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

ITA 321/AGR/2015

AI Insights

The case involves an appeal by the Assistant Commissioner of Income Tax, Circle -3 Gwalior against Shri Naveen Gupta and Associates concerning the assessment year 2010-11. The primary issue was the estimation of income on suppressed sales in the liquor business operated by the assessee. The Assessing Officer (AO) had added the entire amount of suppressed sales to the income, while the CIT(A) reduced this by estimating only the profit element at 3% of the total purchase cost. The Tribunal agreed with the CIT(A)'s decision, emphasizing that only the profit from the suppressed sales should be taxed, not the entire sales amount.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126448 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Laws Referred To: Income Tax (Appellate Tribunal) Rules, 1963
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDER SHRIVASTAVA LD.
• Keywords: Cost of acquisition; Dismissed; Commissioner; Commissioner of Income Tax; Suppressed Sale

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No. 321/Agr/2015 (िनधा \u000fरणवष\u000f / Assessment Year:2010-11) ACIT, Circle -3 Gwalior. बनाम/ Vs. Shri Naveen Gupta and Associates A-15, Maharajpura, Gwalior. \u0002थायीलेखासं./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 2 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. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) 6ा ियक सद7 /JUDICIAL MEMBER लेखा सद7 /ACCOUNTANT MEMBER Dated: 22.04.2025 3 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 ASSISTANT REGISTRAR ITAT AGRA "