Gross taxation of admitted unaccounted receipts applies when no reliable proof of matching expenditure is produced.

Unaccounted receipts admitted during survey may be taxed on the gross amount where the assessee fails to produce reliable evidence of corresponding unaccounted expenditure. The assessee's later attempt to restrict taxation to only the embedded profit element was rejected because no flat-wise details or credible material supported that claim, while the survey admissions and documents remained on record. On that basis, the view that only estimated profit should be brought to tax was not accepted, and the deletion by the first appellate authority was held unsustainable.

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Issues: Whether the unaccounted receipts found during survey were liable to be taxed on the gross amount or only the profit element embedded in such receipts.

Analysis: The assessee had admitted unaccounted receipts during the survey and in subsequent letters, but later sought to tax only the estimated profit component. The Court noted that the assessee did not produce any flat-wise details or credible material to show corresponding unaccounted expenditure. In the absence of evidence of such expenditure, and in view of the prior admissions and documentary material found during survey, the plea that only profit embedded in the receipts should be taxed was not accepted.

Conclusion: The gross unaccounted receipts were taxable and the deletion made by the first appellate authority was unsustainable.

Ratio Decidendi: Where unaccounted receipts are admitted and no reliable evidence of unaccounted expenditure is produced, the entire receipts may be brought to tax instead of only the estimated profit element.

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