HITESH TRADING COMPANY,KOLKATA V. ITO, WARD 34(3), , KOLKATA

ITA 908/KOL/2025

AI Insights

The case involves Hitesh Trading Company appealing against the order of the Commissioner of Income Tax (Appeals), which confirmed the AO's enhancement of the GP rate based on alleged suppression of sales. The AO had increased the GP from 0.79% to 5.0% based on information from the Sales Tax Department of West Bengal, without rejecting the books of accounts or citing comparable cases. The Tribunal found the AO's enhancement unjustified as there was no evidence or reasoning provided to support such a significant increase in the GP rate. The Tribunal also noted inconsistencies in the CIT(A)'s findings, which seemed to alternate between accepting the assessee's arguments and confirming the AO's actions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772442 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Gross profit estimation
• Section: 145

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA SHRI SONJOY SARMA, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 908/Kol/2025 (Assessment Year 2012-2013) Hitesh Trading Compnay, 10, B.R.B. Road, Kolkata - 700001 [PAN: AAFFH2800J] ……..…...…………….... Appellant vs. ITO Ward 34(3), Kolkata, Aayakar Poorva, 110, Shantipally – 700107 ................................ Respondent Appearances by: Assessee represented by : Ashish Rustagi, AR Department represented by : Amuldeep Kaur, Addl. CIT, Sr. DR Date of concluding the hearing : 18.08.2025 Date of pronouncing the order : 26.08.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER 1. This appeal arises from order dated 30.07.2024, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), (hereafter “the Ld. CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. 1.1 In this case, the Ld. AO is seen to have added an amount of Rs. 58,76,520/- by enhancing the GP from 0.79% shown by the assessee to 5.0%. The logic given for such enhancement was that some information was received from the Sales Tax Department of West Bengal to the extent that there was suppression of sales by the assessee. Thereafter, the Ld. AO has mentioned that the GP shown by the assessee was on the lower side as compared to other businesses of similar nature. It is important to note Printed from counselvise.com 2 ITA No. 908/Kol/2025 Hitesh Trading Company at this stage that the Ld. AO did not mention any comparable case before arriving at an estimation of GP to the extent of 5%. Also, the Ld. AO has not rejected the books of accounts before making the impugned addition. 1.2 The assessee carried this matter in appeal where also he could not succeed on the ground of a cryptic finding in para 6.4 of the impugned order to the extent that the assessee should have presented better documents and should have established his claim on the basis of comparable GP of similar enterprises. 1.3 Further aggrieved, the assessee has filed the present appeal with the following grounds: “1. That on the facts and in the circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeal) NFAC U/S 250 of the Income Tax Act 1961 against the order appeal against vide DIN & Order No: ITBA/NFAC/S/250/2025- 25/1075574024(1) is bad in law. 2. That the Ld. Commissioner of Income Tax (A), NFAC had erred in confirming the enhancement of Gross Profit by the Ld. Assessing Officer without rejecting the books of accounts. 3. That the appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above Grounds of Appeal.” 2. Before us, the Ld. AR vehemently argued and stated that it was not the responsibility of the assessee to justify the GP rate shown by him rather it was incumbent on the Ld. AO to make out a case of low GP as compared to other similarly placed businesses. The Ld. AR also pointed out that the books of accounts were not rejected u/s 145 of the Act and hence the addition made had no legal validity. The Ld. AR also pointed out that the Ld. CIT(A) has given very confusing findings where at least in para 6.2 and 6.3 and even some part of para 6.4 it appears as if he is convinced by the assessee’s arguments and then suddenly he confirms the actions of Ld. AO. 2.1 The Ld. DR relied on the orders of authorities below. 3. We have carefully considered the rival submissions and have gone through the records before us. Right at the outset, it deserves to be held Printed from counselvise.com 3 ITA No. 908/Kol/2025 Hitesh Trading Company that the action of Ld. AO cannot be supported since he has not doubted the book results. The Ld. AO has not expressed any doubt on the sales and purchases shown by the assessee and he has also not relied on comparable cases for working out an appropriate GP rate over and above whatever was disclosed by the assessee. On this ground alone, the assessee deserves relief and the same is granted to him. 4. In result, this appeal is allowed. Order pronounced on 26.08.2025 Sd/- Sd/- (Sonjoy Sarma) (Sanjay Awasthi) Judicial Member Accountant Member Dated: 26.08.2025 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "