Declared net profit accepted where past history and consistency supported the assessee, and higher estimated profit was rejected.

ITAT Ranchi held that where the assessee's declared net profit rate was supported by its past history, an earlier year's decision in its own case, and the nature of the contract business, the declared result should be accepted. In the absence of any material evidence from the revenue to justify departure, an arbitrary estimate of profit at 8% could not be sustained. The tribunal accepted the declared net profit rate of 6.10% and deleted the addition made on estimated profits, applying the principle of consistency and rejecting unsupported higher estimation.

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Issues: Whether the addition made by estimating the profit of the contract business at 8% could be sustained, or whether the net profit rate of 6.10% declared by the assessee was to be accepted.

Analysis: The appeal was decided by considering the assessee's past history, the earlier decision in the assessee's own case for a prior assessment year, and the nature of the contract business. The declared net profit rate was found to be reasonable, and the lower authorities had not brought on record any material or evidence to justify variation from the declared results. In these circumstances, the estimation of profit at 8% was not sustained.

Conclusion: The declared net profit rate of 6.10% was accepted and the addition made by estimating profit at 8% was deleted in favour of the assessee.

Final Conclusion: The assessee succeeded on the substantive dispute concerning estimation of business income, and the appeal was allowed.

Ratio Decidendi: In the absence of material evidence to the contrary, a declared profit rate supported by the assessee's past history and the principle of consistency should be accepted, and arbitrary estimation of higher profit is not justified.

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