Estimated gross profit addition deleted where disclosed margin was not shown to be unreasonably low and comparisons lacked reliable particulars.

Estimated gross profit addition was held unjustified where the disclosed margin of about 9.3% on sales was favourable by comparison with earlier years and the record did not show it to be unreasonably low. The Revenue's comparative instances were not supported by adequate particulars to serve as reliable benchmarks, while prior year relief and earlier lump-sum additions on mixed considerations did not justify sustaining the estimate. The addition of Rs. 1,800 was deleted, the assessee's appeal was allowed, and the departmental cross-objection was dismissed.

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Issues: Whether the estimated addition to gross profit sustained by the Appellate Assistant Commissioner was justified on the facts of the case.

Analysis: The disclosed gross profit margin was about 9.3% on sales of about Rs. 6,37,000 and was considered favourable when compared with earlier years. The assessee had also secured relief in the preceding assessment year, and earlier small lump-sum additions appeared to have been made on mixed considerations including estimated inadmissible expenses. The available material did not show that the profit margin was unreasonably low, and the comparative instances relied upon for the Revenue were not supported by adequate particulars to treat them as reliable guidance.

Conclusion: The estimated addition was not justified. The sustained addition of Rs. 1,800 was deleted, the assessee's appeal was allowed, and the departmental cross objection was dismissed.

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