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2017 (8) TMI 1180 - AT - Income TaxReopening of assessment - reasons to believe - addition u/s 40A - belief arrived at by the A.O inextricably linked with the "material‟ available - Held that:- A bare perusal of the "reasons to believe" reveals that the A.O in the course of assessment proceedings in the case of one Sh. Jayantilal M. Thandeshwar for A.Y. 2008-09, had gathered information that the assessee had made cash purchases of gold ornaments aggregating to ₹ 6,06,386/-(supra). We are of the considered view, that now when the belief arrived at by the A.O is found to be inextricably linked with the "material‟ available before him, therefore, no infirmity as regards the validity of assumption of jurisdiction by the A.O does emerge from the record. We find that the A.O in the body of the „reasons to believe‟, after making a clear mention of the cash purchases of ₹ 6,06,386/-, alongwith the bifurcated details as regards the same, had thereafter clearly observed that the income of the assessee in excess of ₹ 1 lac had escaped assessment. Unable to persuade ourselves to subscribe to the contention that the A.O had invalidly assumed jurisdiction u/s 147. The Ground of appeal No.1 raised by the assessee before us is dismissed. Disallowance under Sec. 40A(3) of the cash purchase of jewellery - Held that:- unable to persuade ourselves to subscribe to the contentions of the ld. A.R, and being of the considered view that the case of the assessee does not fall within either of the exceptions carved out under Rule 6DD of the Income Tax Rule 1963, therefore, are of the considered view that the CIT(A) had rightly upheld the disallowance under Sec. 40A(3) of the cash purchases of gold jewellery of ₹ 6,06,386/-. A.R had also tried to impress upon us that the disallowance contemplated under Sec. 40A(3) would not extend to the „Purchases‟ made by an assessee in the course of his business. We find that such a view was way back favourably taken by the Hon’ble High Court of Gauhati in the case of CIT Vs. Hardware Exchange (1991 (4) TMI 114 - GAUHATI High Court) wherein it was observed by the Hon‟ble High Court that payments made for purchasing of stock-in-trade cannot be disallowed under Sec. 40A(3). We however find that the said judgment of the Hon‟ble High Court had thereafter been set aside by the Hon’ble Supreme Court in the case of : Attar Singh Gurmukh Singh (1991 (8) TMI 5 - SUPREME Court ). Thus in the backdrop of our aforesaid observations - Decided against assessee. Addition under Sec. 69C - unexplained credit card expenses - Held that:- A.R had not been able to substantiate his claim that the transactions through the credit cards were relatable to his undisclosed business of trading in cloth material. We find ourselves to be in agreement with the CIT(A) that the assessee on being cornered with the undisclosed transactions carried out through his credit cards, had thus, on the basis of an afterthought and a concocted story tried to wriggle out of the same on the basis of an unsubstantiated and a frivolous explanation. We are of the considered view, that in the absence of any material which could go to support the claim of the assessee that the transactions carried out through credit cards pertained to his undisclosed business of trading in cloth material, it could safely and rather inescapably be concluded, that the assessee had failed to explain, both the nature of the transactions and the source of money deposited by him in the bank accounts connected with the credit cards. - Decided against assessee.
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