Unaccounted sales must be taxed on net profit basis, not on gross profit: ITAT Delhi

Al-Dua Agro Food Processing Pvt. Ltd. Vs DCIT (ITAT Delhi) Conclusion: Where unaccounted sales were established through seized material, only the net profit embedded therein was liable to tax, and not the entire sales turnover. When the seized evidence itself reflected corresponding business expenditure, the Revenue could not disregard such expenses while relying on the same material. Accordingly, the addition was restricted by applying a net profit rate of 2%, and the Revenue’s appeal seeking taxation of the entire undisclosed sales was rejected. Held: During search and seizure operatio...