SURENDRA SINGH,JAIPUR V. ITO WD 1(1), JPR, JAIPUR

ITA 601/JPR/2025

AI Insights

The case involves Surendra Singh, who operates a milk agency business for Mother Dairy, contesting the income tax assessment for the year 2018-19. The primary dispute was the net profit rate applied by the Assessing Officer, which was 8%, significantly higher than the actual profit margins of 1.5% to 2% typical for such businesses. The Tribunal considered precedents and the specific nature of the assessee's business, which primarily dealt with milk and dairy products, and not fruits and vegetables as assumed by the Assessing Officer. The Tribunal's decision to apply a 2.25% profit rate was based on a fair estimation considering the business's actual operations and the lack of regular books of accounts maintained by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713174 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Shri Tasavver Husain vs. ITO Ward-4(2), Farrukhabad
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH
• Assessee Lawyers: R.S. POONIA
• Keywords: Set aside; Business income
• Section: 147; 44AD

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHES “SMC”, JAIPUR BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER ITA. No. 601/JPR/2025 Assessment Year : 2018-19 Surendra Singh C/o. CA R.S. Poonia, D-82B, Siwad Area, Krishna Marg, Bapu Nagar, Jaipur - 302015, Rajasthan PAN : CHWPS8337K Vs. ITO, Ward 1(1), Jaipur Appellant Respondent आदेश / ORDER This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/ NFAC dated 13.02.2025 arising out of the order for A.Y 2018-19 framed u/s 147 r.w.s 144B of the Act dated 20.03.2023 framed by Assessment Unit, Income Tax Department. 2. The assessee has raised following grounds of appeal : “1. That under the facts and circumstances of the case ld. CIT (Appeals), NFAC has erred in law and facts in confirming the order passed by the learned assessing officer which is liable to be quashed. Kindly quash the same. 2. That under the facts and circumstances of the case the Id. CIT (Appeals), NFAC has erred in law and facts in not considering actual profit percentage as prevailing in this particular business. Kindly direct to consider the same and delete the addition. Appellant by : Shri R.S. Poonia, CA Respondent by : Shri Shri Gautam Singh Choudhary, JCIT Date of hearing : 30.06.2025 Date of pronouncement : 29.07.2025 Printed from counselvise.com ITA No.601/JPR/2025 Surendra Singh 2 3. That under the facts and circumstances of the case the Ld. CIT (Appeals), NFAC has erred in law and facts in confirming the addition of Rs. 9,60,000/- based on assumptions and presumption surmises and conjectures. Kindly delete the same. 4. That the appellant craves the permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.” 3. At the outset, ld. Counsel for the assessee placing reliance on the decisions of Co-ordinate Bench, Agra in the case of Shri Tasavver Husain vs. ITO Ward-4(2), Farrukhabad in ITA No. 11/Agr/2023 dated 12.06.2024 submitted that the income of the assessee is from carrying on milk agency business of Mother Dairy and net profit rate from sale of milk and dairy products is approx 1.5% to 2% but Ld. Assessing Officer grossly erred in applying Net Profit rate of 8%. He also submitted that even though the assessee is not dealing into fruits and vegetables but still ld. AO has considered it be part of total turnover and applied the higher net profit rate. 4. On the other hand, ld. Departmental representative supported the order of ld. CIT(A). 5. I have heard the rival contentions and perused the record placed before me. I observe that the assessee is running agency of Mother dairy in terms of the certificate given by Mother Dairy Fruits and Vegetables Pvt. Ltd. The assessee who is an ex-serviceman has been granted the booth for sale of milk and milk products. In the return of income, assessee has disclosed income of Rs. 2,58,740/- which comprises of pension of Rs. 2,08,739/- and balance income from dairy business on the turnover of Rs. 1.30 CR. Admittedly, the assessee is not maintaining regular books of accounts. Printed from counselvise.com ITA No.601/JPR/2025 Surendra Singh 3 6. Before me, the only issue relates to estimation of net profit from dairy business. The ld. AO has considered that the assessee is dealing in milk, dairy products, daal, fruits and vegetables for which the profit/commission margin is 0.50%, 5%, 3% and 9% respectively. With the support of certificate from Mother Dairy, ld. Counsel for the assessee has submitted that the assessee is not dealing in fruits and vegetables. In so far as remaining items are concerned the ratio of sales is 70:25:5 of the total sales of milk, milk product and pulses. Taking basis of this ratio of weighted contributions on total turnover of Rs. 1.30 cr, the net profit/commission comes to Rs. 2,43,100/- (approx). In the case of Shri Tasavver Husain vs. ITO Ward-4(2), Farrukhabad (supra), relied by learned Counsel for the assessee in that case, the assessee maintained the books of accounts and also filed the audit report and 1.30% net profit margin has been accepted. However, in the instant case, the assessee is not maintaining any books of accounts. In such cases section 44AD of the Act is generally applicable and 8% net profit is calculated but in the given case which is milk agency business and the assessee is only earning profit in the form of commission from the Mother Dairy Fruits and Vegetables Ltd. and that too at pre- determined rate referred above therefore, it is not justified to calculate the net profit of the assessee @ 8%. 7. However, considering the facts and circumstances of the case and also being fair being fair to both the parties, I hereby estimate the net profit rate of 2.25% from sale of milk, dairy milk products and pulses of Mother Dairy and net profits for this year on total sale of Rs. 1.30 cr (approx.) admitted by the assessee comes to Rs. 2,92,500/- and after reducing income Printed from counselvise.com ITA No.601/JPR/2025 Surendra Singh 4 from the business income declared in the income tax return, the excess amount is sustained as an addition in the hands of the assessee. Ld. Assessing Officer shall give the effect as per my direction given above. Impugned order is set aside and Grounds of appeal raised by the assessee are partly allowed. 7. In the result, appeal filed by the assessee is partly allowed. Order pronounced on this 29th day of July, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER \u0001दनांक / Dated : 29th July, 2025. Ganesh/Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, Jaipur / DR, ITAT, “SMC” Bench, Jaipur 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Jaipur Printed from counselvise.com "