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TMI Blog2019 (8) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... Plainly this was not forthcoming and the AO rightly therefore disregarded the accounts of both Assessees u/s 145 (3). The satisfaction recorded by the AO in the present cases that the books of account maintained by each Assessee deserved to be rejected cannot, in the circumstances, be said to be perverse. In Kachwala Gems Jaipur v. JCIT [ 2006 (12) TMI 83 - SUPREME COURT] it was held that the AO can reject the assessment u/s 145 (3) if he finds that there are defects in the books of accounts and where bogus purchases are shown by the Assessee in order to reduce gross profit. In the present cases, the discussion of the evidence on record both by the CIT (A) and the ITAT is found to be cryptic and without adverting properly to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, learned counsel for the Assessees. 5. The background facts are that the Respondent/Assessee in ITA No. 828/2005 is the proprietor of M/s S.R. Jewells whereas the Respondent Assessee in ITA No. 833/2005 is a proprietor of M/s. Kishan Lal and Sons. Both are dealing in the business of trading in gold and silver items. 6. The Assessee in ITA No. 828/2005 filed his return of income for the AY in question on 31st October, 1998 declaring a loss of ₹ 1,35,570/-. As far as the Assessee in ITA No. 833/2005 is concerned, he filed a return declaring an income of ₹ 1,87,750/-. Both the returns were picked up for scrutiny. 7. At this stage, it requires to be noticed that a search and seizure operation under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 10. The AO on examining the accounts came to the conclusion that the Assessee had given accommodation entries to persons who had declared high quantities of silver in the VDIS declarations for the purposes of earning commission thereon which ranged at 5% to 7% of the interest. 11. What is significant is that queries were asked of the Assessee by note sheet entry dated 13th December, 2000 to furnish names and addresses with respective amounts of all the alleged buyers of silver items. This was reiterated by a letter dated 29th December, 2000. The Assessee failed to comply with this request. On 12th March, 2001 a specific letter was again addressed in which it was stated as under: With reference to the aboveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the Assessee in ITA No. 833/2005, the AO found the situation to be no different. It was noted that the silver which the said Assessee had allegedly sold to persons who declared silver in the VDIS declarations had been shown as sold entirely in cash. The daily cash sales were in the range of ₹ 85 lakhs. Here again no details were forthcoming. There were as many as 3142 cash memos of such sales for a total amount of ₹ 40,21,80,331/-. The details only in respect of 15 such cash memos were provided. These showed purchase of silver from MMTC and Customs. However, when he was asked to produce evidence of purchases other than those from MMTC and Customs, the Assessee was unable to do so. 15. The AO noted that in eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being put forth entirely as cash sales had no valid basis in the books of accounts. It was obligatory on the Assessees to satisfactorily account for the creditworthiness, identity and genuineness of the transactions of the so-called providers of such cash to each of them in such huge sums. Plainly this was not forthcoming and the AO rightly therefore disregarded the accounts of both Assessees under Section 145 (3). The satisfaction recorded by the AO in the present cases that the books of account maintained by each Assessee deserved to be rejected cannot, in the circumstances, be said to be perverse. 19. In Kachwala Gems Jaipur v. Joint Commissioner of Income Tax (2007) 12 SCC 761 it was held that the AO can reject the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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