SAP TRADERS,AGRA V. WARD1(1)(1), AGRA

ITA 41/AGR/2026

AI Insights

SAP Traders, a partnership firm engaged in trading alcoholic liquor, appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed the addition made by the Assessing Officer (A.O.) on account of unverifiable purchases at the rate of 3% of purchases. The A.O. had rejected the books of accounts due to the non-submission of sales bills and estimated the net profit at 3% of the cost of purchases. The Tribunal, while upholding the rejection of the books of accounts, reduced the estimated net profit to 1% of sales, considering the nature of the business and the specific facts of the case.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 845789 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Agra
• Assessment Year: 2022-2023
• Appeal Filed On: 13-01-2026
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (SMC) BENCH, AGRA BEFORE : SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI M BALAGANESH, ACCOUNTANT MEMBER ITA No. 41/Agr/2026 Assessment Year: 2017-18 SAP Traders 26 Gulmohar Vatika Khandari Road, Agra Pin- 282004 Vs. ITO Ward1(1)(1), Agra PAN : ADWFS9679J (Appellant) (Respondent) Assessee by None Department by Shri Anil Kumar, Sr. DR Date of hearing 17.03.2026 Date of pronouncement 24.03.2026 ORDER This is an appeal of the assessee arising out of the order of Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as ld.CIT(A)] in NFAC appeal No.NFAC/2021-22/10355274 dated 26.11.2025 of the A.Y. 2022-23 against the order passed by Assessment Unit, It Department (hereinafter referred to as the ld. A.O) u/s. 143(3) r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). 2. Though the assessee has raised several grounds of appeal before us , the only effective issue argued and challenged before us is the action of ld CIT(A) in confirming the addition made on account of unverifiable purchases at the rate of 3% of purchases. Printed from counselvise.com ITA No.41/Agr/2026 2 | P a g e 3. We have heard the rival submissions and perused the materials available on record. The assessee is a partnership firm engaged in the business of trading in alcoholic liquor and having one shop carrying the business with license in the name of 5 partners. The return of income for the A.Y. 2022-23 was electronically filed by the assessee firm on 30.09.2022 declaring total income of Rs. 9,85,290/-. During the course of scrutiny assessment proceedings, the assessee furnished the complete cash book for the whole year, purchase register for the period 01.04.2021 to 31.03.2022, bank statement, schedules to the accounts, ledger for all direct expense together with the depot price list for each of the products. The assessee had declared sales of Rs. 14,56,95,311/-. The assessee did not furnish the sales bills before the ld A.O. The ld A.O. observed that quantum of sales and the value of trade debtors reflected in the audited balance sheet could not be verified for want of sale bills accordingly concluded that the books of accounts and the book results cannot be relied upon and issued a show cause notice to reject the same u/s. 145(3) of the Act and proceeded to estimate the net profit. The ld A.O. noted that the assessee is selling Indian Made Foreign Liquor and after making purchases from UP Govt subjecting the same to TCS. The ld A.O. determined the net profit of the assessee at the rate of 3% of cost of purchases which is certified by Excise Department and also subjected to collection of tax at source u/s. 206 C of the Act and made an addition of Rs. 29,30,413(3% of total purchase of Rs. 13,05,23,357). This action of ld A.O. was upheld by the ld CIT(A). Printed from counselvise.com ITA No.41/Agr/2026 3 | P a g e 4. None appeared on behalf of the assessee despite issuance of notice hence we proceed to dispose of this appeal on hearing the ld D.R. and based on material available on record. The short issue that arises for our consideration in this appeal is as to whether estimation of net profit at the rate of 3% of purchases is justifiable or not in the facts and circumstance of the case. It is not in dispute that the total value of purchases of the assessee is Rs. 13,05,23,357/- and sales of Rs. 14,56,95,311 the assessee had shown net profit of Rs. 9,85,290 which works out to 0.68% of turnover. It is a fact that the assessee had not furnished sale bills before the lower authorities. In principle we uphold the action of the lower authorities in rejecting books of accounts and book results u/s. 145(3) of the Act. But considering the nature of business carried on by the assessee, we hold that estimation of net profit at the rate of 1% of sales would meet the ends of justice in the peculiar facts and circumstances of the instant case. We would like to make it very clear that the said decision would not apply as a precedent for other cases and even for the assessee in earlier and the subsequent assessment years. Accordingly, the grounds raised by the assessee are partly allowed. Printed from counselvise.com ITA No.41/Agr/2026 4 | P a g e 5. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 24.03.2026 -Sd/- -Sd/- (MAHAVIR SINGH) (M BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 24.03.2026 *Aamir Siddiqui, PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra Printed from counselvise.com "