Low tax effect bars departmental appeal; extra gross profit rate reduced from 20% to 10% on the facts.

Departmental appeals may be rejected as not maintainable where the tax effect falls below the prescribed monetary threshold; here, the appeal was dismissed in limine on that basis. On the merits of the addition for alleged excess cash realisation, the Tribunal held that a 20% extra gross profit rate was excessive on the facts and reduced it to 10%, granting partial relief to the assessee while sustaining the balance addition.

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Issues: (i) whether the Revenue's appeal was maintainable in view of the low tax effect; (ii) whether the rate of extra gross profit sustained on the alleged excess cash realisation required reduction.

Issue (i): Whether the Revenue's appeal was maintainable in view of the low tax effect.

Analysis: The tax effect in the Revenue's appeal was stated to be below the prescribed monetary threshold. Both sides were in agreement that, in view of the applicable tax-effect limit, the departmental appeal should not be entertained.

Conclusion: The Revenue's appeal was held to be not maintainable and was dismissed in limine.

Issue (ii): Whether the rate of extra gross profit sustained on the alleged excess cash realisation required reduction.

Analysis: The addition sustained by the first appellate authority was based on application of a 20% gross profit rate to the excess cash realisation found on the facts. On the material before it, the Tribunal found that 20% was excessive and that 10% would be fair and reasonable in the circumstances.

Conclusion: The rate of extra gross profit was reduced to 10%, resulting in partial relief to the assessee and sustenance of the balance addition.

Final Conclusion: The departmental appeal was rejected on account of low tax effect, while the assessee obtained partial relief by reduction of the sustained addition.

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