TMI Blog2015 (12) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... different purpose when the assessee has made purchases in cash. This provision cannot be applied in such cases. Once the purchases are held to be bogus then the trading results declared by the assessee cannot be accepted and right course in such case is to reject books of accounts and profit has to be estimated by applying a comparative profit rate in the same trade. Though there can be a little guess work in estimating profit rate but such profit rate cannot be punitive. - I.T.A. No. 1512/Del/2015 - - - Dated:- 2-12-2015 - Shri N. K. Saini, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri Ved Jain, CA For the Respondent : Sh. Ved Prakash Mishra, Sr. DR ORDER Per Beena Pillai, Judicial Member This is an appeal preferred by the assessee against the order of the ld. CIT(A)-XX, New Delhi vide his order dated 16/12/2014 for A.Y. 2006-07 on the following grounds: 1. On the facts and circumstances of the case, the order passed by the ld. CIT(A) is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in rejecting the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss and contrary to the facts on record. 8. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee in ignoring the fact that there being a complete tally of the quantity purchased and sold the allegation that the assessee has not made purchases cannot be sustained. 9. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts in law in confirming the addition to the extent of 20% of such purchases rejecting the material and evidences brought on record by the assessee to show that the purchases were made in regular course of the business and material so purchased was sold in the regular course of business. 10. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts in law in rejecting the contention of the assessee that the addition so made on the basis of material collected at the back of the assessee is bad in law liable to be deleted. 11. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts in law in rejecting the contention of the asessee that the addition made by the ld. Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered a similar and identical issue, and held the reassessment to be bad in law. 7. On the contrary, the ld. DR relies upon the orders passed by the authorities below. 8. We have heard the rival submissions and carefully considered the documents placed on record. It is noted that the assessment has been reopened by the ld. Assessing Officer by recording the following reasons: Reasons for the belief that the income has escaped assessment in the case of M/s Krishan Lal Gambhir Sons for the assessment year 2006-07 A letter bearing F.No. Addl.CIT/(Hq)/(Coord.)/Accommodation entry/2012- 13/15016 dated 26.03.2013 was received from the Office of the Chief Commissioner of I.Tax, Delhi-1, New Delhi therein forwarding letter bearing F.No. CIT(C)- II/2012-13/3898 dated 19.03.2013 received from the Commissioner of I.Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta Sh. Vishesh Gupta Sh. Navneet Jain Sh. Vaibhav Jain and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which is time barring on 31.03.2013. The information provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trading Co. M/s Krishan Lal Gambhir Sons ₹ 4,05,860 2. Vishnu Trading Co. M/s Krishan Lal Gambhir Sons ₹ 3,52,461 Total amount of entries ₹ 7,58,321 Since Sh. Rakesh Gupta Sh. Vishesh Gupta and Sh. Navneet Jain Sh. Vaibhav Jain during the course of assessment proceedings u/s 153A of I.T. Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s Krishan Lal Gambhir Sons, whose name is appearing in the said list, has taken accommodation entries from Shri Rakesh Gupta Sh. Vishesh Gupta and Sh. Navneet Jain Sh. Vaibhav Jain pertaining to A.Y. 2006-07. Also the details of Income Tax Return filed by M/s Krishan Lal Ghambhir Sons for A.Y. 2006-07 and processing done u/s 143(1) of I.Tax Act thereof were taken out from ITD System. Further, no scrutiny assessment was done in A.Y. 2006-07. Therefore, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise the addition of 20% on the facts and circumstances is apparently too high. The ld. CIT(A) having held that tax has to be levied on real income and the profit cannot be ascertained without deducting the cost of purchases from the sales as otherwise it amount to levy of tax on gross receipt, she ought to have applied profit rate in this nature of trade. Estimating profit @ 20% by taking into consideration the or visions of section 40A(3) will not lead to determination of correct real income. Section 40A(3) is meant for a different purpose when the assessee has made purchases in cash. This provision cannot be applied in such cases. Once the purchases are held to be bogus then the trading results declared by the assessee cannot be accepted and right course in such case is to reject books of accounts and profit has to be estimated by applying a comparative profit rate in the same trade. Though there can be a little guess work in estimating profit rate but such profit rate cannot be punitive. 12. Ld. DR even though vehemently relied on the order of CIT(A) as well as that of the Assessing Officer, could not bring to our knowledge any cogent material or evidence which may com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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