#gross profit margin

The ITAT Delhi has ruled that tax authorities cannot impose a mechanical 2% income estimation on businesses with a demonstrably lower and consistent gross profit margin of just 0.29%. This sets a binding precedent for traders and pass-through entities, ensuring estimated income assessments must reflect commercial reality, not arbitrary benchmarks, and deletes penalties imposed on such taxpayers.

ITAT Delhi rules that if sales are accepted but purchases are alleged to be bogus, disallowance under Section 69C must be restricted to the gross profit margin rather than the entire purchase value. The ruling reinforces judicial precedent, protecting assessees from excessive additions where sales legitimacy is not challenged.