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TMI Blog2022 (9) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or reassessment of escaped income, and which he intends to take into account. In the instant case, the AO was satisfied with the justifications given by the assessee regarding the items, viz., credit transactions with two parties. During the assessment proceedings, he found the justification of addition U/s 44AD of the Act. He, consequently, while not making additions on transactions, which was supposed to added back with the U/s 69/69A of the Act. The escapement of income was ascertained amount to Rs.79,31,509/-. But the addition was made amount to Rs. 38,10,700/-. The ld. AO was not so justified when the reasons for the initiation of those proceedings ceased to survive. Decided in favour of assessee. - I.T.A. No.553/Asr/2019 - - - Dated:- 20-9-2022 - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Ashray Sarna, CA. For the Respondent : Sh.Ghansham Sharma, Sr. DR. ORDER PER ANIKESH BANERJEE, JM: The instant appeal is directed against the order of Ld. Commissioner of Income Tax (Appeal)-2, Jalandhar, {in brevity CIT(A)} bearing appeal no. 2/10164/18-19/CIT(A)-2/Jal date of order 04.07.2019, ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assesse. The ld. counsel mentioned that assessee had turn over amount of Rs.4,76,33,724/-. In any case, this turnover is not under perview of section 44AD of the Act. So the calculation of net profit @8% on this turnover is contrary to the provisions of the Act. 3.1 The counsel further argued that the ld. AO had calculated the net profit @8% without any basis. The assessee had the G.P and NP rate which is not more than 2% in any of the proceedings and succeeding years. A chart NP and GP ratio was submitted with the paper book which is reproduced as below:- A.Y. SALE G.P. N.P. @AGE GP %AGE NO 2010-11 16385194 275561 125767 1.68176831 0.76756491 2011-12 47633724 521892 290598 1.09563552 0.61006777 2012-13 27273329 499776 219075 1.83247157 0.80325728 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in response thereto Sh. Ashray Sarna, CA, counsel for the assesse attended the office and furnished information\documents. 3. As per written submissions furnished by the assesse, the assessee claims to be engaged in business of trading of carpets and cloth. Assessee imports carpets and other goods from Dubai and sells the same in India. The assessee during the course of assessment proceedings furnished a copy of Audited Balance Sheet and P L account alongwith Audit Report in form 3CD. The assesses has shown total sales of Rs.4,76,33,724/- and purchases of Rs.5,80,81,918/- in the trading account and worked out a net profit of Rs.2,90,598/-. The assesse further in his reply furnished on 15.10.2018 stated that all the sales have been duly recorded in the books of accounts and also stood declared in the VAT returns. The assesse further furnished copies of ledger accounts of two Mumbai based firms namely, M/s. Kamal Clearing Forwarding Agency Pvt. Ltd., Mumbai and M/s. Star Trade Shipping and logistics, Mumbai, with whom the assessee claimed to have had business transactions. Copies of few bills issued to the assessee by these two above mentioned firms were also furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue Authorities. He relied on the order of ld. AO in para no. 3.1. The relevant part is extracted as below: Similarly, from the data furnished by the Excise and Taxation Authorities, it was seen that the assessee had made no sales, i.e. Zero sales, during the year under consideration as against claimed sales of Rs.4,76,33,724/- in the trading account. As such the claims of the assesse made in his reply dated 15.10.2018 were found to be totally incorrect as the figures of sales and purchases reflected in the Trading Account did not match with VAT returns filed by the assesee. 5. We heard the rival submissions and relied on the documents available on the record and respectfully considered the generated pronouncement of different authorities. The reopening u/s. 148 was originated on the basis of reasons to believe. The ld. AO recorded the satisfaction for reopening the case related to transactions with the two parties with the assessee. After the detailed investigation ld. AO comes to conclusion that both the transactions with the parties are bogus and liable to be added u/s. 69/69A as unexplained investments. During the assessment proceedings the ld. AO found discriminati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or reassess the escaped income chargeable to tax. As per Explanation 3 if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the Legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of escaped income. The ld. AO would keep on making roving inquiry and thereby would include different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before the Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account. In the instant case, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items, viz., credit transactions with two parties. But, during the assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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