TMI Blog2014 (1) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... , then under such circumstances, there was no reason for him to reject the books of the accounts of the assessee. There was no incriminating evidence available with the revenue - the Revenue merely rely on the weakness of the evidences produced by the assessee to make any adverse presumption or conclusion of his indulging in such activities without being there any direct or even circumstantial evidence on record against him - Merely assuming that the buyer and seller might have connived with each other, cannot itself be a ground to call upon the assessee to disprove such type of assumption which is even not based on any relevant incriminating evidence or fact on the file – there was no justification in the action of the CIT(A) in confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.08. Since the assessee namely Shri Jitendra Kumar Jain and his concerns were also allegedly connected with the business activities of the said Shri Pravin Kumar Jain and his associates, as such the residence and locker of the assessee were also searched. Survey action under section 133A of the Income Tax Act was also conducted at the business premises of the assessee. During the course of survey action at the office premises of the assessee, certain cheques as well as two blank letter heads of Shri Ashok, proprietor of M/s. Kunal Gems, were found and impounded. A statement of the assessee under section 131 of the Income Tax Act was also recorded. Consequently, the assessment proceedings for the block period of seven years i.e. assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estimation of the income at the rate of 1% of the total turnover was not justified. It was therefore requested that the estimation of income at the rate of 1% made by the AO be deleted and the books of the accounts of the assessee be accepted. 6. The ld. CIT(A) after considering the submissions of the representative of the assessee and after going through the file observed that from the record no specific defect was pointed out by the AO in the books of accounts. However, he observed that the assessee had declared meager income from the business transactions. Hence, he considered it reasonable to estimate the income at the rate of 0.5% (net of expenses) of the total turnover instead of 1% as adopted by the AO. He thus estimated the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avin Kumar Jain, with whom the Revenue has failed to establish any link of the assessee, admitted in his statement to have given accommodation entries to one person that itself could not be a ground to reject the books of accounts of the assessee. Even the ld. AR has tried to explain from paper book page 9 10 of the file before us that against the opening stock of 'nil' the closing stock as on 31.3.2002 of stock in trade of polished diamonds was at about Rs.1.11 Crores. He has further demonstrated that the assessee had to incur various expenditure such as assortment charges of about Rs. 4.64 lakh, brokerage of Rs.6.99 lakh, foreign travelling expenses of Rs. 64 thousands, import expenses of Rs.53 thousands along with other expenditure as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lect any incriminating evidence against the assessee to prove that the assessee was engaged in providing accommodation entries. 13. In the impugned order, the ld. CIT(A) has given a categorical finding that from the record it was seen that no specific defect was pointed out by the AO in the books of the account of the assessee. It has also been observed that the income was estimated by the AO without reference to any cogent material and the estimation was made on the basis of statement of Shri Pravin Kumar Jain and as far as the assessee was concerned, no such statement was ever made by him. Despite making the above observations, the CIT(A) went on to assess the income of the assessee on estimation basis though at a reduced rate i.e. 0.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual turnover, that itself cannot be a ground to reject the books of the accounts of the assessee which had been maintained regularly in the due course of business. When the ld. CIT(A) had given a finding that there was no defect in the books of the accounts of the assessee and even no cogent or convincing incriminating material was found against the assessee during the course of search action, then under such circumstances, there was no reason for him to reject the books of the accounts of the assessee. 15. We are also not inclined to accept the contention of the ld. D.R. that even though no incriminating material has been found against the assessee but still the possibility cannot be ruled out that the buyer and the seller associated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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