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2023 (6) TMI 733 - AT - Income TaxReopening of assessment - Addition u/s 68 - accommodation entries receipt - purchases made from M/s Danodia Impex Pvt. Ltd. to be accommodation entries - HELD THAT:- Name of the firm M/s Danodia Impex Pvt. Ltd appeared not from the reasons but reply of assessee but assessee was then not show caused to explain how the transaction with firm M/s Danodia Impex Pvt. Ltd. was related to Jain Brothers. AO, unilaterally being dissatisfied with the explanation of assessee had passed the impugned order considering the purchases made from M/s Danodia Impex Pvt. Ltd. to be accommodation entries. Such action of Ld. AO is not sustainable in law. As in Ranbaxy Laboratories Ltd [2011 (6) TMI 4 - DELHI HIGH COURT] and Jet Airways Other [2010 (4) TMI 431 - HIGH COURT OF BOMBAY]where it is held that Ld. AO has jurisdiction to re-assesss issues other than the issues in respect of which proceedings are initiated but AO has to show cause the assessee for the same. AO has failed to take into consideration the fact that the assessee was engaged in the business of Trading of computer parts and component. Purchases were not made from M/s Danodia Impex Pvt. Ltd. only but purchases were also made from other parties as reflected in the purchase account made - sales account made reveals that sales were made to various parties and it included sales made to the Office of Labour Commissioner - The trading account as made available which also reflects various expenditure inconsonance with nature of business of assessee. AO was not justified to discredit whole of the business activity of assessee for want of certain expenditure and that too without specifically rejecting the books of assessee, to discredit the purchases and make addition. Appeal of assessee allowed.
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