Net profit estimation for cash sales of recharge coupons reduced to a reasonable rate

Income from cash sales of mobile recharge coupons was assessed on an estimated net profit basis because the business involved substantial cash receipts and turnover estimation. The Tribunal treated the assessee's suggested rate as reasonable in light of the nature of the trade and directed estimation of income at 3% net profit, granting partial relief.

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Issues: Whether the income from cash sales of mobile recharge coupons could be estimated at a lower net profit rate instead of the rate adopted by the lower authorities.

Analysis: The assessee was engaged in business of selling mobile recharge coupons and receipts were substantially in cash. The lower authorities had estimated business income by applying a higher profit rate on the deposits/turnover. Considering the nature of the business and the realities of the trade, the Tribunal found the assessee's suggested net profit rate to be reasonable.

Conclusion: The income was directed to be estimated at 3% net profit, resulting in partial relief to the assessee.

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