2023 (9) TMI 893 - HC - Income Tax

Tax Appeal Upheld: Gross Profit Estimate at 2% for Appellant Group

THE PRINCIPAL COMMISSIONER OF INCOME TAX 3 Versus M/s BB TRADELINK AGRO PVT. LTD.

The Tax Appeal was filed against the order of the Income Tax Appellate Tribunal for Assessment Year 2012-13. The Appellate Tribunal upheld the decision of ... GP estimation - addition being the difference between gross profit shown by the assessee and computed @4% of sales as per the trading results declared by the assessee - CIT(A) restricting the G.P@2% - HELD THAT:- Based on the estimated gross profit for the group and looking to the subsequent assessment orders passed by the AO for the later assessment years, the Tribunal confirmed the order of the CIT(A). The concurrent findings of the authorities therefore do not involve any substantial question of law and the appeal is held to be without any merit. Issues:The appeal involves the question of whether the Appellate Tribunal erred in upholding the decision of the Ld.CIT(A) regarding the restriction of Gross Profit and the addition made by the Assessing Officer.Summary:The Tax Appeal was filed under section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal for Assessment Year 2012-13. The appellant, a part of the Agrawal Group, had a search action conducted under section 132 of the Income Tax Act, leading to discrepancies found by the Assessing Officer in the books of accounts. The Assessing Officer estimated gross profit at 4% on sales turnover due to low profits shown by the appellant in the books for the relevant assessment year. This estimation resulted in an addition of Rs.5,38,26,869. The Ld.CIT(A) partly allowed the appeal, reducing the addition. The Appellate Tribunal confirmed the decision of the Ld.CIT(A) and dismissed the appeal by the revenue.The Tribunal upheld the decision of the Ld.CIT(A) to estimate the gross profit at 2% for the appellant group, considering comparable instances and the nature of the agricultural produce trading activity. The Tribunal noted that the Assessing Officer did not provide sufficient evidence to support the higher estimation of 4% gross profit. Based on previous assessment orders and settlements, the Tribunal found the 2% estimation reasonable and in line with past practices. Consequently, the Tribunal concluded that the appeal lacked merit and upheld the order of the CIT(A) regarding the estimated gross profit for the group.In conclusion, the Tribunal found no substantial question of law in the concurrent findings of the authorities. Therefore, the appeal was dismissed with no costs imposed.