DCIT, CENTRAL CIRCLE - 4(1), KOLKATA, INCOME TAX DEPARTMENT, KOLKATA V. N T AGRO FOOD PRODUCTS, HOOGHLY

ITA 1480/KOL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata, which had allowed the appeal of N.T. Agro Food Products for the assessment year 2019-20. The primary issue was the treatment of unaccounted sales amounting to Rs. 69,10,285 found during a survey under section 133A of the Income Tax Act, 1961. The Assessing Officer (AO) had treated these as unexplained investments under section 69, but the CIT(A) reversed this decision, applying a gross profit rate to these sales instead. The Tribunal upheld the CIT(A)'s decision, agreeing that the unaccounted sales were eventually recorded and taxed in the books of account.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668944 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Other Referred Cases: ACIT, 2(1) Vs. Surajbhan Agrawal, Janta tiles Vs. ACIT, PCIT-2 vs. Rameswar Textile Mills Ltd, ACIT vs. comor granito Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. B. CHAKRABORTY
• Assessee Lawyers: MIRAZ D. SHAH
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3); 142(1); 69; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI PRADIP KUMAR CHOUBEY, JM AND SHRI RAKESH MISHRA, AM ITA No. 1480/KOL/2024 (Assessment Year: 2019-20) DCIT, Central Circle-4(1), Kolkata Aaykar Bhavan Poorva, 110, Shantipally, PIN-700107, West Bengal Vs. N.T. Agro Food Products, Village-Deshapara, PO-Dearah Nasibpur, Dist. Hooghly, PIN-712223 West Bengal (Appellant) (Respondent) PAN NO. AAIFN2002M Assessee by : Shri Miraz D. Shah, AR Revenue by : Shri S.B. Chakraborty, DR Date of hearing: 11.06.2025 Date of pronouncement: 23.06.2025 O R D E R Per Pradip Kumar Choubey, JM: This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] dated 01.05.2024 for the AY 2019-20. 02. The brief facts of the case are that the assessee filed his original return of income u/s 139(1) of the Income-tax Act, 1961 (the Act) on 20.10.2019 declaring total income at Rs. 10,35,370/-. Later, a survey was conducted u/s 133A of the Income Tax Act, 1961 on 13.02.2019 on the assessee. Subsequently, the case was selected for compulsory scrutiny for the year of survey i.e., the instant AY 2019-20. Subsequently, notice u/s 143(2) & 142(1) was issued to the assessee Page | 2 ITA No.1480/KOL/2024 NT Agro Food Products; A.Y. 2019-20 with all the relevant questionaries in timely manner. In response to the same, the assessee through his AR submitted requisite details and documents to the AO and the case was heard. Later, the AO passed the assessment order u/s 143(3) of the Act on 27.09.2021 determining a total Income of Rs.79,45,650/-, and served on the assessee. On perusal of the assessment order, it is observed that the AO had made additions in only one ground viz. Addition u/s 69 of the Act of Rs.69,10,285/- in the form of Unexplained investment. 03. Aggrieved by the said order the assessee preferred the appeal before the ld. CIT (A), wherein the appeal of the assessee has been allowed. 04. Being aggrieved and dissatisfied, the Revenue has preferred the appeal before us. 05. The ld. DR has challenged the order of ld. CIT (A) thereby submitting that the ld. CIT (A) erred in determining the income of Gross Profit at the rate of 6% of ₹69,10,285/-, whereas the assessee had himself admitted the net profit to be ₹70 lacs in his statement but did not offer the said unaccounted income for the relevant assessment year for tax. 06. Contrary to that the ld. AR support the impugned order thereby submitting that the ld. AO has relied on the statement of Shri Dipak Shah and concluded that the assessee has an unexplained stock of ₹69,10,285/-, ignoring the total reply of Shri Dipak Shah in which he has stated that it is an unaccounted sale and does not enter in the books of accounts as on date. The ld. AR submits that Shri Dipak Shah has clearly stated that there is unaccounted sale which were not recorded in the books of account on the date of survey, no inference can be drawn that sale was unaccounted. The ld. AR further submits that there was Page | 3 ITA No.1480/KOL/2024 NT Agro Food Products; A.Y. 2019-20 no excess