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Facts
The assessee appealed an addition of Rs. 15,43,650 to their income, which represented an estimated net profit of 30% on a turnover of Rs. 51,45,500 in the fruit trading business for AY 2010-11.
Held
The Tribunal noted that neither the lower authorities nor the DR disputed that market comparable profit rates or the assessee's past profit rates were discussed. Consequently, the Tribunal deemed a lump sum net profit rate of 8% on gross receipts/turnover to be just and proper, with the caveat that it would not set a precedent.
Key Issues
Whether the addition of Rs. 15,43,650 based on an estimated net profit rate of 30% was justified, considering lack of proper justification from lower authorities.
Sections Cited
147, 144
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Income Tax Appellate Tribunal, “SMC” BENCH, AGRA
Before: SHRI SATBEER SINGH GODARA & SHRI MANOJ KUMAR AGGARWAL
O R D E R PER SATBEER SINGH GODARA, JUDICIAL MEMBER:
This assessee’s appeal for assessment year 2010-11 arises against Commissioner of Income Tax(Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN & Order No. ITBA/NFAC/S/250/2023-24/1058065212(1) dated 20.11.2023, in proceedings u/s 147 r.w.s. 144 of the Income-tax Act, 1961, [hereinafter referred to as the ‘Act’]. 2. Heard both the parties at length. Case file perused.
Mohammed Owais 3. Coming to the assessee’s substantive grievance challenging the correctness of both the lower authorities action in adding an amount of Rs.15,43,650/-, it emerges during the course of hearing that the same represent estimated net profit @ 30% on gross receipts turnover of Rs.51,45,500/- in trading of fruits business.
That being the case, the learned DR is hardly in dispute that neither of the lower authorities have discussed market comparable profit rate nor the assessee’s past profit rate which justifies the impugned estimation of highly exorbitant impugned profit rate @ 30%.
Faced with this situation, we deem it proper that a lump sum Net Profit rate of 8% only on gross receipts/turnover in the given facts would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation(s) shall follow as per law.
This assessee’s appeal stands partly allowed. Order pronounced in the open court on 10.02.2025