam Sel Group' of cases. Surveys under Section 133A were also conducted. Incriminating materials were found, indicating unrecorded transactions. The assessee admitted to unrecorded sales and disclosed income at 5% of the total turnover. The Assessing Officer (AO) estimated the income at 8% of the unrecorded sales and added it to the assessee's income. The Commissioner of Income-tax (Appeals) [CIT(A)] restricted the profit to 5.5% of the suppressed turnover, partly allowing the appeals. The assessee appealed against the CIT(A)'s order for Assessment Years (AYs) 2013-14 to 2019-20.

What were the issues?

1. Whether the profit element of 5.5% applied by the CIT(A) on unaccounted sales is excessive and ought to be restricted to 5% (Question of law and fact, turning on Section 69 of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that the profit estimated by the CIT(A) at 5.5% is excessive and unreasonable. They contended that they had already disclosed more than a reasonable profit of 5% on unrecorded sales during the search. Therefore, the CIT(A)'s action of applying 5.5% is baseless and should be reduced to 5%. The assessee relied on the decisions in Prakash Rameshbhai Nanda Hasmukh Kunj vs ITO, DCIT vs Ajay Vishandas Kamnani, M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT, and M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT. Revenue's Contention: The Revenue heavily relied on the decisions of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 132(1),Section 133A,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

For Appellant: Shri AkkalDudhwewala&, Ms. Vidhi Ladia, ARs
For Respondent: Shri P.N. Barnwal, DR
Hearing: 23.07.2025Pronounced: 29.07.2025

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM IT(SS)A Nos.61 to 67/KOL/2025 (Assessment Years: 2013-14 to 2019-20) Kalpataru House Fin & Trading DCIT, Central Circle 1(1), Private Limited 110, Shantipally, E.M. Bypass, 29, Ganesh Chandra Avenue Aaykar Bhavan, Kolkata-700107, Vs. Dalhousie, 1st Floor, West Bengal Kolkata-700013, West Bengal (Appellant) (Respondent) PAN No. AABCK2172R Assessee by : Shri AkkalDudhwewala& Ms. Vidhi Ladia, ARs Revenue by : Shri P.N. Barnwal, DR Date of hearing: 23.07.2025 Date of pronouncement: 29.07.2025

O R D E R Per Rajesh Kumar, AM:

These are appeals preferred by the assessee against the orders of the ld. Commissioner of Income-tax (Appeals), Kolkata-20 (hereinafter referred to as the “Ld. CIT(A)”] dated 29.03.2025, 28.03.2025for the AYs 2013-14 to 2019-20. As the facts and circumstances are similar in all the appeals, hence, we will take ITA no.61/KOL/2025 as lead case and decide the issue accordingly.

2.

The issue raised in ground no.1 is not pressed at the time of hearing and accordingly, the same is dismissed as not pressed.

3.

The issue raised in ground No.2 is against the order of ld. CIT (A) applying the profit element of 5.5% on the unaccounted sales which was excessive and ought to have restricted to 5%.

4.

The facts in all the appeals are that a search action u/s 132(1) of the Act was carried out on the assessee on 17.01.2019 and subsequent

5.

In the appellate proceedings, the ld. CIT (A) after taking into consideration the submission and evidences filed by the assessee restricted the profit at the rate of 5.5% of the suppressed turnover and thus partly allowed these appeals. The ld. AR vehemently submitted before us that the profit estimated by the ld. CIT (A) is excessive and unreasonable. The ld. AR submitted that the assessee has already offered/ disclosed during search more than the reasonable profit of 5% on the said unrecorded sales and therefore, the action of the ld. CIT (A) applying the profit rate of 5.5% is without any basis and therefore, may kindly be reduced to 5%. In defense of his argument the ld. AR relied on the decisions as under:-

Prakash Rameshbhai Nanda Hasmukh Kunj vs ITO [ITA Nos. 13-16/Raj/2018] DCIT vs Ajay VishandasKamnani [ITA No. 88/Nag/2023]

7.

The ld. DR on the other hand heavily relied on the decisions of the ld. lower authorities.

8.

After hearing the rival contentions and perusing the materials available on record and also the decisions cited before us, we find that the assessee has declared 5% profit on the unrecorded sales. In the assessment proceedings, the ld. AO estimated 8%, which was restricted to 5.5% by the ld. CIT (A) for which we do not find any substantive basis. Therefore, we are inclined to accept the contention of the assessee that suo moto profit disclosed by the assessee during the search proceedings is reasonable. The case of the assessee also filed support from the various decisions cited above in which the co- ordinate benches of this Tribunal has applied 5% on the unrecorded sales. Consequently, we are inclined to modify the order of the ld. CIT (A) and direct the ld. AO to accept the profit at the rate of 5% as declared by the assessee.

9.

In the result, all the appeals of the assessee are allowed.

Order pronounced in the open court on 29.07.2025.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 29.07.2025 Sudip Sarkar, Sr.PS

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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