Unsupported enhancement for alleged unaccounted sales was deleted, while the original trading-results addition was sustained on the facts.

The ITAT Jaipur held that an enhancement based on higher unaccounted sales and an additional unexplained investment addition could not stand where the record contained no evidence to support the Appellate Assistant Commissioner's estimate; the enhancement was therefore deleted as being founded on mere surmise. The original addition of Rs. 10,000 toward trading results was found reasonable on the facts and was sustained. The result was partial relief to the assessee, with the unsupported enhancement removed but the Income-tax Officer's addition maintained.

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Issues: Whether the enhancement made by the Appellate Assistant Commissioner in respect of trading results and alleged unexplained investment was sustainable, and whether the addition of Rs. 10,000 made by the Income-tax Officer required interference.

Analysis: The assessee's books were treated as unreliable in view of the materials arising from the sales-tax proceedings, but there was no material on record to support the Appellate Assistant Commissioner's estimate of higher unaccounted sales or the consequent further addition of Rs. 1,18,000. In the absence of evidence to justify the enhancement, the addition based on mere surmise could not stand. At the same time, the original addition of Rs. 10,000 made by the Income-tax Officer toward trading results was considered reasonable on the facts.

Conclusion: The enhancement made by the Appellate Assistant Commissioner was deleted, while the addition of Rs. 10,000 made by the Income-tax Officer was upheld. The appeal was partly allowed.

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