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TMI Blog2019 (11) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of recording of reasons by. A.O. Appellant says that under the facts Notice u/s. 148 of the Act dated 02.03.2016 being issued after one month of reason recorded on 02.02.2016 is invalid as per the ratio laid by the Court. 3. No concrete, cogent and corroborative evidences, documents, copies of affirmation of vendors which have direct nexus for reopening of the case and for making additions are available on record as Ld. CIT (A) did not make available, assessment records for inspection and verification of these facts though specific requests were made by A.R. in his letter submitted at the time of hearing. Therefore, an adverse inference may be drawn against both the authorities for withholding of the evidence as per Section-114(g) of the Evidence Act and inference may be drawn In favour of the Appellant and both the orders passed by lower authorities may be set aside with deletion of the additions. 4. As stated in ground 3 above no materials furnished to the Appellant for rebuttal but the same are used against Appellant, therefore, there is fragrant violence of rules of natural justice and both the orders may be set aside on this ground also- This ground is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, the AO reopened the assessment by issuing notice u/s. 148 of the Act. During the course of reassessment proceedings, the AO asked the assessee to file the details like (a) Name of the Seller with current full address, (b) PAN (c) Bill and Voucher No. with date, (d) Description of goods purchased (e) Quantity (f) Rate, (g) Amount (h) Goods dispatched from (name of the place) with date (i) Mode of transportation, if by Road Vehicle No. and also payments, detailed in the annexure-A and (j) details of corresponding sales of goods. The AO noted that the assessee could file few details but could not link purchases with corresponding sales and further failed to produce the books of accounts for verification. On the basis of the above facts, the AO estimated the profit @12.5% on the disputed purchases of Rs. 55,72,229/- which comes to Rs. 6,96,528/-. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). We find that vide order dated 14.02.2019, the ld. CIT(A) has dismissed the appeal filed by the assessee by observing that: "I have considered the facts of the case, AO's contentions and appellants' submission and also the case laws relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as recorded by the AO, the assessee failed to file full details called for vide notice u/s.142(1) of the Act. It also stated by him that the assessee failed to produce to books of accounts before the AO for verification. Thus, the ld. DR submits that the estimation @12.5% on the disputed purchases made by the AO and then confirmed by the ld. CIT(A) be affirmed. 7. We have heard the rival submissions and perused the relevant materials available on record. Firstly, we deal with the notice issued u/s.148 of the Act. As mentioned earlier, the AO has reopened the assessment which was processed u/s. 143(1) of the Act. The Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC) analyzed the distinction between the acceptance of a return u/s 143(1) and an assessment which is framed u/s 143(3) of the Act. In the former case, the AO would have much wider latitude to reopen the assessment. In the case of Avirat Star Homes Venture P. Ltd. v. ITO (2019) 411 ITR 321 (Bom), the Hon'ble Bombay High Court referring to the above decision has held: "That the return had been accepted without scrutiny. The income-tax investigation had subsequently pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the assessee as its additional income. The assessee carried the matter in appeal before the CIT(A), who accepted the factum of purchases being bogus. However, he compared the purchases and sales statements of the assessee and observed that the Department had accepted the sale, and therefore, there was no reason to reject the purchases, because without purchases there cannot be sales. He, therefore, held that under these circumstances the AO was not correct in adding the entire amount of purchases as the assessee's income. He, therefore, deleted the addition refreshing it to 10% of the purchase amount. He also directed the AO to make addition to the extent of difference between the gross profit rate as per the books of accounts on undisputed purchases and gross profit on sales relating to the purchases made from the said three parties. The assessee carried the matter before the Tribunal. The Revenue also carried the issue before the Tribunal. The Tribunal allowed the appeal of the assessee partly and dismissed that of the Revenue. The Tribunal noted that the CIT(A) had not given any reasons for retaining 10% of the purchases by way of ad-hoc additions. The Tribunal, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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