MOHD GULZAR,DELHI V. ITO, WARD 63(5), NEW DELHI

ITA 4097/DEL/2024

AI Insights

The case involves Mohd. Gulzar, an individual engaged in the business of livestock trading, who appealed against the order of the National Faceless Appeal Centre (NFAC) which upheld the Assessing Officer's (AO) decision estimating his income based on a GP of 2% of total sales. The Tribunal examined the nature of Gulzar's business, his role as an intermediary for the Allana Group, and the financial practices involved, including the use of cash transactions and lack of permanent addresses for some suppliers. The Tribunal considered comparable cases and the specific circumstances of Gulzar's business, leading to the decision to estimate the GP at 0.40%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780403 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 05-09-2024
• Other Referred Cases: Zakira Kamil v. ITO, Ward\u201363(3), New Delhi, Mohd. Nadir for A.Y. 2012\u201313, CIT vs M/S Jas Jack Elegance Exports, DCIT vs. Hanuman Sugar (Khandsari Mills (P) Ltd), R.B. Jessaram Fatehchand (Sugar Dept.) vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: SALIL KAPOOR
• Keywords: Set aside; Business income; Reasonable cause; Rejection of books of accounts; Principle of natural justice; Initiation of penalty proceedings; Bogus
• Section: 144; 143(3); 142(1); 133(6); 145

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.4097/DEL/2024 (Assessment Year: 2012-13) Mohd. Gulzar, vs. ITO, Ward 63 (5), T – 444, Ahata Kidara, New Delhi. Gali Pahar Wali, Sadar Bazar, New Delhi – 110 006. (PAN : AGUPG8688A) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Salil Kapoor, Advocate Shri Sumit Lalchandani, Advocate Shri Shivam Yadav, Advocate REVENUE BY : Shri Dheeraj Kumar Jain, Sr. DR Date of Hearing : 15.07.2025 Date of Order : .10.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appeal is filed by the assessee against the order of the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 20.03.2024 for the Assessment Year 2012-13. 2. At the time of filing of appeal, the Registry has pointed out a defect that appeal is time barred by 109 days. In response thereof, the ld. AR of the Printed from counselvise.com 2 ITA No.4097/DEL/2024 assessee submitted that reasonable cause has attributed in delay in filing the appeal and Accordingly, he prayed that the delay in filing the appeal be condoned. We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the appeal. Therefore, we condone the delay in filing the appeal before the Tribunal. 3. Brief facts of the case are, the assessee is an individual having income from business and filed his return of income for AY 2011-12 declaring total income of Rs.8,04,680/-. During the course of assessment proceedings, the AO rejected books of account of the assessee and estimated the income of the assessee at Rs.3,30,45,676/- i.e. 2% of the total sales of Rs.1,65,22,83,790/- made by the assessee. Accordingly, assessment order under section 143(3) of the Income-tax Act, 1961 (for short ‘the Act’) was passed on 27.03.2015 determining total income of Rs.3,30,45,680/-. The assessee took the matter before CIT(A) and further before the ITAT. The ITAT set aside the matter to the AO and directed that the assessing officer to grant adequate opportunity of hearing to the assessee and to re-frame the assessment order accordingly. Accordingly, the AO issued various notices u/s. 142(1) of the act on 05.03.2021, 13.03.2021, 19.03.2021, 15.07.2021, 27.07.2021 06.08.20218 31.08.2021, however, the assessee did not submit any reply in response to Printed from counselvise.com 3 ITA No.4097/DEL/2024 the notices. As the assessee failed to comply with any of the notices, a show cause notice along with draft assessment order was issued to the assessee on 16.09.2021 & 20.09.2021 and requested to submit the reply by 20.09.2021 & 22.09.2021 respectively. However, the assessee did not submit any reply. During the year under consideration, the assessee had made total sales of Rs.1,65,22,83,790/- whereas it was Rs.1,40,83,59,313/- in the preceding A.Y., the assessee had shown Gross profit of Rs.47,93,192/- (0.290%) in the year under consideration whereas it was at Rs.40,87,149/- (0.291%) in the preceding A.Y. Further the assessee had shown net profit declared for the year under consideration was at Rs.9,04,681/- (0.055%), whereas in the preceding A.Y. it was Rs.6,89,638/- (0.049%). The AO also noticed that during the year, assessee had shown purchase of Rs.1,74,90,598/- and shown sundry creditors of Rs.59,82,600/-. During the previous assessment proceedings, the A.R. of the assessee appeared/submitted that as per practice followed from year to year, purchase of livestock made from numerous sellers who were shepherds and were nomads they do not maintain their permanent residence at one place. The A.O. observed that only list of sundry creditors provided but no details of address, or confirmation submitted. The AO further stated in his assessment order that various opportunities were provided to the assessee to provide name and person from whom Printed from counselvise.com 4 ITA No.4097/DEL/2024 purchases were made and name and address of their sundry creditors to know the genuineness of the