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Issues involved: Estimation of net profit for undisclosed sales and unexplained investment in business.
Estimation of Net Profit: The case involved a search conducted on the premises of the Assessee, who was in the business of trading in "Saria" and other steel items through two concerns, Kamal Steel-I and Kamal Steel-II. The Assessing Officer noted undisclosed sales of Rs. 8 crores and estimated the net profit at 5%, leading to tax imposition. The Commissioner of Income Tax (Appeal) disagreed with the Assessing Officer and reduced the estimated net profit to 2.5%. Upon further appeal, the Tribunal accepted the Assessee's disclosed net profit of 0.75% for certain years and estimated it at 1.5% for other years. The Tribunal found no material to support the Assessing Officer's initial 5% estimation, ultimately concluding that no substantial question of law arose regarding the net profit estimation. Unexplained Investment: Another issue raised was the unexplained and undisclosed investment of Rs. 10 lakhs in the business of steel items under Kamal Steel-II. The Assessing Officer estimated this amount without concrete evidence, while the Assessee argued that due to goodwill with vendors, no capital investment was necessary. The CIT (A) reduced the estimated investment to Rs. 5 lakhs. The High Court noted the lack of evidence supporting the investment estimate and the regular filing of returns by the Assessee, indicating that any investments could have been investigated through regular returns rather than block assessment. Ultimately, the Court found no substantial question of law regarding the unexplained investment issue. Judgement: The High Court dismissed the appeal, affirming the Tribunal's decisions on both the estimation of net profit and the unexplained investment, stating that no substantial question of law arose in either matter.
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