Turnover estimation for milk and allied products reduced to lump sum 8% where neither side supported the higher gross profit rate.

Assessee's turnover from sale of milk and allied products was examined on an estimated basis because the claimed business expenditure was not supported by evidence and the Revenue produced no comparable material to justify a gross profit rate of 85%. In the absence of reliable supporting data from either side, the higher estimation made below was not accepted in full and a lump sum estimate was applied. The turnover was directed to be assessed at 8% instead of 85%, partly favouring the assessee.

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Issues: Whether the assessee's turnover from sale of milk and allied products should be assessed at the rate of 85% gross profit, or on a lower estimated basis.

Analysis: The assessee did not substantiate the claimed business expenditure with supporting evidence, while the Revenue also failed to place any comparable material from the same line of business to justify assessment at a gross profit rate of 85%. In these circumstances, the existing estimations made by the lower authorities were not accepted in full, and a lump sum estimation was considered appropriate.

Conclusion: The turnover was directed to be assessed at a lump sum estimated rate of 8% and not at 85%, which is partly in favour of the assessee.

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