UMESH KUMAR BAJAJ HUF ,GHAZIABAD V. DCIT CENTRAL CIRCLE, GHAZIABAD

ITA 2083/DEL/2023

AI Insights

The case involves Umesh Kumar Bajaj (HUF), who appealed against the order of the CIT(A)-Noida-3, which upheld the AO's decision to reject the books of accounts and estimate the net profit at 12.06% of turnover for the assessment year 2019-20. The AO had made an addition of Rs. 82,18,690, which was contested by the assessee on grounds of reduced handling charges and increased operational costs. The CIT(A) granted partial relief after considering some of the assessee's explanations but upheld the rejection of the books. The Tribunal, after hearing both parties, decided to grant further relief to the assessee, reducing the addition to Rs. 36,32,694.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31587 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2019-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: RAKESH GUPTA; SAKSHM AGARWAL
• Keywords: Depreciation
• Section: 142(1); 143(2)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 2083/Del/2023 A.YR. : 2019-20 UMESH KUMAR BAJAJ (HUF), R-5/21, RAJ NAGAR, GHAZIABAD UTTAR PRADESH-201002 (PAN: AAAHU0707Q) VS. DCIT, CENTRAL CIRCLE, GHAZIABAD UTTAR PRADESH (APPELLANT) (RESPONDENT) Assessee by : Dr. Rakesh Gupta, Adv. & Sh. Sakshm Agarwal, CA Department by : Shri Dayainder Singh Sidhu, CIT(DR) Date of hearing : 27.03.2025 Date of pronouncement : 04.04.2025 ORDER PER SHAMIM YAHYA, AM : Assessee has filed the Appeal against the order dated 01.5.2023 passed by the Ld. CIT(A)-Noida-3, relating to assessment year 2019-20. 2. Brief facts of the case are that in this case, return of income was filed on 30.10.2019 declaring total income of Rs. 22,67,310/-. Notice u/s. 143(2) of the Act was issued on 29.9.2020 and duly served upon the assessee. Later on, notices u/s. 142(1) of the Act alongwith questionnaire were also issued and AO completed the assessment by making addition of Rs. 82,18,690/- on account of estimated NP @12.06% of turnover over (appellant being proprietor of M/s Bajaj Prime Lubes is wholesale and retail dealer of different type of industrial lubricants) by rejecting books of accounts. In doing so, the AO rejected 2 the books of accounts. Against the above order, assessee preferred appeal before the Ld. CIT(A). Ld. CIT(A) noted the following submissions of the assessee: “In the assessment proceeding, the appellant submitted that the other reason for decline in the net profit is due to reduction in handling charges received from HPCL, as their depot remained inoperative for the part of the year. The handling charges reduced from Rs. 88 lacs in the preceding year to Rs. 55 lacs in the current year. From the profit and loss accounts of FY 2017-18 and 2018-19, it can be seen that HPCL COD handling charges in FY 2017-18 were Rs. 88,21,870/- and the same reduced to Rs. 55,78,819/- in FY 2018-19. Thus there is reduction of Rs. 32,44,051/-. Now this receipt is from Hindustan Petroleum Corporation Ltd. and AO could not bring anything on record from which it may be conclusively proved that this receipt is suppressed. Further, the appellant submitted that with the increase in turnover, the assessee needed addition staff and space which resulted in increase in salary and rent by Rs. 10 lacs. In this regard from the profit and loss accounts of FY 2017-18 & 2018-19, it can be seen that salary to staff in FY 2017-18 was Rs. 44,95,750/- and the same increased to Rs. 50,24,066/- in FY 2018-19 thus there was increase of Rs. 5,28,316/- in the salary expenses. Further the appellant submitted that another major reason for decrease in net profit was the net balance of Rs. 8 lacs written off during the year. In this regard from the profit and loss accounts of FY 2017-18 and 2018-19, it can be seen that there is no such balance written off in FY 2017-18 and the same is Rs. 8,13,629/- in FY 2018-19.” 2.1 Thereafter, Ld. CIT(A) granted part relief by observing as under:- “Therefore, from the records it has been found that the appellant has successfully explained some circumstances which were responsible in reduction of NP to the extent of Rs. 45,85,996/- [Rs. 32,44,051/- + Rs. 5,28,316/- + Rs. 8,13,629/-]. However, this needs to be be kept in mind that in the assessment proceeding, the appellant is required to produce books of accounts with supporting vouchers, so that 3 the claim of expenses may be verified in entirety. There is no doubt that appellant failed to produce the books in the assessment proceedings by taking recourse that there was paucity of time in the submission dated 22.9.2021. In the remand proceedings also, the appellant could not furnish all the books and could not justify substantial reduction in the net profit. Therefore looking to the facts and circumstances of the case, decision of AO to reject the books of accounts and estimation of NP @12.06% is upheld, however, the addition of Rs. 82,18,690/- is reduced by Rs. 45,85,996/- since the reduction in the profit to this extent has been found as explained. Therefore addition of Rs. 36,32,694/- [rs. 82,18,690/- (-) Rs. 45,85,996/-] is hereby upheld. 3. Against the above order, assessee is in appeal before us. 4. We have heard both the parties and perused the records. Ld. Counsel for the assessee pleaded that though AO has rejected the books of account, Ld. CIT(A) has granted part relief on the same books of accounts that means Ld. CIT(A) has accepted the books of accounts, he pleaded that there is no justification for allowing only part relief. He prayed for following further relief :- Expenditure side Rent paid 4,78,240 Nil in AY 18-19 Vat paid 1,91,874 Nil in AY 18-19 Depreciation 1,76,047 Increase Finance Charges 1,17,681 Nil in AY 18-19 Income side Intt. On FDR 2,13,933 Nil in AY 19-20 Incentive 1,00,000 Total 12,77,775/- 4 4.1 Upon careful consideration, upon hearing both the sides and after going through the orders of the authorities below, we are of the opinion that assessee deserve more relief, hence, the request of the assessee’s counsel is acceptable. Accordingly, we hold that further relief of Rs. 12,77,775/- as above is to be allowed to the assessee. We hold and direct accordingly. 5. In the result, the appeal of the assessee is partly allowed. Order pronounced on 04/04/2025. Sd/- Sd/- (SUDHIR PAREEK) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBhatnagar Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "