KLG JEWELLERS, PATIALA,PATIALA vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, CHANDIGARH, CHANDIGARH

Facts

The assessee, a jewellery business, was subjected to a search action, leading the Assessing Officer (AO) to allege unaccounted sales of Rs. 63,96,384/-. The AO added this amount to the assessee's income as suppressed income.

Held

The Commissioner of Income Tax (Appeals) held that only the Gross Profit (GP) component of the suppressed sales represented taxable income and estimated the profit rate at 20%. The Income Tax Appellate Tribunal found this estimation to be on the higher side considering the assessee's regular GP rate of 9.48% and reduced it to 10% of the suppressed sales.