M/s. Rayban Food Pvt. Ltd. vs Addl. CIT

PER SATBEER SINGH GODARA, JM

This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)-30 [in short, the “CIT(A)”], New Delhi’s order dated 11.09.2025 having DIN and order no. ITBA/APL/M/250/2025-26/1080620286(1), involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Heard both the parties. Case file perused.

2 For the reasons stated in the assessee’s condonation averments, delay of 1 days in filing of the instant appeal is condoned in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).

The assessee’s first and foremost substantive ground raised in the instant appeal pleads that both the learned lower authorities’ respective assessment findings dated 21.12.2019 as well as the lower appellate discussion herein have erred in law and on facts in estimating NP @ 8% of its turnover which stands upheld to the extent of 2%; respectively.

That being the case, learned counsel invites our attention to the CIT(A)’s detailed discussion at para 11.2 (page 49) taking note of the assessee’s NP @ 1.08%; 1%; 0.93%; 2%, 0.56% and 0.93% in assessment years 2010-11 to 2015-16; respectively. His case accordingly is that none of the foregoing cases (except for AY 2013-14) involves the assessee’s NP rate of 2% as taken in the lower appellate discussion. We thus find merit in the assessee’s instant first and foremost substantive ground to direct the learned Assessing Officer to adopt “strict average” of its foregoing NP rates in the preceding six assessment years or that at the flat rate of 1%, whichever is higher, to be followed by his necessary computation as per law. The assessee’s instant first and foremost substantive grievance is accordingly accepted in very terms.

Next comes the second substantive issue between the parties. Both the learned lower authorities appear to have treated a sum of Rs.1,50,00,000/- coming from the assessee’s director, Ms. Mumtaz Ilahi as unexplained cash credits. There is hardly any dispute that Ms. Mumtaz Elahi, assessee’s investor herein happens to be its director getting assessed in the same jurisdiction all along. He had further filed his income tax return(s), banks statement(s), and confirmation as well which have nowhere been specifically rebutted. We thus conclude that the assessee has indeed proved the identity, genuineness and creditworthiness of these advances to delete the impugned addition of Rs.1.50 crores in very terms.

The assessee’s third substantive ground is that both the learned lower authorities have erred in law and on facts in making section 69B addition of Rs.37,38,210/- in assessment as upheld in the lower appellate discussion. The impugned sum admittedly represents the difference between the assessee purchase consideration of immovable property(ies) for total value of Rs.2,43,91,790/- as against that determined by the DVO amounting to Rs.2,70,18,000/-; respectively.

Faced with this situation, we see no merit in the impugned addition as well since there is already exists a specific provision in section 56(2)(vii) of the Act dealing with such an instance which has nowhere been invoked in both the lower proceedings. There is further no material on record that the assessee had actually paid its purchase consideration over and above that declared hereinabove. We thus delete the impugned section 69B addition of Rs.37.38 lakhs since based on mere conjectures and surmises only.

This assessee’s appeal is allowed.