ANIRUDDHA MALLIK,MAYURBHANJ vs. DCIT, CENTRAL CIRCLE, SAMBALPUR, SAMBALPUR

ITA 656/CTK/2026Status: DisposedITAT Cuttack08 October 2026AY 2012-134 pages
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What did the Tribunal hold?

The Tribunal held that while the assessee's books of account were rejected, the turnover as per the books was accepted by the AO. Given this, and the fact that purchases were accepted, the Tribunal found no justification for estimating the GP at a higher rate, as the AO had not provided reasons or comparable cases for such an estimation. Consequently, instead of estimating GP, the Tribunal directed that the net profit (NP) be estimated. The Tribunal directed the AO to adopt the net profit at 1.3% for all the years under appeal. The Tribunal also noted that the gross profit disclosed by the assessee was within 2.5%, and an agreement between petroleum dealers and companies supports this. Therefore, the Tribunal disagreed with the Revenue's submission for a 2% NP. As the books were rejected, other additions made by the AO and sustained by the CIT(A) relying on those books were directed to be deleted, except for the estimation of profit. For AY 2017-18, the Tribunal held that the demonetized currency deposited could not be treated as unexplained cash credit, especially once the books of account were rejected, and directed its deletion.

What were the facts?

The assessee, Aniruddha Mallik, operates a petrol pump. The Assessing Officer (AO) rejected the assessee's books of account for assessment years 2012-13, 2013-14, 2014-15, 2017-18, and 2018-19. The AO estimated the gross profit (GP) at 3.5% or 3% and made further disallowances. For AY 2017-18, a deposit of Rs. 20,12,500 during the demonetization period was treated as an unexplained cash credit. The assessee argued that petroleum product sales and purchases are synchronized, preventing GP variations, and that net profit estimation is acceptable. The assessee also contended that demonetized currency deposits should not be treated as unexplained credit. The appeals are against the orders of the CIT(A), Bhubaneswar.

What were the issues?

1. Whether the Tribunal was justified in rejecting the assessee's books of account and estimating the gross profit, contrary to the assessee's submission that purchases and sales of petroleum products are synchronized and do not allow for GP variation? (Question of law and fact, concerning rejection of books and estimation of income). 2. Whether the addition of Rs. 20,12,500 as unexplained cash credit for AY 2017-18, representing demonetized currency deposited during the demonetization period, was justified, given the assessee's contention that such deposits were permitted by the government? (Question of law and fact, concerning cash credits). Assessee's contentions: The assessee argued that since purchases and sales of petroleum products are fully recorded and tallied, there can be no variation in gross profit. They submitted that net profit may be estimated reasonably. Regarding the demonetized currency deposit, the assessee stated they were permitted by the government to collect such currency and it should not be treated as unexplained cash credit, especially after books of account were rejected. They also argued that once books are rejected, further additions based on those books are unsustainable. Revenue's contentions: The Revenue, through the ld Sr. DR, prayed that the net profit be estimated at 2%, stating that petroleum dealers are also being estimated at 2%.

Which sections of the Income-tax Act were involved?

Section 68

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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI GEORGE MATHAN & G. GURUSAMY

For Appellant: Shri P.K.Mishra/Narahari Swain/Himanshu Bhusan Jena & Rajashree
For Respondent: Shri Vijaya Singh ld Sr DR
Hearing: 08/10/2026Pronounced: 08/10/2026

Per Bench These are appeals filed by the assessee against the order of the ld CIT(A), Bhubaneswar-2 all dated 27.8.2025 in Appeal No. CIT(A)/10186/2017-18, in Appeal No. CIT(A)/10187/2017-18, in Appeal No. CIT(A)/10188/2017-18, in Appeal No. CIT(A)/10822/2019-20 and in Appeal No. CIT(A)/11234/2017-18 for the assessment years 2012-13, 2013-14, 2014-15, 2017-18 & 2018-19. 2. Shri P.K.Mishra/Narahari Swain/Himanshu Bhusan Jena & Rajashree Routray, Ld ARs appeared for the

The order continues below.

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