PALAK SAJAAWAT PRIVATE LIMITED,HARYANA V. ITO WARD-44(1), -

ITA 5291/DEL/2024

AI Insights

The case involves Palak Sajaawat P. Ltd., the appellant, who appealed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2019-20. The primary issue was the rejection of the assessee's books of accounts by the Assessing Officer, who estimated the business income at 8% of sales reported in the sales register, considering GST as part of the revenue. The assessee argued that the sales declared in the Income Tax Return were net of GST, unlike the gross sales figure in the sales register. The Tribunal found merit in the assessee's argument and restored the case to the Assessing Officer for a detailed examination of the gross profit percentage calculation, excluding GST.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360778 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2019-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: RAJIV BANSAL; CHARTERED ACCOUNTANT
• Keywords: Set aside; Business income
• Section: 147; 148; 144; 142(1); 139; 2

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “एस एम सी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.5291/िदʟी/2024 (िन.व. 2019-20) ITA No.5291/DEL/2024 (A.Y.2019-20) Palak Sajaawat P. Ltd., B-54, 1st Floor, B Block, South City-2, Sector-49, Gurgaon, Haryana 122018 PAN: AAGCP-5438-E ...... अपीलाथᱮ/Appellant बनाम Vs. Income Tax Officer, Ward-44(1), Delhi ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : Shri Rajiv Bansal, Chartered Accountant ŮितवादीȪारा/Respondent by : Shri Sahil Kumar Bansal, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 28.02.2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 23.05.2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as 'the CIT(A)') dated 23.09.2024, for assessment year 2019-20. 2. Brief facts of the case as emanating from records are: No return of income was filed by the assessee u/s. 139 of the Act for AY 2019-20. The Assessing Officer (AO) issued notice u/s. 148 r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on the basis of specific information that the assessee has generated bills of entry for imports amounting to Rs.93,99,872/- and shipping bills for export amounting to Rs.20,30,625/- resulting in total transaction value of Rs.1,14,30,497/- during the Financial Year 2018-19. In response to the notice u/s. 2 ITA No. 5291/DEL/2024 (AY 2019-20) 142(1) dated 12.12.2023, the assessee submitted bank statement of the account maintained with Indian Overseas Bank, computation of income, audited financials along with the Audit Report etc. During assessment proceedings, the AO directed the assessee to furnish details of debtors and creditors, sales and purchase made by the assessee in the global and domestic market during the relevant period. Since, further details as asked by the AO were not furnished by the assessee, the AO rejected assessee’s books of accounts and on the basis of documents already on record estimated business income of the assessee at the rate of 8% of sales reported in sales register and made addition of Rs.44,74,705/-. Aggrieved by the assessment order dated 29.02.2024 passed u/s. 147 r.w.s 144 r.w.s. 144B of the Act, the assessee filed appeal before the CIT(A) but remained unsuccessful. Hence, present appeal by the assessee. 3. Shri Rajiv Bansal appearing on behalf of the assessee submits that the assessee in his books of accounts had disclosed the profit earned during the year. The ld. AR submitted that the difference between sales reflected in Sales Register and ITR is due to GST. The sales declared in Return of Income is net of GST. The AO has erred in rejecting assessee’s books of accounts and has considered GST as part of the Revenue, whereas, gross profit percentage has to be applied on net revenue i.e. without GST. The GP percentage of assessee in the preceding three assessment years is as under:- AY G.P% 2016-17 6.37% 2017-18 5.07% 2018-19 4.77% 3 ITA No. 5291/DEL/2024 (AY 2019-20) The ld. AR submits that if the issue is restored back to the AO for re- examination, the assessee would be able to explain how the GP percentage has been calculated by the assessee and the method of determination of profit. 4. Per contra, Shri Sahil Kumar Bansal, representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submits that the assessee failed to furnish relevant documents before the AO. Hence, books of accounts were rejected. 5. Both sides heard, orders of the authorities below examined. The short issue that emerges from the submissions made by rival sides is the manner of determination of GP. It is an admitted fact that during assessment proceedings the assessee failed to furnish requisite information before the AO. The ld. AR of the assessee has made statement at Bar that if the issue is restored back to the AO, the assessee would cooperate and would furnish all the relevant material before the AO. The AO has rejected assessee’s books of account and has applied 8% GP on sales declared by the assessee in sales register. The short contention of assessee is that the sales declared in ITR are after excluding GST whereas in the sales register it is the gross sales (i.e. including GST). Without commenting on merits of the issues, I deem it appropriate to restore this appeal back to the AO for denovo assessment, after affording reasonable opportunity of making submissions to the assessee, in accordance with law. 6. The assessee is directed to respond to the notice(s) issue by the AO, without fail and furnish relevant documents in support of its submissions. 4 ITA No. 5291/DEL/2024 (AY 2019-20) 7. In the result, impugned order is set aside, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on Friday the 23rd day of January, 2025. Sd/- Sd/- (VIKAS AWASTHY) ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 23.05.2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent, 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "