Net profit estimation on plot sales reduced to 12% where comparable co-owners were taxed at a lower rate.

Income from plot sales, including on-money, was required to be estimated on a net profit basis, and the 20% rate applied by the first appellate authority was found excessive on the facts. The Tribunal relied on the department's acceptance of business income at a lower rate in the hands of other co-owners on comparable material and directed a consistent approach across the joint owners. It reduced the estimation to 12% of the sale consideration, including on-money, and ordered recomputation accordingly.

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Issues: Whether the assessee's income from plot sales, including on-money, was to be assessed on an estimated net profit basis and whether the estimation made by the first appellate authority at 20% required reduction.

Analysis: The assessee's case was that the income had to be estimated consistently with the treatment adopted in the assessments of the other co-owners, who were subjected to a lower rate on similar facts. The Tribunal noted that the department had accepted business income in the hands of the other joint owners at a lower rate on comparable material and that the higher estimation adopted by the first appellate authority was not justified on the facts of the case. The Tribunal therefore directed estimation of net profit at 12% of the sale consideration, including on-money, for all the assessment years involved.

Conclusion: The estimation of 20% was reduced and the Assessing Officer was directed to recompute the income by applying a net profit rate of 12%; the appeals were partly allowed in favour of the assessee.

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