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[2008] 173 Taxman 29 (Delhi)/[2009] 311 ITR 322 (Delhi) [2008] 173 TAXMAN 29 (DELHI) HIGH COURT OF DELHI Mrs. Krishna Gupta v. Assistant Commissioner of Income-tax* , Investigation Circle 20(1), New Delhi MADAN B. LOKUR, AND V.B. GUPTA, JJ. IT APPEAL NO. 553 OF 2004 â-  APRIL 7, 2008 Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of profit - Assessment year 1992-93 - Assessee was running a studio dealing in photographic films - It had declared its gross profit at 1.5 per cent on sale of photographic films to its registered dealers - Assessing Officer issued summons to aforesaid dealers, but summons were received back unserved - Assessee too failed to produce said dealers - Assessing Officer, therefore, rejected books of account of assessee and estimated gross profit rate at 10 per cent of turnover - On appeal, Commissioner (Appeals) noticed that assessee had declared gross profit rate at 4.3 per cent for first 11 months of accounting year and for month of March, 1992, gross profit was declared at 1.5 per cent for which no justification was given - He, therefore, estimated gross profit rate at 5 per cent - Order of Commissioner (Appeals) was upheld by Tribunal - Whether since trading results shown in books of account were not open to verification, rejection of books of account and determination of profit on an estimate basis was justified - Held, yes - Whether since Commissioner (Appeals) estimated gross profit rate at 5 per cent for entire year keeping in view gross profit rate for 11 months, there was no unreasonableness in that estimation and, therefore, Tribunal was justified in upholding his order - Held, yes FACTS The assessee was running a studio dealing in photographic films and still photography. During the relevant assessment year, it had declared its gross profit at 1.5 per cent on sale of photographic films to registered dealers. During the assessment proceedings, the Assessing Officer issued summons under section 131 to the aforesaid registered dealers requiring them to appear along with their books of account, but the summons were received back unserved. The assessee was asked to produce those parties and also to…

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