ACIT.CIRCLE-3, , GWALIOR vs. SH. NAVEEN GUPTA AND ASSOCIATES, GWALIOR

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ITA 321/AGR/2015Status: DisposedITAT Agra22 April 2025AY 2010-11Bench: HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL (Accountant Member)3 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal concurred with the CIT(A)'s decision, holding that only the profit embedded in suppressed sales could be taxed. The estimation made by the CIT(A) was deemed reasonable and did not require interference.

What were the facts?

The assessee, engaged in the liquor business, faced potential losses due to unsold stock at the end of the licensed period. The AO estimated suppressed sales and added the entire amount to the assessee's income. The CIT(A) restricted the addition to 3% of the total purchase cost, considering that only the profit element of suppressed sales should be taxed.

What were the issues?

Whether the entire amount of estimated suppressed sales should be taxed as income, or only the profit element embedded therein.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “DB” BENCH, AGRA

Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

Pronounced: 22.04.2025

BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ (िनधा"रणवष" / Assessment Year:2010-11) बनाम/ ACIT, Circle -3 Shri Naveen Gupta and Associates Gwalior. A-15, Maharajpura, Gwalior. Vs. "थायीलेखासं./जीआइआरसं./PAN/GIR No. AAIFN-0745-P (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant by : Sh. Shailender Shrivastava – Ld. Sr. DR " थ"कीओरसे/Respondent by : None सुनवाईकीतारीख/Date of Hearing : 20-02-2025 घोषणाकीतारीख /Date of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2010-11 arises out of an order passed by learned Commissioner of Income Tax (Appeals), Gwalior [CIT(A)] on 03-04-2015 in the matter of an assessment framed by Ld. AO u/s143(3) on 22-03-2013. At the time of hearing, none appeared for assessee. The Ld. Sr. DR advanced arguments. After due consideration thereof, our adjudication would be as under. The sole subject matter of appeal is estimation of income on suppressed sales.

2.

From the findings of Ld. CIT(A), it emerges that the assessee has carried out liquor business. The assessee paid prescribed fee to the government to take delivery of the material which was to be sold before the end of the licensed period. If the material is not sold during licensed period, the assessee would be in possession of unsold stock and face huge losses. In such a situation, the assessee had to sell the goods even at discounted rates which would ultimately reduce its profits. The Ld. AO, applying higher profit rate, computed suppressed sales for Rs.185.17 Lacs and added the same to the income of the assessee in its entirety. However, Ld. CIT(A) held that entire suppressed sales could not be taxed as income in terms of various judicial decisions. It would be reasonable to estimate the income of 3% of total purchase cost as debited by the assessee. The same worked out to be Rs.38.01 Lacs as against Rs.34.66 Lacs as declared by the assessee. Accordingly, impugned addition was restricted to the extent of Rs.3.34 Lacs. Aggrieved, the revenue is in further appeal before us.

3.

It is quite discernible that the assessee has sold several variants of liquor but it did not maintain separate data. The Ld. AO opined that Gross profit and Net profits were on lower side. Accordingly, Ld. AO worked out alleged suppressed sales and added the same in its entirety to the income of the assessee. However, entire sales could not be held to be the income of the assessee. Therefore, we concur with the adjudication of Ld.CIT(A) that only profit element embedded in such alleged suppressed sales could be brought to tax. The estimation of Ld. CIT(A), in our opinion, is quite correct and the same, therefore, would not require any interference on out part.

4.

The appeal stands dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) 6ाियक सद7 /JUDICIAL MEMBER लेखासद7 /ACCOUNTANT MEMBER Dated: 22.04.2025 आदेश की 9ितिलिप अ;ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. " थ"/Respondent 3. आयकरआयु1/CIT 4. िवभागीय"ितिनिध/DR 5. गाड7फाईल/GF

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