TMI Blog2020 (5) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... of the average g.p. and arrived to the conclusion that if the income is estimated based on the average g.p. on the turnover of the assessee then it would be more than the addition made by the AO - HELD THAT:- If the income of the assessee is estimated as per well settled proposition of law being the past history of the g.p. declared by the assessee and average of past history as the basis of the estimation then the addition on account of low g.p. for the year under consideration would have been more than the addition made by the AO. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A). - Decided against assessee. - ITA No. 355/JP/2019 - - - Dated:- 4-3-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : None (Written Submission) For the Revenue : Ms. Chanchal Meena, JCIT-DR ORDER PER VIJAY PAL RAO, JM This appeal by the assessee is directed against the order of ld. CIT(A)-1, Jaipur dated 13-12-2018 for the Assessment Year 2010-11. 2.1 None appeared on behalf of the assessee when this appeal was called for hearing despite the notice was duly received by the assessee as per acknowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd. vs ITO, 236 ITR 34 and submitted that sufficiency or correctness of the material is not a thing to be considered at this stage of reopening. Thus the ld. DR relied on the order of the ld. CIT(A) qua this issue. 3.4 We have considered the rival submissions as well as the relevant materials available on record. In the case of the assessee, there was no original assessment u/s 143(3) of the Act but the return filed by the assessee was processed u/s 143(1) of the Act. Subsequently, the AO received information as well as statement recorded by the Investigation Wing, Mumbai during search and seizure operation in case of Shri Rajendra Jain, Shri Sanjay Choudhary group and Shri Dharmichand Jain group of Mumbai on 03-10-2013. The assessee claimed to have purchased Diamond from the concerns of Shri Rajendra Jain, Group, therefore, based on the information received from Investigation Wing, Mumbai, there was a prima facie material to form the belief that income assessable to tax has escaped assessment. The ld. CIT(A) has considered this issue in para 3.1.2 as under:- 3.1.2 Determination: (i) I have duly considered the submissions of the appellant, assessment order and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an accommodation entry provider, reassessment could not be held unjustified (iv) In the case of M/s Jayant Security Finance Ltd 9 1 taxmann.com 181[2018] (Gujarat), it was held by the held by the Hon'ble High Court of Gujarat that: initiation of reassessment proceedings on basis of information received from Investigation wing that assessee had received certain amount as a loan from a company, working as entry operator and earning bogus funds to provide advances to various person, was justified (v) In the case of Rakesh Gupta Vs CIT 93 taxmann.com 271 [2018] (Punjab Haryana), it was held by the Hon'ble High Court of Punjab Haryana that: Where Assessing Officer received information from Principle Director of Income Tax (Investigation) that assessee had received bogus loss from, his broker by client code modification, reassessment on basis of said information was justified (vi) In the case of ACIT Vs Rajesh Jhaveri Stock Brokers (P.) Ltd [2007] 161 Taxman 316 (SC) /291 ITR 500 (SC)/ [2007] 210 CTR 30 (SC),it was held by the Hon'ble Apex Court that: So long as the conditions of section 147 are fulfilled, the Assessing Officer is fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the rival submissions as well as the relevant materials available on record. At the outset, we note that though the AO has made the addition of 25% of alleged bogus purchases, however, the ld. CIT(A) has considered the addition in terms of Section 145(3) r.w.s. 144 of the Act and tested the results of the assessee in terms of average g.p. declared by the assessee in the preceding years. The ld. CIT(A) has given the details of the average g.p. and arrived to the conclusion that if the income is estimated based on the average g.p. on the turnover of the assessee then it would be more than the addition made by the AO. Accordingly, the ld. CIT(A) has restricted the addition to the extent of the amount which was made by the AO. The relevant findings of the ld. CIT(A) at para 3.2.2 (xi) of his order is as under:- 3.2.2 .. (xi) Thus, in view of the above judicial pronouncements, after rejection of books of accounts, the past history of the appellant has to be seen, for estimating the profit of the appellant. During the appellate proceedings, the appellat was required to submit its trading results for the last few years, which were submitted and reproduced as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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