Case Number: ITA 1400/DEL/2021
Assessment Year: 2015-16
Decision Date: 2023-06-30
The case revolves around the appeal filed by Rajendra Shankar Singhal against the decision of the Commissioner of Income-tax (Appeals)-10, New Delhi, regarding the profit calculation on purchases not disclosed in the original tax filings for the assessment year 2015-16.
The primary issue at dispute is the addition of Rs. 62,46,959 made by the Income-tax Officer, which represents 8% of the suppressed purchases amounting to Rs. 7,80,86,998. The Assessing Officer made this addition based on a presumption of suppressed sales and corresponding profit, a methodology also employed in the previous assessment year 2014-15.
The appellant argued that the application of an 8% profit rate was excessively high and unsubstantiated by the actual business conditions, including the impact of weather on sales and specific market challenges faced during the year.
The Tribunal considered the submissions, focusing on the justification for the profit rate applied to the undisclosed purchases. The appellate authority highlighted discrepancies in the assessee’s accounts and the lack of substantiating evidence for sales made at lower prices purportedly due to adverse weather conditions.
In its ruling, the Tribunal adjusted the profit rate to 3.5% from 8%, citing the need to align with the profit rates accepted for recorded sales and acknowledging the unique business circumstances presented by the assessee. This adjustment was seen as a more reasonable reflection of the business reality and the challenges documented during the fiscal year.
This decision underscores the complexity of tax assessments involving unrecorded transactions and the importance of providing substantial evidence to support claims during appeals. The Tribunal’s decision to reduce the profit rate highlights its role in ensuring equity and reasonableness in tax assessments, providing a critical analysis of both the taxpayer’s and the tax authority’s positions.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform