1968 (10) TMI 7

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....nd he estimated the gross profits at 28 per cent. of that turnover. The Appellate Assistant Commissioner did not disturb the estimation of the turnover made by the Income-tax Officer but he was of the opinion that there was excessive estimation of the gross profits. He, therefore, reduced the addition made by the Income-tax Officer to the net income by Rs. 4,000. The estimation of the gross profits made by the Appellate Assistant Commissioner amounted to 24 per cent. of the turnover. But, in the appeal preferred by the Income-tax Officer to the Appellate Tribunal, the order of the Appellate Assistant Commissioner was reversed and that of the Income-tax Officer was restored. The Tribunal was of the view that the Appellate Assistant Commiss....

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..... In such circumstances, I estimate the sales at Rs. 1,16,000 and adopt a gross profit of 28 per cent. as done in other cases." This part of the order demonstrates that he merely adopted a working rule on which he depended in the case of other assessees. While this is so, the Appellate Assistant Commissioner depended upon the theory that an increase in the turnover results in a diminution in the gross profits. The estimates for the earlier periods constituted a new basis on which the Appellate Tribunal founded its order. Other things being equal, profits estimated during an earlier period may, in a proper case, guide the estimation of the profits of a subsequent year. But the earlier estimates can have relevance only if the conditions in....