stock and all the stock have been at the time of survey was related to the books of accounts and only mistake on the part of the assessee was that the books were not updated at the time of survey. According to him all the sales such as Atta, Husk/ Bran, Dust, have been duly recorded in the audited books of accounts and the same is included in the total turnover and duly offered for taxation in the return of income. He placed reliance on the order passed by the ITAT Indore Bench in cases of ACIT, 2(1) Vs. Surajbhan Agrawal in ITA No. 352/Ind/2013 order dated 26.08.2013 and Janta tiles Vs. ACIT vide order dated 06.04.1999 passed by ITAT Pune Bench. 07. Upon hearing the submissions of the counsel of the respective parties, we peruse the order passed by the ld. AO as well as the ld. CIT (A) and find that the ld. AO has held that Dipak Shah being the partner of the firm has in his statement has accepted that ₹69,10,285/- was unaccounted sale for the relevant assessment year but from the return filed by the assessee it cannot be verified whether the assessee has offered the amount of ₹69,10,285/- to tax or not. The assessee in this regard is silent hence, the ld. AO treated the same amount as unexplained investment u/s 69 of the Act. It is pertinent to mention here that the statement of shri Dipak Shah recorded u/s 133A of the Act reveals thus “it is unaccounted sale and does not enter in the books of account as on date.” It is further pertinent to mention here that there is no excess stock and all the stock found at the time of survey was related to the books of accounts. The assessee has clearly stated that the sale has been duly recorded in the audited books of accounts and same is included in the total turnover and duly offered for taxation in the return of income. We have gone through the order Page | 4 ITA No.1480/KOL/2024 NT Agro Food Products; A.Y. 2019-20 passed by the ld. CIT (A) and the relevant portion of the order of ld. CIT (A) is hereinbelow: - “6.2. Discussion and decision: 6.2.1. I have gone through the assessment order as well as the submissions of the assessee. It is observed that during the aforesaid survey operation, the survey team had unearthed shortage of stock of 4687.63 quintals valuing Rs.69,10,285.18. It is also noticed that vide the recorded statement, Shri. Dipak Saha had intimated the survey team that the shortage of stock was because of sales which are yet to be recorded in the books of account of the assessee. The assessee both in the assessment proceedings as well as in the appellate proceedings had submitted that the said unaccounted sale was not at all unexplained as the same was recorded into its books of account after the survey operation. 6.2.2. When there is a shortage of stock, it can be inferred that the sale was already done, but not recorded in the books For the unaccounted sale a GP ratio is to be applied for estimating the profit. Reliance may be placed on the judgement of Gujrat High Court in the case of 'PCIT-2 vs. Rameswar Textile Mills Ltd 07/09/2015', 'ACIT vs. comor granito Pvt. Ltd.' In which the Hon'ble High Court and ITAT Rajkot held that for unaccounted sales GP ratio is to be applied. The assessee has stated in his reply that the GP ratio in this line of business is @5.23%. However, to meet the ends of justice, the GP is estimated at 6%. The unaccounted sales found and estimated by the survey team of Rs.69,10,285/-. The GP @ 6% for the Rs.69,10,285/- comes to Rs.4,14,617/-. The AO is directed to delete Rs.64,95,668/- (Rs.69,10,285/- less Rs.4,14,617/-). Therefore, the ground raised by the assessee is partly allowed.” 08. Going over the facts of the case as well as the decision made by the ld. CIT (A), we do not find any infirmity in the order. Accordingly, we do not find any merit in the appeal of the Revenue and hence, dismissed. 09. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 23.06.2025. Sd/- Sd/- RAKESH MISHRA (PRADIP KUMAR CHOUBEY) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Kolkata, Dated: 23.06.2025 Sudip Sarkar, Sr.PS Page | 5 ITA No.1480/KOL/2024 NT Agro Food Products; A.Y. 2019-20 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "