The estimation of gross profit must reflect actual business activity and be justifiable against sufficient evidence. The reliance on accommodation entries renders unsupported profit claims inadmissible.

ORDER

Per Satbeer Singh Godara, Judicial Member:

These assessee’s four cases ITA Nos. 4102 to 4105/Del/2024 and the Revenue’s cross appeals in the latter three appeals Nos. 4441 to 4443/Del/2024; in assessment years 2015-16 to 2018-19, arise against the CIT(A)/NFAC, Delhi’s DIN & order Nos. ITBA/NFAC/S/250/2024- 25/1067638658(1), 1067639618(1), 1067639834(1) and 1067640243(1) dated 14.08.2024, in proceedings u/s 147 of the Income Tax Act, 1961 (in short “The Act”), respectively.

2. Heard both the parties at length. Case files perused.

3. We note at the outset that both the assessee as well as department’s respective cross appeals raise a common issue of correctness of the learned CIT(A)/NFAC’s lower appellate findings partly reversing the Assessing Officer’s action assessing the former’s gross profits @ 26.12% to 10% only; reading as under:

“11. The next issue of appeal pertain to estimating the gross profit at Rs.1,17,32,650/- taken through grounds No. 5, 6 and 7. According to the appellant, the AO calculated the income as Rs.1,37,97,170/- by adding Rs.1,37,32,650/- to the returned income of Rs.64,520/- and incorporating an af-hoc GP of 23.73 % into the sale of moong dal during the year. The appellant further contends that the gross profit (GP) for grains (moong dal) purchased from Parth International is 2.39% for FY 201516, while the gross profit (GP) for products other than grains (moong dal) is 26.12% for FY 2015-16.

11.1 Before I continue with the issue, I feel it necessary to mention that the appellant submitted additional evidence in the appeal proceedings through their submission dated 27/05/2024.The relevant portion of the appellant’s submission is reproduced below for convenience.

“a. copy of VAT Returns are attached as Annexure-A for your reference

b. The sales made were through valid tax invoices. The copy of sales invoices issued to customers are attached as Annexure-B for your reference.

c. The Purchase Invoices from whom purchases are made are attached as Annexure-C for your reference.

d. The copy of Confirmation of Accounts of Purchase & Sale Parties are attached as Annexure-D.

e. The above Purchase & Sales parties have been registered under DVAT. The copy of online status of above parties under D-VAT are attached as Annexure-E.

f. The signed ledger accounts of above parties are attached as Annexure- F.

g. The payment made/received are through banking channel only. The copy of Extract of Bank Statement reflecting the relevant payments against sale & purchase made are attached as Annexure-G.

h. The similar case of M/s. Siya General Trading Pvt. Ltd., a company dealing in grains a GP Ratio @ 0.24% has been observed and assessment has been made on returned income. The copy of assessment order, calculation of GP Ratio and copy of financial statement of M/s Siya General Trading Pvt. Ltd.

5. Since certain documents were required to be obtained from the appellant at the fag end of assessment proceedings by Ld. AO, therefore suitable time was also sought. Apparently, huge additions were made not because there was any fallacy in the claim or anything in contradiction brought of record at assessment stage.

6. It is also a matter of fact that for reason beyond control, on account of certain technical exigencies the appellant could not place on record additional supporting documents and therefore precluded from submitting the same as a result made were treated as unexplained and additions/disallowances were made.

7. It may be appreciated that inspite of best of efforts by the appellant, for reasons beyond control and in absence of proper opportunity to rebut the case granted by Ld. A.O., the appellant was prevented by sufficient cause to place on record certa