HARISH GUPTA,DELHI V. ITO WARD 44(3), DELHI

ITA 1189/DEL/2024

AI Insights

The case involves Harish Gupta, an individual and sole distributor of Amul Milk, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed an addition of Rs.47,02,360 to his income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer under section 144 of the Income Tax Act, treating unexplained cash deposits of Rs.5,87,79,491 during the demonetization period as unexplained money under section 69A. The CIT(A) reduced the addition by applying an 8% profit rate on the turnover, which Gupta contested as excessive, arguing for a lower profit margin of 1% to 3%. The Tribunal agreed with Gupta, acknowledging the fixed maximum price of milk by the principal and the nature of the business, and thus reduced the profit rate to 3%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474570 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: PRANAV YADAV
• Keywords: Unexplained cash credit
• Section: 144; 142(1); 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘B’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1189/Del/2024 (ASSESSMENT YEAR 2017-18 Harish Gupta, RZ-15, Raghu Nagar, Pankha Road, Delhi-110045 PAN: ACLPH0730P Vs. Income Tax Officer, Ward-44(3), Delhi. (Appellant) (Respondent) Assessee by Sh. Pranav Yadav, Adv. Department by Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 24/03/2025 Date of Pronouncement 24/03/2025 O R D E R PER MANISH AGARWAL, AM, This is an appeal filed by the Assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No. CIT(A), Delhi- 15/10438/2019-20 dated 30.01.2024 for Assessment Years 2017-18. 2. Brief facts of the case are that assessee is an individual and filed his return of income on 25.07.2019 which is after the due date, therefore, the same was treated as invalid by the AO. The Assessing Officer was having information that assessee has 2 ITA No.1189 /Del/2024 Harish Gupta vs. ITO deposited cash of Rs.85,78,760/- during demonetization period in the bank account with PNB, Janakpuri, New Delhi. Besides this, total cash of Rs.5,87,79,491/- were deposited during the previous year relevant to assessment year under appeal, therefore, return of income was not filed in due date and, therefore, the Assessing Officer has proceeded to complete the assessment u/s 144 of the Act. In the assessment order, the AO observed that notices u/s 142(1) were issued on various dates followed by the show cause notices, however, no reply was filed by the assessee. From the 26AS statement of the assessee, it is found that assessee has also having interest income from Gujrat Cooperative Milk Marketing Federation Limited. Finally, reply to notice issued u/s 142(1), the assessee stated that he is the distributor of Gujrat Cooperative Milk Marketing Federation Limited and having income from distribution is the commission only and the entire cash deposit was the cash sales of milk. Since, the assessee has neither filed further details nor any explanation with regard to the cash deposits in bank was made, the AO treated the entire cash of Rs.5,87,79,491/- deposited in the bank account which include cash deposit during demonetization period as unexplained money u/s 69A and made the addition of entire cash deposit in bank in previous year. Against such order, assessee preferred appeal before Ld. CIT(A) wherein the assessee submitted the detailed reply and claimed the entire receipts were on account of the sales proceed of milk in cash which was purchased from Gujrat Cooperative Milk Marketing Federation Limited. The assesse is having very less margin of profit on such sale of milk. Ld. CIT(A) considering the 3 ITA No.1189 /Del/2024 Harish Gupta vs. ITO reply of the assessee, Ld. CIT(A) held the entire cash deposits as turnover of the assessee and further by applying 8% of profit rate on the same, has restricted the addition to Rs.47,02,360/- as against Rs.58,77,949/- made by AO. 3. Aggrieved by the said order, assessee is in appeal before the Tribunal wherein the sole ground of the appeal with regard to the confirmation of the addition of Rs.47,02,360/- being 8% of total cash deposit of Rs.5,87,79,491/-. 4. Before us, Ld. AR submitted that assessee is a sole distributor of Gujrat Cooperative Milk Marketing Federation Limited and is dealing with Amul Milk and other milk products namely Amul Milk. From such sales assessee is having very low profit margin which is ranging between 1% to 3% and the profit rate of 8% applied by Ld. CIT(A) is exorbitantly high and, therefore, the same should be reduced to a reasonable percentage of profit. He prayed accordingly. 5. On the other hand, the Ld. Sr. DR supported the orders of lower authorities and submit that in absence of the details filed by the assessee, the ld. CIT(A) was fair in applying rate of 8% and he requested for the confirmation of the same. 6. We have considered the rival submissions and perused the material available on record. In the instant case, it is found that assessee is a distributor of Amul Milk supplied by Gujrat Cooperative Milk Marketing Federation Ltd. The sales made by the assessee were in cash and the sale proceeds were deposited in the bank account. During the course of appellate proceedings, 4 ITA No.1189 /Del/2024 Harish Gupta vs. ITO assessee has filed all the necessary details before the CIT(A). After obtaining the remand report from the Assessing Officer, the Ld. CIT(A) has admitted such evidences and after examining these details Ld. CIT(A) has observed that the business of the assessee of selling Amul Milk is established. Accordingly, the Ld. CIT(A) was of the opinion that entire credit appearing in the bank account cannot be treated as unexplained credits. He by holding the same as turnover of the assessee, had applied 8% profit rate on such deposits. 7. On careful consideration of the facts, and the arguments put forth by the parties, in our opinion the profit rate of 8% in this line of trading of milk is very high where normal margin of profit range between1% to 3%. This also a matter of fact that maximum price of milk is fixed by the principal and assessee cannot charge higher price then the rate per litter fixed by the principal. Looking to this peculiar facts, in our considered view profit rate of 3% would be reasonable in the instant case which will meet the end of justice and, accordingly, we direct the AO to apply the net rate of 3% on the entire bank deposits of Rs.5,87,79,491/-. The only ground of appeal of the assessee is partly allowed. 8. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 24.03.2025. Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated 28. 03.2025 PK Sr. PS 5 ITA No.1189 /Del/2024 Harish Gupta vs. ITO Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "