Case Number: ITA 1670/DEL/2019
Appellant: N.M. Agro Pvt. Ltd., Delhi
Respondent: DCIT, Central Circle-5, New Delhi
Assessment Year: 2014-15
Case Filed On: 2019-02-28
Order Type: Final Tribunal Order
Date of Order: 2022-07-14
Pronounced On: 2022-07-14
The case of N.M. Agro Pvt. Ltd. vs DCIT, Central Circle-5, New Delhi (ITA 1670/DEL/2019) revolves around the allegations of unaccounted cash sales amounting to Rs. 30,43,345. Filed on 28th February 2019, this case pertains to the assessment year 2014-15 and was adjudicated by the Income Tax Appellate Tribunal (ITAT) in New Delhi. The final tribunal order was issued on 14th July 2022, with the judgment pronounced on the same day.
N.M. Agro Pvt. Ltd., based in Delhi, filed its return of income for the assessment year 2014-15. The issue arose when the Assessing Officer (AO) discovered evidence of cash sales during a survey operation under Section 133A of the Income Tax Act, conducted on 30th September 2013. Based on the evidence, the AO estimated unaccounted cash sales to be 10% of the declared sales for the period 01.04.2013 to 31.03.2014, resulting in an addition of Rs. 30,43,345.
Aggrieved by the addition, N.M. Agro Pvt. Ltd. appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], New Delhi. The appellant argued that the AO had unjustifiably rejected its books of account under Section 145(3) and made arbitrary estimates. Despite presenting detailed evidence, the CIT(A) upheld the AO’s addition, prompting the appellant to approach the ITAT.
The ITAT, led by Shri Anadee Nath Misshra, Accountant Member, and Shri Chandra Mohan Garg, Judicial Member, examined the appeal on 14th July 2022. The tribunal noted that the AO’s assessment order was passed under Section 143(3) and not under Section 144 (Best Judgment Assessment). The ITAT found that the AO’s estimation of unaccounted sales for the entire year, including the period after the survey date, lacked justification as there was no incriminating material for the period after 30.09.2013.
The tribunal decided to restrict the estimation of unaccounted cash sales to the period from 01.04.2013 to 30.09.2013, in line with the survey evidence. Both the appellant and the respondent agreed to this approach. The ITAT directed the AO to compute the unaccounted sales for this period at 10% of the recorded sales, amounting to Rs. 6,52,76,733, and to estimate the gross profit thereon at the declared rate of 1.69%, resulting in an addition of Rs. 11,03,177. The tribunal’s final judgment stated:
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
This order was already pronounced orally on 12th July 2022 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing. Now this order in writing is signed today on 14/07/2022.
-Sd/- (CHANDRA MOHAN GARG) JUDICIAL MEMBER
-Sd/- (ANADEE NATH MISSHRA) ACCOUNTANT MEMBER
This case reflects common procedural issues where estimations of unaccounted sales and lack of detailed evidence can lead to the need for reassessment. Similar cases often highlight the necessity for thorough documentation and the importance of presenting a clear defense during initial proceedings to avoid prolonged litigation.
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