transactions, as all the payments had been made in cash. No address details provided by the assessee. The A.O. had asked the assessee as to why the provisions u/s.145(3) be not invoked. The A.R. of the assessee submitted that most of the payments were made in cash to the suppliers on the spot after getting the bought notes signed by the shepherd. However, when the cash was not available, the purchase made on the same day and payments were made shortly thereafter. In such cases, unpaid amount credited to their sundry creditors and books of accounts. The A.R. had submitted that there was an amount of Rs.59,54,100/- remained as unpaid as on 31.03.2012. In support of his claim, the AR. had submitted 13 copies of bought notes cum payment vouchers confirming the receipt outstanding as on 31.03.2012. The AR. had also submitted a copy of ledger of sundry creditor. The AO had analyzed the same and found that no proper books of account produced by the assessee in spite of being allowed many opportunities and time, only bought notes and payment slips were produced but only name appear no address were there. In absence of the proper books of account being produced, the correctness of the account maintained by the assessee could not be established. Being dis-satisfied with the correctness of the assessee’s books of account, the books of account maintained by the Printed from counselvise.com 5 ITA No.4097/DEL/2024 assessee were rejected as per section 145(3) of the Act and estimated the income of the assessee at Rs.3,30,45,676/- i.e. 2% of the total sales of Rs.1,65,22,83,790/- made by the assessee. Accordingly, due to non- submission of further details by the assessee, the AO totally depended on the earlier findings on the basis of earlier data available with jurisdictional assessing officer to complete the proceedings. Therefore, the books of account of the assessee was rejected on the finding of earlier assessment order dated 27.03.2015 u/s 145 (3) of the Act and therefore, estimated the income of the assessee at Rs.3,30,45,676/- i.e. 2% of the total sales of Rs.1,65,22,83,790/-. Subsequently, the AO completed the assessment u/s. 144 r.w.s 254 of the Act estimating income of the assessee at Rs.3,30,45,676/- under the head business and profession. 4. Aggrieved against the above order, assessee preferred an appeal before the ld. NFAC, Delhi. Before ld. CIT (A), assessee has raised several grounds of appeal, however several notices were issued to the assessee. Due to non-compliance, the appeal of the assessee was dismissed in limine. Even on merits, ld. CIT (A) observed from the facts and observed that there is no case on merits as well. Accordingly, the appeal of the assessee is dismissed. 5. Aggrieved assessee is in appeal before us raising following grounds of appeal :- Printed from counselvise.com 6 ITA No.4097/DEL/2024 “1. That the order dated 20.03.2024 passed under Section 250 of the Income Tax Act, 1961 ('the Act') by the National Faceless Appeal Centre ('NFAC') for Assessment Year ('AY') 2013-14 is illegal, bad in law, and is in gross violation of the principle of natural justice. 2. That the assessment order dated 27.09.2021 passed under Section 144 r.w.s. 254 of the Act by the Assessing Officer ('AO') for AY 2012- 13 and the additions/disallowances made therein are illegal, bad in law, without jurisdiction, barred b time limitation, and based on conjectures and muses and the NFAC has wrongly upheld the same and same is liable to quashed. 3. That in view of the facts and circumstances of the case and in law, NFAC is not justified in upholding the action of the rejection of the books by the AO and invoking section 145(3) of the Act. 4. That in view of the facts and circumstances of the case and in law, NFAC had erred in law and facts of the case by confirming the addition of Rs.3,30,45,676/. 5. That in view of the facts and circumstances of the case and in law, AO and NFAC had erred in making the addition of 2% of the total sales on an ad-hoc basis and without providing any justification. 6. That in view of the facts and circumstances of the case and in law, the NFAC has erred in not providing sufficient and adequate opportunity to the Appellant to represent its case. 7. That, in view of the facts and circumstances of the case, the Appellant was also prevented by reasonable and sufficient cause for not producing relevant documents/evidence/material and details before the AO and NFAC. 8. That the evidence filed and materials available on record have not been properly construed and judiciously interpreted, hence the addition/disallowance made are uncalled for. 9. That the observation and the additions made are unjust, illegal, arbitrary, bad in law, highly excessive and based on presumptions conjectures and surmises. Printed from counselvise.com 7 ITA No.4097/DEL/2024 10. That, the AO had erred in initiation of penalty proceedings under Section 271 (1)(c) of the Act. 11. That interest u/s 234A, 2348 and 2340 of the Act has been wrongly and illegally charged and has been incorrectly computed.” 6. At the time of hearing, ld. AR of the assessee submitted as under :- A. Arbitrary Rejection of Comparable Case Without Justification: The assessee had duly submitted a copy of the assessment order in the case of Mohd. Nadir for A.Y. 2012–13assessed by the same Assessing Officer of the same Ward wherein a gross profit (G.P.) rate of 0.21% was accepted. It is most respectfully submitted that the business activities, functional profile, market conditions, and operational structure of Mohd. Nadir are identical to that of the assessee. Despite specific reliance placed on this comparable case, the authorities below have failed to even consider the same or assign any cogent reason for its non-acceptance. The complete omission to consider this directly comparable case reflects non-application of mind and renders the impugned addition arbitrary and liable to be deleted.[Mohd. Nadir for A.Y. 2012–13 is enclosed herewith] B. Assessee in this regard place reliance on order passed by learned assessing officer for AY 2008-09 wherein Assessing Officer vide order dated 20.12.2010 accepted the stand of the Assessee.[Copy of Assessment order for AY 2008-09 is enclosed herewith] C. The foundation on which the impugned addition has been made stands squarely reversed by the Hon’ble Income Tax Appellate Tribunal in several cases involving identical or substantially similar facts. The Assessee, in support of its contention, places reliance on a series of orders passed by the Hon’ble ITAT, which are enclosed as part of this submission. For ease of reference, the Assessee has also prepared a comparative chart summarizing the facts of the cases adjudicated by the Hon’ble Tribunal and demonstrating their clear applicability to the present matter. One such authoritative and directly applicable decision is that of the Hon’ble ITAT, Delhi Bench in the case of Zakira Kamil v. ITO, Ward–63(3), New Delhi [ITA No. 3022/Del/2016; Order dated 03.01.2019], where the facts were identical, including the involvement of a common supplier. Once the assessee had justified the entire sales which is purely through cheques and banking channels and has given the party wise details of the purchasers and also explained the nature of trade whereby the assessee has no option but to make the purchases in cash which otherwise has statutory sanctity in view of Income Tax Rules under Printed from counselvise.com 8 ITA No.4097/DEL/2024 6DD, then simply because assessee could not furnish the particulars of the purchasers, that does not mean that the entire purchases are bogus or are not verifiable. While examining the trading result, it is important to keep in mind the nature of trade and the trade practices which needs to be understood and while determining the income, trade practices prevalent and the accounting system has to be appreciated. All the trade cannot be viewed from same glass as the different trade has different realities especially in country like ours where most of us agrarians and not much of the population were exposed to banking systems at the relevant time; nor there are any organised sector especially dealing with rural people. Assessee is dealing in sale and purchase of meat and also livestock who procures the meat from local butchers or shepherds or farmers who are mostly illiterate and work in a much unorganised sector. In such circumstances it would very difficult to either make the purchases through account payee cheques or get proper bills. Thus, the reasons given by the AO for rejecting the books of accounts on the facts of the present case cannot be sustained. Ld. CIT(A) without properly analysing the facts brought on record by the assessee has simply reiterated the reasoning given by the AO and noted that the assessee did not produce any books of accounts before the AO in order to claim deduction and expenses and therefore AO was justified in rejecting the books of accounts. He has not given any finding about the details and replies filed by the assessee before the AO and also the detailed explanation given before him in the written submissions. Hence reasoning given by the Ld. CIT (A) to uphold the order of the AO is completely de-hors the material and facts placed on record cannot be appreciated. Accordingly, the reasoning given by the Ld. CIT (A) is set aside; and on the basis of reasoning given by us as above, we hold that no proper grounds for rejection of books of account has been given and consequently the trading result cannot be disturbed. The additions thus made by the AO and as sustained by the Ld. CIT(A) for rejecting the estimate is deleted. D. That title in Goods Never Vested in Appellant – Status as Kachcha Arhtiya Recognised in CBDT Circular No. 556 dated 23.02.1990 is ignored by Authorities Below - It is most respectfully submitted that the title in the goods never passes to the Appellant at any stage of the transaction. The Appellant merely facilitates procurement and sale on behalf of the actual owners, i.e., villagers or livestock owners, and the ultimate buyer, i.e., the Allana Group. The Appellant functions purely as an intermediary without acquiring ownership, dominion, or trading risk in the goods. This factual position has neither been disputed nor properly appreciated by the authorities below. In fact, the Appellant squarely falls within the category of a “Kachcha Arhtiya”, a concept that has been well-recognized in commercial law and directly acknowledged in CBDT Circular No. 556 dated 23.02.1990. The Circular draws a distinction between a Kachcha Arhtiya and a Pakka Arhtiya, based on whether title in goods passes to the intermediary. In Printed from counselvise.com 9 ITA No.4097/DEL/2024 the present case, it is evident that the Appellant does not acquire title, nor does he conduct the transactions in his own right. 