Business income estimation restricted to 2.75% of adjusted turnover; bank interest addition left undisturbed as withdrawn.

The addition relating to bank interest was left undisturbed because the assessee did not press that challenge and treated it as withdrawn. On estimation of business income, the absence of any comparable case, the assessee's first year of business, and the fact that the declared net profit was the highest when compared with later years of the same assessee required a more reasonable estimate. The profit rate was therefore restricted to 2.75% of adjusted turnover, after excluding specified expenses on which no income could arise.

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Issues: Whether the assessee's business income should be estimated at a higher rate or at 2.75% of turnover, and whether the addition relating to bank interest should be sustained.

Analysis: The assessee did not press the challenge to the addition of bank interest, and that part of the appeal was treated as withdrawn. On the estimation of business profit, the available material showed that no comparable case was relied upon by the lower authorities. The assessee's business was in its first year, and the record showed the declared net profit to be the highest when compared with subsequent years of the same assessee. In these circumstances, the income was required to be estimated on a more reasonable basis, and the turnover was to be considered after excluding the specified expenses on which no income could be said to arise.

Conclusion: The addition relating to bank interest was left undisturbed as withdrawn, while the estimation of business income was restricted to 2.75% of the adjusted turnover; the assessee succeeded on the profit-estimation issue.

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