Past net profit trend accepted for income estimation; 5.75% applied instead of a higher flat rate.

Business income was estimated by reference to past audited results rather than a flat 8% of receipts, because the assessee's turnover, contractual business pattern, and earlier net profit history were consistent. With prior years showing net profit rates of about 5% to 5.5%, the earlier trend was treated as the fair benchmark for estimation. The net profit rate was therefore directed at 5.75% instead of 8%, reducing the estimated income and granting relief to the assessee.

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Issues: Whether the assessee's business income should be estimated at 8% of receipts or at a lower net profit rate based on the past audited results.

Analysis: The assessee's turnover, contractual nature of business, and the consistency of audited net profit rates in the preceding years were not in dispute. The books had not been audited for the year under consideration and the return had not been filed, but the historical record showed turnover in a similar range and net profit rates of about 5% to 5.5%. In these circumstances, the prior years' trend was treated as the appropriate benchmark for a fair estimation of income.

Conclusion: The net profit rate was directed to be applied at 5.75% instead of 8%, resulting in reduction of the estimated business income and relief to the assessee.

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