3. A number of references have been received by the Board seeking clarification whether the sale proceeds of agricultural commodities, left over by the agriculturists with their 'Kachcha Arhatiyas', would also come within the ambit of deposit of any nature necessitating its payment by an account payee cheque as provided under section 269T of the Act. 4. The Board is of opinion that where a 'Kachcha Arhatiya' sells goods belonging to an agriculturist, the sale proceeds thereof which remain with him cannot be regarded as a deposit made by the agriculturists with the 'Kachcha Arhatiya'. Further, whether the 'Kachcha Arhatiya' remits only a part of the sale proceeds to the agriculturist, the unremitted part of the sale proceeds would also not assume the character of a deposit. Therefore, the repayment of such sale proceeds does not fall within the purview of section 269T of the Act. 5. However, such unremitted sale proceeds would assume the character of a deposit if the amount is retained by the 'Kachcha Arhatiya' in pursuance of a direction in this regard by the agriculturist, irrespective of whether the amount is retained in the same account or transferred to different accounts and irrespective of whether the directions are to call it a deposit or just to retain the same for future payment. The repayment in such cases will be covered under section 269T of the Act. This clarification by the Board recognizes that a Kachcha Arhtiya— such as the Appellant does not hold funds as a deposit, nor does he act as principal in the sale. He merely acts as a channel through which the goods are routed and payments are facilitated. E. It is submitted that Assessee is acting as an agent of the exporter based in MCD slaughter house and therefore, the commission ought to be the total receipt as against the amount of total sales of livestock. The appellant contended that the title in goods was never transferred to the appellant and the risk of damage/destruction was not with the appellant. It is submitted that there is no change in business model of the Assessee as compared to last year. F. As stated above, the Appellant makes purchases in cash from shepherds, who are nomads and do not maintain any permanent residence at one place. Such shepherds are not regular suppliers to the Appellant i.e. to say that the Appellant enters into transactions with such shepherds on one-off basis and hence, no records are maintained· by the Appellant w.r.t the address details. This fact was duly submitted by the Appellant before the Learned AO on a time to-time basis. Printed from counselvise.com 10 ITA No.4097/DEL/2024 Further, the Appellant also submitted bought notes for cash purchases made by it which carries the names of such shepherds. However, the Learned AO erred in not accepting these as relevant evidences, disregarding the nature of business of the Appellant and backgrounds of such shepherds who are mostly illiterate people from villages. Further, the Learned AO also disregarded the fact that such nomadic shepherds would not maintain any bank accounts and thus, only cash purchases could be made from them. G. At the time of assessment, the appellant duly produced the complete set of books of accounts pertaining to the Financial Year 2011–12 (i.e. from 01.04.2011 to 31.03.2012) for examination by the Assessing Officer. Pertinently, the following records were made available: a) Cash Book and Journal b) Stock Register c) Purchase Register d) Sales Register e) Ledger f) Bought Notes issued by customers (i.e., sales invoices) g) Bought Notes issued by the appellant (i.e., purchase vouchers) h) Salary vouchers i) Unloading charges vouchers j) Electricity bills k) Vouchers for all other expenses The appellant also explained that, consistent with the long-standing practice in the trade and as followed by other similarly placed traders in the business of livestock and meat products, all purchases from shepherds and livestock owners are made in cash, supported by self-generated purchase vouchers. This practice arises from the nature of the trade, wherein purchases are made from itinerant and unorganized suppliers (i.e., shepherds and nomadic cattle owners), who do not provide permanent addresses or maintain formal records. It is submitted that there has been no deviation from this practice in the current or earlier years. H. Transparent and Regulated Pricing Structure: It is an undisputed fact on record that the assessee’s sole customer is the Allana Group, one of the largest exporters of frozen meat in India. The Allana Group publicly declares its daily buying rates for fresh buffalo meat in the open market, which are known to all livestock suppliers at the Ghazipur Slaughterhouse. These rates are transparently fixed, leaving no scope for any manipulation by the assessee. In such a competitive environment, the assessee’s profit is necessarily confined