TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 262
X X X X Extracts X X X X
X X X X Extracts X X X X
....mption of jurisdiction of the Ld. ACIT to initiate proceedings u/s 143(2) of the Act and, frame assessment u/s 143(3) of the Act despite the fact that initiation of proceeding was not in accordance with the instruction issued by Central Board of Direct Taxes for selection of cases for the financial year 2012-13. 2. Invocation of section 145(3) is bad :- That on the facts and in the circumstances of the case Ld. CIT(A) has grossly erred in law and facts in confirming application of provisions of section 145(3) by ld. AO by alleging certain purchases to the tune of Rs. 94,23,653/- made from five parties as under - S.No. Name of the party Amount of the Purchases made in Rs. 1. M/s Shree Abhushan Rs. 25,91,381/- 2. M/s R.R.Gems....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and unsustainable in law. 6. Failure to Issue Proper Show Cause Notice :- That on the facts and in the circumstances of the case Ld. AO has grossly erred in law and facts in where he proposes to make additions or disallowances, the assessee would be given a fair opportunity to explain his position on the proposed additions/ disallowance in accordance with the principle of natural justice. In this regard the AO shall issue an appropriate show-cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences. Which is mandatory as per CBDT circular. 7. Interest levied u/s 234A, 234B and 234C That on the facts and in the circumstances of the case Ld. AO has grossly erred in law and facts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the unverifiable purchases the ld. CIT(A) has took a different approach and held that the income of the assessee is required to be estimated by applying average GP declared by the assessee in the preceding years. Since the addition would have been more than the addition made by the AO, therefore, the ld. CIT(A) has confirmed the addition made by the AO of Rs. 23,55,913/-. 3. Before us, the ld. AR of the assessee has submitted that the entire purchases have corresponding sales and therefore, when the sale is not undisputed then purchases cannot be doubted. The Assessing Officer has doubted purchases due to the reasons that the assessee could not produce suppliers for verification, therefore, the action of rejection of books of account i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ld. CIT(A) has already considered the estimation of income of the assessee by applying reasonable criteria being average of GP declared in the preceding years. Since, the addition would have been much more then the addition made by the AO had the average GP applied for estimation of income, therefore, the ld. CIT(A) as restricted the addition only to the amount of the addition made by the AO. He has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record. The assessee has explained the reasons for declaring less GP rate for the year under consideration in comparison to the preceding years and the facts emerging from the record supports the case of the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of Rs. 94,23,653/- were not verifiable during the assessment proceedings and bills were obtained through accommodation entry providers which definitely results in higher GP rate. The higher gross profit will also take into account of the irregularities committed by the appellant in obtaining accommodation entries. The gross profit during the year is 1.39% onlyhas fallen from 11.45% and 14.96% in preceding years. For such a steep fall in gross profit, it was submitted by the appellant before the AO that the appellant started dealing in gold jewellery in comparison to earlier years, where sale was mainly gems and stone jewellery. It was also submitted that the appellant mainly purchased gold from corporation bank and exported 98.77% of good....
X X X X Extracts X X X X
X X X X Extracts X X X X
....increased to Rs. 53.56 Core. Further, the ld. CIT(A) has duly noted the fact that for the year under consideration the assessee started dealing in gold jewellery in comparison to the stone jewellery for the preceding years. Apparent from the sale of gold jewellery the assessee also traded in bullion by purchasing gold from Corporation Bank and exported the same. The Revenue has not disputed that 98.77% of the total turnover of the assessee is comprising export of bullion. Once 98.77% of the total turnover represents export of bullion then the GP declared by the assessee for the year under consideration cannot be compared with the GP for the preceding years when there is very less turnover of the assessee in the trading of stone jewellery. ....