2025 (8) TMI 191 - AT - Income Tax

Turnover Estimation Reduced from 20% to 5% for Waste Paper Recycling Business under Income Tax Rules

The ITAT Delhi reduced the turnover estimation rate from 20% to 5% for the assessee engaged in the waste paper recycling business, noting that purchases ... Estimation of turnover - Lower authorities have assessed the assessee at the rate of 20% on sales turnover in waste paper recycle business- HELD THAT:- DR could hardly rebut the clinching facts, inter alia, emerging from the case file that neither the purchases made by the assessee remained unexplained, nor the nature of the primary business activity which has been carried on in unorganized sector involving most of the small-time traders insisting for cash payment only. No concrete comparable instances discussed in the lower orders. It is deemed appropriate in the larger interest of justice to assess the assessee’s foregoing turnover @ 20% to that extent @ 5% only with a rider that the same shall not be treated as a precedent. Assessee’s appeal is partly allowed. The Appellate Tribunal (ITAT Delhi) heard the assessee's appeal for AY 2018-19 against the CIT(A)/NFAC's reopening of assessment under section 147 read with section 144 of the Income-tax Act, 1961. The assessee did not press the ground challenging the validity of reopening. The sole substantive issue concerned the application of a 20% rate on the sales turnover (Rs. 1,01,15,230) in the waste paper recycling business. The Tribunal noted that the departmental representative failed to rebut key facts: the purchases were not unexplained, the business operated in an unorganized sector with predominantly cash transactions among small traders, and no concrete comparable cases were cited in the lower orders. In the interest of justice, the Tribunal reduced the rate applied on turnover from 20% to 5%, explicitly stating that this decision 'shall not be treated as a precedent.' The appeal was partly allowed, with further computations to follow as per law.