to a fixed difference between the procurement cost and sale price, typically 25– 27 paise per kilogram, which amounts to a modest G.P. margin. The authorities below have failed to appreciate this commercial reality and the fundamental pricing structure of the assessee’s business model. I. Functional and Financial Dependence on the Buyer: The Allana Group not only provides daily procurement funds to the assessee but also furnishes a fully equipped office near the Ghazipur Slaughterhouse, bearing all associated operational costs. This Printed from counselvise.com 11 ITA No.4097/DEL/2024 evidences that the assessee is essentially a procurement facilitator engaged on behalf of the Group. The functional profile of the assessee is thus akin to that of an agency or a logistics facilitator operating under a fixed and predetermined margin, which is governed by external market forces and business constraints, not internal pricing discretion. The lower authorities have completely overlooked this structural fact while estimating an unreasonably inflated G.P. rate. J. Practical Constraints in Maintaining Identity of Sellers: The assessee’s suppliers consist largely of itinerant livestock traders and shepherds who operate informally without fixed addresses. It is neither practicable nor statutorily required under the prevailing law for the assessee to maintain permanent identity details of such unorganized and transient vendors. Any adverse inference on this count, without appreciation of ground-level trade realities, is unjustified and fails the test of reasonableness under the law. K. Why Allana Group do not deal directly with villagers? Allana group is into this business since 19th Century. The practice followed by them is same for last so many years. They do not deal with the villagers directly because they need timely and hassle-free supply of the meats. Moreover, they make the payment directly into the bank account of the seller of meat. However, it is tough to identify the villagers who maintain the bank account. The villagers have the apprehension in taking money in their bank accounts. The Allan a Group does not want to deal with hundreds of villagers and does not want to make cash payment to each villager. This is something like Airline company, who does not want to deal with customers at large and want to deal with a limited group of people called travel agents. Meat being a highly perishable item cannot be stored except in the regulated environment. At no point of time, the appellant takes the stock of slaughtered meat. The delivery of slaughtered meat is taken by Allana Group through the Appellant. L. Analogy with Share Broker or Travel Agent- The Appellant works in the same way as a Travel agent works. Despite the fact that the payment is received by the travel agent for the sale of air tickets, it does not make him the actual seller of the air tickets. In case of Qatar Airways [2012] io taxmann.com 598 (Bombay), Bombay High Court held that the airlines would have no information about the exact rate at which the tickets were ultimately sold by their agents since the agents had been given discretion to sell the tickets at any rate between the fixed minimum commercial price and the published price and it would be impracticable and unreasonable to expect the assessee to get feedback from their numerous agents in respect of each ticket sold. Further, if the airlines had discretion to sell the tickets at the price Printed from counselvise.com 12 ITA No.4097/DEL/2024 lower than the published price then the permission granted to the agent to sell it at a lower price could neither amount to commission nor brokerage at the hands of the agent. Any amount which the agent earned over and above the fixed minimum. commercial price would naturally be income in the hands of the agent and would be tc1xable as such in his hands. The facts of our case are similar to that of Airlines travel agent. Wherein the price at which the principal is going to purchase the meat is fixed on daily basis. The margins in the business is approx. 10-12 paisa per kg. M. It is a largely accepted principle that the Assessing Officer should bring on record specific defects in the books of account of the assessee before invoking the provisions of section 145(3). Reliance in this regard is placed on the following decisions: In the case of CIT vs M/S Jas Jack Elegance Exports (2010} 233 CTR 398 (Delhi HC), the assessee contended that there was a fall in gross profit ratio due to reduction in margin, in order to increase sales. The assessee was asked to produce Books of Account and relevant registers. The Books of Account as well as certain vouchers were produced, but, the stock register was not produced, claiming that no such register was being maintained. While dismissing the appeal filed by the Revenue, it was noted that the Assessing Officer had not found any defect in the books of accounts maintained by the assessee. It was held that maintenance of Stock Register, which shows consumption of raw material and production of finished goods by applying the same measurement was not feasible, considering the nature of the business of the assessee. N. Various Courts have held that rejection of books of accounts under