SAPNA ENTERPRISE,AHMEDABAD V. THE ITO, WARD-3(3)(5), AHMEDABAD

ITA 330/AHD/2025

AI Insights

The case involves Sapna Enterprise, which appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2017-18. The primary contention was the assessment of net profit on a substantial turnover reported by the enterprise. The Assessing Officer had raised concerns based on the audit report, which highlighted discrepancies and lack of supporting documents for the transactions reported in the Profit and Loss account. The Tribunal considered the unique circumstances of a flood affecting the business operations and records, leading to a revised estimation of net profit.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707046 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Appeal Filed On: 12-02-2025
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GARG
• Assessee Lawyers: PARIN SHAH

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT Ms SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.330/Ahd/2025 (Assessment Year: 2017-18) Sapna Enterprise, A-102, Samay Apartment Near Azad Society, Ambawadi Ahmedabad-380015. [PAN :AAGFT2725 F] Vs. Income Tax Officer, Ward-3(3)(5), Ahmedabad. (Appellant) .. (Respondent) Appellant by : Shri Parin Shah, AR Respondent by: Shri Rajeev Garg, Sr. DR Date of Hearing 03.07.2025 Date of Pronouncement 09.07.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned This appeal is filed by the Assessee against the appellate order dated 22.02.2024 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, relating to the Assessment Year 2017-18. 2. On verification of audit report, it is noticed that the assessee has shown total turnover of Rs. 2,62,37,48991/-. The assessee has furnished return of income and P & L account only. The assessee has not submitted any books of accounts or any other details called for. The assessee did not furnish any evidence in support of his claim of expenses, purchases, etc. shown in P&L account to the return of income. ITA No.330/Ahd/2025 Sapna Enterprise Vs. ITO Asst. Year : 2017-18 - 2– On perusal of audit report, it is noticed that the assessee has shown net profit Rs.661/-only. The assessee has shown GP at 0.44% in preceding year FY 2015-16. 3. Further, in form 3CB to audit report, the auditors observations are found adverse and reproduced as under. 1. Valuation of closing stock is subject to management confirmation. 2. Debtors and creditors balance are subject to confirmation. 3. No details of PAN available for loan advanced and received. 4. Though proper books of accounts were maintained but we were not able to express the opinion of true and fair view to lack of invoices up to certain extent. 5. The documents supporting physical transfer of goods are also missing 4. The Assessing Officer held that the above remarks of the auditor also reveal that there is no physical delivery of goods and the assessee is merely engaged in billing entry providing activity. Further, during the assessment, no details are furnished even bank account statements are not furnished. Based on the profit and loss account, there is sales of Rs. 2,61,08,88,797/- and purchase of Rs 2,62,48,14,799/- and these purchases and sales are of the items namely Oil Seed Cake, Gaur seed, Jeera and meithai. The Assessing Officer held that the net profit as shown Rs.661/- on the total turnover of Rs. 2629694799/- is not ITA No.330/Ahd/2025 Sapna Enterprise Vs. ITO Asst. Year : 2017-18 - 3– acceptable. After observing so, the Assessing Officer determined net profit @1% on total gross sales of Rs.2,61,08,88,797/- of oil seed cake, jeera etc. shown in the Profit and loss account which amounts to Rs.2,61,08,890/-. 5. Aggrieved by the order of the Ld. CIT(A), the Assessee filed appeal before the Tribunal. 6. Before us, the Ld. AR submitted that the profit on sale of agricultural commodities cannot be 1% and the traders trade on meager margins. The Ld. DR argued that even in agricultural commodity trading, 0.05% is accepted market averages. The ld. DR accepted for lump-sum of Rs.10,00,000/- which can be determined as net profit on estimate basis. Not laying down any legal proposition, in the specific facts of the instant case, since there was flood during the period which led to loss of grains as well as books of accounts, we hold that Rs.10,00,000/- can be fairly treated as net profit earned by the assessee. 7. In the result, the appeal of the assessee is partly allowed. The order is pronounced in the open Court on 09.07.2025 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 09.07.2025 MV ITA No.330/Ahd/2025 Sapna Enterprise Vs. ITO Asst. Year : 2017-18 - 4– आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "