2016 (2) TMI 427 - AT - Income Tax

Reopening of assessment - Held that:- There was linkage of the documents with the statement tendered by the assessee evidencing that income had escaped assessment. It is not the case in the present appeals that addition has been made merely on the basis of statement recorded by the Revenue, rather, there was enough material on record which could be unearthed on the basis of survey followed by the statement of the assessee to show that the assessee made purchases/sale which were not entered in the regular books of accounts, resulting into escapement of income, therefore, of the opinion that, so far as, initiation of proceedings u/s 147 r.w.s. 148 of the Act are concerned, the ld. Assessing Officer was justifiably within his jurisdiction under the parameter of the law to reopen the assessment, therefore, affirm the stand of the ld. First Appellate Authority. - Decided against assessee

Trading addition - Held that:- Adding the respective amounts being 50% of the gross profit is concerned, find that ad-hoc addition has been made on the basis of trading account. There is no dispute to the fact that while tendering the statement, the assessee admitted to have carried out purchase and sale, which were not entered in regular books of accounts. The Assessing Officer has added 50% of the gross profit on ad-hoc basis. In the modern era of cut throat competition, 50% of the gross profit is not expected. Even, while coming to a particular conclusion, neither the Assessing Officer has cited any comparable case in a identical business nor has compared the same with any other assessment years, therefore, to meet the ends of justice, to cut short the litigation, feel the 20% of the gross profit will be sufficient to safeguard the interest of the Revenue in place of 50% sustained by the ld. Commissioner of Income Tax (Appeals), because, on the basis of evidence for a particular period, extrapolation of the income to the whole period of reassessment is not justified

So far as, the contention of the ld. counsel for the assessee, that net profit rate should be adopted and not the gross profit is concerned, not agreeing with this proposition, because, in the present set off cases, the assessee has not declared anything and the whole profit was earned as the purchase and sales were not even entered in the books of accounts by the assessee. Thus, this ground of the assessee is not having any merit, therefore, dismissed. Even otherwise, the 20% has been reduced from 50% sustained by the ld. CIT(A) and that to on gross profit and not on net profit. - Decided partly in favour of assessee