section 145(3) cannot be sustained merely on the fact that the gross profit of the assessee is low during the relevant period. Reliance in this regard is illustratively placed on the following decisions: Hon'ble Allahabad High Court in the case of DCIT vs. Hanuman Sugar (Khandsari Mills (P) Ltd) (2014} 221 Taxman 156 held that profit being low cannot be ground for rejection of books of accounts considering books of accounts being properly audited and relevant vouchers were available to the Assessing Officer. O. In the case of R.B. Jessaram Fatehchand (Sugar Dept.) vs. CIT (1970) 75 ITR 33 (Born HC), it had been held that mere absence of addresses from the account books was not a sufficient ground for rejecting accounts. Thus, placing reliance on the said decision, it can be inferred that mere absence of addresses of the nomadic shepherds cannot state a basis for the Learned AO for rejecting the books of accounts.” Printed from counselvise.com 13 ITA No.4097/DEL/2024 7. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 8. Considered the rival submissions and material placed on record. We observe that the assessee has declared huge turnover of Rs.165.23 crores and also declared huge purchases and declared a GP of 0.29%. It is also observed that GP declared by the assessee is same as declared in the preceding assessment year of 0.21%. From the facts available on record, we observe that assessee purchases live stock from the farmers/local markets and supplies the same at the indent raised by the Allana Group. From the records, we observe that Allana Group raises the indent to the assessee and assessee purchases the live stock and accordingly supplies the carcass/meat/bones to the Allana Group. The main purchaser in this transaction is only Allana Group. Since the Allana Group cannot purchase directly from the villages/local markets, in order to regularize the purchases they appoint middleman/pass through entities like assessee who manages the purchases on behalf of the Allana Group and supplies the same. From the books and records brought on record, we observe that Allana Group makes the payment as advances to the assessee and they adjust the same according to the indent raised by them. Therefore, there is no risk involved in the purchase/processing of the carcass/meat to the assessee. That being the case, the assessee was compensated with Printed from counselvise.com 14 ITA No.4097/DEL/2024 competitive percentage of commission or compensation for processing of purchase, rather it can be considered that the compensation is towards regularization of the purchases. From the profit & loss account submitted before us, it indicates that assessee has very little control over the process. It is noticed that the assessee has got very little administrative expenditure and it is fact on record that assessee is only a pass through entity functions with a thin margin of purchase commission. 9. Since the assessee has already submitted modus operandi and process of purchase and sale before the lower authorities, Assessing Officer could have verified the same information by calling information from Allana Group by issue of notice u/s 133(6) of the Act in the second round of proceedings. From the record, the Assessing Officer has merely asked for information from the assessee and assessee is only a pass through entity having information relating to indent raised by Allana Group, assessee has to purchase the live stock from the villagers and all these transactions are being done only through cash. The assessee is involved in the live stock, this transaction is already exempt under Rule 6DD of the Income-tax Rules, 1962. That being the case, what is relevant is the sales invoice raised to the Allana Group is the main document which assessee has already submitted before the lower authorities. From the modus operandi, it is clear that assessee is only involved and working for Allana Printed from counselvise.com 15 ITA No.4097/DEL/2024 Group who are utilising the services of the assessee only to regularize their purchases. Therefore, after considering the financial statements, the assessee is regularly declaring the GP of 0.29%. It is also brought on record that on similar facts on record, the coordinate Bench in ITA Nos.1045 & 1046/Del/2018 has sustained the addition of 0.50% relying on similar cases. After considering the facts on record and case laws relied before us, we observe that the GP in the similar line of business relating to live stock the estimated income by the coordinate Bench at 0.50%. The cases will vary case to case basis and the coordinate Bench has decided the issue of turnover of independent live stock dealer @ 0.50% whereas when dealing with the big group with high turnover, the same margin cannot be expected. Therefore, in the given case, assessee is declaring around 0.29% consistently over the years. For the sake of overall justice, we are inclined to estimate the GP of 0.40% of the gross sales. 10. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 8th day of October, 2025. Sd/- sd/- (ANUBHAV SHARMA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08.10.2025 TS Printed from counselvise.com 16 ITA No.4097/DEL/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "