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2017 (2) TMI 36 - HC - Income TaxAddition of unexplained expenditure under Section 69C - rejection of the books of accounts u/s 145(3) - Held that:- The main source of income of the Assessee was from salary and partly from commission and brokerage. During the year under consideration the assessee started export business in gems and stones and has earned income only from Export business and bank interests. During the year under consideration the assessee has declared total export turnover of ₹ 2,35,10,077/- upon which gross profit of 1,15,62,119/- was shown thereby giving a G.P. rate of 49.8%. This is the first year of business of the assessee. During the next financial year 2001-02 the assessee has declared total export turnover at ₹ 32,71,097/- upon which gross profit of ₹ 18,01,075/- is shown thereby giving a GP Rate of 55%. On perusal of the return filed for the assessment year 2003-04 i.e. financial year 2002-03, it is seen that the assessee has declared Nil export and has declared income from salary as was done previously before he started his export business. It appears that this is an isolated case of export by the assessee in past several years. In view of the above facts, it is clear that the assessee had done the business of export mainly for one fyear i.e. for the fyear under consideration. It is not understood as to how there was such a huge export turnover in one year. That too in the first year of business and then there was substantial fall in the next year and subsequently there was no business of export in any of the years. This shows that this is not the regular business of the assessee. Identical issue was decided by the Court in the case of Commissioner of Income Tax vs. M/s. Bright Future Gems [2016 (11) TMI 539 - RAJASTHAN HIGH COURT ] there is nothing on record to certify the stones which were verified by any of the valuer. In our view it is all paper transactions for the purpose of taking benefit of the export and tax benefits and we are of the opinion that it is a bogus purchase - Decide against assessee
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