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2023 (4) TMI 180 - ITAT MUMBAIEstimation of profit on purchase and sale transactions - statement given during the course of survey - importance to the retraction statement of the assessee - HELD THAT:- We notice that the Ld CIT(A) has put the responsibility upon the AO and has observed that the AO has not brought on record any corroborative evidence, which is not justified. Accordingly, we are of the view that the retraction of statement by the assessee is liable to be rejected. There is one more reason for rejecting retraction, i.e., the reasoning given by the assessee for giving cheques to S R Co also defies logic. On the one hand, it is stated that the cheques were given to S R Co, so that the same can be used to strike good deal in diamond purchase. On the other hand, it is stated that the concerned bank accounts did not have enough bank balances. If the bank accounts did not have enough balances, how S R Co could have used the cheques to purchase diamonds on behalf of the assessee. Hence the reasoning given in the retraction statement about the cheques defies logic and hence on this count also retraction is liable to be rejected. The assessee could not bring any material to contradict the statement so given. On the contrary, the cheques were found with S R Co. Hence the legal principle that the statement given during the course of survey does not have evidentiary value will not apply to the facts and circumstances of the present case. There is merit in the submission made by the assessee before Ld CIT(A), i.e., mere mobilization of money on the security of cheques will not give rise to any income transaction liable to be taxed. The statement given by the assessee is that he has purchased diamonds by using the cash so mobilized and sold the same. Accordingly, the profit, if any, generated from the above said purchase and sale transactions is liable to be taxed. Profit generated from the above said purchase and sale transactions is required to be estimated in the facts and circumstances of the case. The normal profit rate adopted for diamond business is around 3% of the sale value. Profit from the sale of diamonds purchased out of the balance may be estimated @ 3% and the same, in our view, will meet the ends of justice. Appeal filed by the revenue is partly allowed.
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