Past profit history justified lowering estimated income, with delay in filing also condoned for sufficient cause.

Delay in filing the appeal was condoned because the assessee showed a communication gap with the earlier representative, late receipt of records, and time needed to engage new counsel, with no deliberate inaction or neglect. On merits, estimation of income at 8% of turnover was found excessive in light of the audit report, financial statements, and past net profit history of about 2.04% to 2.38%, so the addition was restricted by adopting 4% net profit on total turnover. The appeal thus succeeded only in part, with partial relief granted on both limitation and quantum.

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Issues: (i) Whether the delay of 107 days in filing the appeal could be condoned on the basis of the explanation offered by the assessee. (ii) Whether the estimation of income at 8% of turnover was justified, or whether the addition required restriction having regard to the assessee's audit report and past profit history.

Issue (i): Whether the delay of 107 days in filing the appeal could be condoned on the basis of the explanation offered by the assessee.

Analysis: The explanation showed that the delay arose from communication gap with the earlier representative, late receipt of records, and the time taken to engage the present representative. The delay was not attributable to deliberate inaction or neglect.

Conclusion: The delay was condoned.

Issue (ii): Whether the estimation of income at 8% of turnover was justified, or whether the addition required restriction having regard to the assessee's audit report and past profit history.

Analysis: The assessee had furnished certain materials including audit report and financial statements, and the past records showed net profit ranging between 2.04% and 2.38% of turnover. In these circumstances, estimation at 8% was found excessive, and the earlier profit pattern was treated as the proper guide for a fair estimation.

Conclusion: The addition was restricted by adopting net profit at 4% of the total turnover, resulting in partial relief to the assessee.

Final Conclusion: The appeal succeeded only in part, with the delay condoned and the assessed income reduced by adopting a lower profit rate.

Ratio Decidendi: Where the assessee's past disclosed profit margin and surrounding facts indicate that the revenue's estimated rate is excessive, the income may be reasonably estimated at a lower rate to meet the ends of justice.

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