Restriction on double taxation: additions limited to undisclosed amounts; arbitrary profit estimation deleted; higher vehicle depreciation allowed.

Additions for unexplained transactions must be confined to amounts not already declared in the return to avoid double taxation; this restriction follows verification of seized documents, statements and declared turnover and operates in favour of the assessee. Estimation of income at a presumptive 20% net profit was held unsustainable where audited books were not rejected and no material defect was shown, resulting in deletion of such additions. Higher depreciation at 30% on heavy vehicles used for transport or hiring was allowed where evidence and prior consistent allowance supported the claim.

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Issues: (i) Whether additions for unexplained transactions detected from search/seizure should be restricted to the portion not already reflected in the return to avoid double taxation; (ii) Whether additions based on a 20% estimated net profit are sustainable where audited books are not rejected; (iii) Whether higher depreciation at 30% on heavy vehicles qualifies where vehicles are used for transport/hiring.

Issue (i): Whether unexplained transactions identified from search/seizure could be taxed in full when part of the amounts were already shown in the assessee's return.

Analysis: Seized materials and statements established existence of additional unaccounted transactions. Simultaneously, a portion of the receipts corresponding to those transactions was disclosed in the audited return. The confirmed additions were therefore adjusted by deducting amounts already reflected in the return to prevent taxing the same receipts twice. The restriction was applied after verifying seized documents, statements, and declared turnover.

Conclusion: Addition confirmed only to the extent not already included in the return; restriction upheld in favour of the assessee.

Issue (ii): Whether the AO's application of a 20% net profit estimation on adjusted turnover is sustainable without rejecting the audited books of account.

Analysis: The books of account were audited and not rejected under the statutory provision governing accounts. No material defect was shown that would justify substituting declared profits with an arbitrary 20% rate. Estimation of income at such rate in absence of rejection or cogent evidence resulted in double taxation and lacked justification.

Conclusion: Additions based on a 20% estimated net profit deleted; conclusion in favour of the assessee.

Issue (iii): Whether higher depreciation at 30% is allowable on the claimed heavy vehicles used in mining/transport and hiring.

Analysis: Evidence, prior consistent allowance in earlier years, and applicable authorities support grant of higher depreciation where vehicles are used for transporting goods or hired out. No fresh contrary material was placed to overturn earlier findings allowing higher rate for the same class of assets.

Conclusion: Disallowance of higher depreciation deleted; conclusion in favour of the assessee.

Final Conclusion: The tribunal dismissed the revenue appeals, upholding the restriction of unexplained transaction additions to the portion not reflected in the return, deleting profit-estimation additions made without rejecting audited books, and allowing higher depreciation on qualifying vehicles; overall relief granted to the assessee.

Ratio Decidendi: Where audited books are not rejected and declared turnover/profits are supported, arbitrary profit estimations are unsustainable and additions for unaccounted transactions must be restricted to amounts not already disclosed in the return to avoid double taxation.

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