TMI Blog2019 (2) TMI 1954X X X X Extracts X X X X X X X X Extracts X X X X ..... ing is taxable income has escaped assessment and the assessee s plea that no fresh material before the AO warranting reopening, is not relevant. Estimation of income on bogus purchases - HELD THAT:- We find that once the onus shifted to the AO, instead of verifying those details, he has jumped into an estimation which is uncalled for. Similarly, there is no merit in the order of the Ld. CIT(A) restricting the disallowance to 3% of such purchases - we set aside the order of the Ld. CIT(A) restricting the disallowance to 3% of such purchases and allow the 2nd ground of appeal. - ITA No. 4444/MUM/2018 - - - Dated:- 28-2-2019 - Shri Saktijit Dey (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. Nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m filed its return of income for the assessment year (AY) 2008-09 on 24.09.2008 declaring total income of ₹ 44,070/-. The said return of income was processed u/s 143(1) of the Act. A search and seizure action was conducted on Shri Rajendra Jain Group on 03.10.2013 by the Director General of Income Tax (Investigation), Mumbai [in short DGIT ]. The search action resulted in collection of evidence which shows that the above group concern, through a web of benami concern operated by them, was engaged in providing accommodation entries of bogus sales and unsecured loans to various beneficiaries. As per the information received by the AO, the various parties who had issued accommodation entries to the assessee are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7,50,859/-. 4. In appeal, the Ld. CIT(A) dismissed the ground raised by assessee against reopening the assessment on the reason that the return of income filed by the assessee was processed u/s 143(1) of the Act, then it was reopened by the AO by issuing notice u/s 148. Referring to the decision of the Hon ble Supreme Court in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500, the Ld. CIT(A) dismissed the said ground of appeal. On merits the Ld. CIT(A) held as under: In the light of the above, one has to see in the present case, which is in the line of trading in diamonds, what is the correct profit element embedded in such bogus purchases. In the case of diamond trade, generally the rate of VAT is stated to be charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial statements (including purchase and sales summary and bank statements) for the relevant period of these parties, (iv) income tax return of the relevant period of these parties, (v) affidavit in this context from these parties, (vi) details of payment made through account payee cheque towards these purchases and (vii) quantitative details. It is thus submitted by him that additions only on the basis of information received from the sales tax/other department is not sustainable. The Ld. counsel files a decision in the case of Pr. CIT v. Marg Ltd. (2017) 84 taxmann.com 52 (Madras) and Haryana Jwellers P. Ltd. v. ITO (ITA No. 2315/Del/2018 for AY 2013-14). Further, the Ld. counsel files a copy of the reply filed before the CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition to be satisfied for reopening is taxable income has escaped assessment and the assessee s plea that no fresh material before the AO warranting reopening, is not relevant. In view of the above factual scenario and position of law, the 1st is dismissed. Turning to the merit of the case, we find that the assessee vide letter dated 28.12.2015 had written to the AO stating that the notice issued u/s 133(6) to M/s Aadi, M/s Avi, M/s Moulimani and M/s Sparsh have been replied by the said parties enclosing the confirmation, acknowledgement of income tax return filed along with balance sheet, profit and loss account and proof of sale. Instead of verifying those details, the AO relied on the statement of Shri Ravindra Jain, where there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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