Gross profit addition cannot rest on a different-purpose estimate when records show actual profit and evidence.

In fiscal assessment, liability cannot be sustained on an estimated admission made for a different purpose when the record shows a different actual gross profit. The Karnataka HC noted that the books and supporting material disclosed gross profit of 14.3 per cent, so the appellate authority was correct in rejecting the 30 per cent addition and the revisional authority lacked basis to interfere. Assessment must rest on the statutory scheme and evidence on record, not on an estimate that was not intended as a true profit computation. The revisional order was therefore set aside and the appellate relief in favour of the assessee stood confirmed.

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Issues: Whether the revisional authority was justified in restoring an addition of gross profit at 30 per cent when the material on record showed actual gross profit of 14.3 per cent, and whether tax liability could be sustained merely on the basis of the assessee's estimate or admission made for a different purpose.

Analysis: The addition of 30 per cent was not found to represent the actual profit earned by the assessee; it was an estimated figure adopted by the assessee while claiming exemption in another context. The assessment had to be made on the basis of the statutory scheme and the evidence on record, and not merely on an admission which was not intended as a true profit computation. Since the books and supporting material disclosed actual gross profit at 14.3 per cent, the appellate authority was right in holding that the assessing authority had no basis to apply 30 per cent as the addition. The revisional authority interfered despite the appellate finding being supported by the record and the legal position governing reassessment and revisional power.

Conclusion: The addition at 30 per cent could not be sustained, and the revisional interference was unjustified. The relief granted by the appellate authority was upheld in favour of the assessee.

Final Conclusion: The appeal succeeded and the order of the revisional authority was set aside, leaving the appellate order in force.

Ratio Decidendi: In fiscal matters, liability cannot be determined merely on an estimated admission made for a different purpose when the record shows a different actual profit figure; the assessment must rest on the material evidence and the statute.

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