AI Structured Summary
Not yet generated for this judgment
Judgment
PER VIKAS AWASTHY, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 10.02.2026, for Assessment Year 2020-21.
Ms. Tanuja Rawat, appearing on behalf of the assessee submits that the assessee is a proprietor of M/s. Sachin Cold Store. Admittedly, no return of income was filed by the assessee for the impugned assessment year. The Assessing Officer (AO) issued notice u/s.148 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) on 20.03.2024. In response to the said notice, the assessee filed return of income declaring total income of Rs.2,15,720/-. During assessment proceedings, the AO observed that the assessee has declared total sales amounting to Rs.3,13,42,755/- and total purchases amounting to Rs.2,90,84,885/- during the relevant period. Since, the assessee was not able to furnish relevant details/documents to substantiate purchases. The AO disallowed the said purchases and estimated the Business Income at Rs. 29,04,289/- i.e. @10% of the total purchases. The assessee carried the issue in appeal before the CIT(A). The CIT(A) dismissed appeal of the assessee and confirmed addition made by the AO.
The ld. Counsel submits that the assessee in ground no. 3 to 6 of appeal has assailed the assessment order/reassessment proceedings on legal issues. However, the same are not pressed. The assessee in ground no. 7 and 8 of appeal has assailed the action of AO in estimating business income of assessee @10% of purchases. The said estimation of profits is on the higher side. The ld. Counsel prayed for restricting the addition to GP declared by the assessee i.e. 2.68%.
Per contra, Shri Manoj Kumar, representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submits that the AO has been very considerate and has restricted addition to 10% of the total bogus purchases. He prayed for upholding the addition made by the AO.
Both sides heard, orders of the lower authorities examined. The assessee in appeal has assailed the addition made by AO on estimations. The assessee has declared total sales of Rs.3, 13,24,755/- and total purchases to the tune of Rs.2,90,84,855/- during the period relevant to the assessment year 2020-21. The AO rejected the profit declared by the assessee. The AO has held that in the absence of any supporting documents, the purchases cannot be accepted. The AO has estimated business income of the assessee at 10% of total purchases. I am of considered view that the addition by estimating business income @10% of alleged bogus purchases is on the higher side. To meet the end of justice, the business income of the assessee is estimated at 4% of the alleged bogus purchases. Thus, ground no. 7 and 8 of appeal by the assessee is partly allowed in the terms aforesaid.
Ground no. 9 to 11 and 13 of appeal are argumentative and are in support of ground no. 7 and 8 of appeal. Hence, require no separate adjudication.
In ground no. 12 of appeal, the assessee has assailed initiation of penalty proceedings u/s.270, 272A(1)(d) & 271B of the Act. Challenge to penalty proceedings at this stage is premature, hence, ground no. 12 of appeal is dismissed.
In ground no. 14 of appeal, the assessee has assailed charging of interest u/s.234A and 234B of the Act. Levy of interest u/s/.234A and 234B of the Act is consequential and mandatory, hence, ground no. 14 of appeal is dismissed.
In the result, appeal of the assessee is partly allowed.