Consignment Sales Cannot Be Construed as Own Turnover for Income Estimation: ITAT [Read Order]
ITAT held that consignment sales carried out by a commission agent on behalf of consignors cannot be treated as the assessee's own turnover for estimating income.
![Consignment Sales Cannot Be Construed as Own Turnover for Income Estimation: ITAT [Read Order]](https://images.taxscan.in/h-upload/2026/06/24/2141290-itat-clarifies-turnover-treatment-of-consignment-sales-by-taxscan.jfif "Consignment Sales Cannot Be Construed as Own Turnover for Income Estimation: ITAT [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, upheld the deletion of an addition made on account of estimated profit after finding that the Assessing Officer had misconstrued consignment sales as the assessee's turnover. The assessee, Chilles & Garlic Commission Co., was a commission/Del Credere agent dealing in agricultural commodities. During survey proceedings,...
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, upheld the deletion of an addition made on account of estimated profit after finding that the Assessing Officer had misconstrued consignment sales as the assessee's turnover.
The assessee, Chilles & Garlic Commission Co., was a commission/Del Credere agent dealing in agricultural commodities. During survey proceedings, it was noticed that the assessee had paid APMC cess of Rs.3.53 lakh. By reverse calculation, the Assessing Officer estimated sales of Rs.4.42 crore as against sales of Rs.4.66 lakh shown by the assessee and made an addition towards profit on discrepancy in sales.
The CIT(A) deleted the addition.
Aggrieved, the Revenue preferred an appeal before the Tribunal.
Before the Tribunal, the Revenue contended that the CIT(A) had erred in deleting the addition made on account of undisclosed sales and estimated profit and in holding that the APMC cess represented consignors' turnover.
The assessee submitted that APMC cess was payable even in respect of consignment sales undertaken on behalf of consignors and that commission income from such transactions had been offered to tax.
The Tribunal comprising Amit Shukla (Judicial Member) and Arun Khodpia (Accountant Member) observed that the assessee had transacted through direct sales as well as consignment sales on behalf of other sellers/consignors and had declared commission income in its books of account. It noted that the Assessing Officer had wrongly treated consignment sales as the turnover of the assessee.
The Tribunal further observed that the CIT(A) had reconciled the turnover under different categories and rightly concluded that the addition was uncalled for and unwarranted.
Accordingly, the Tribunal upheld the order of the CIT(A) deleting the addition made on account of profit on discrepancy in sales.
The Revenue's appeal was partly allowed for statistical purposes.
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