TaxTMI 
TaxTMI 
2011 (6) TMI 996
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....ducing the income to ₹ 1,45,36,030/- against the assessed income of ₹ 1,72,39,091/-. 2. The facts of the case are that the assessee filed its return on 29.10.2007 declaring total income of ₹ 47,39,887/-. The return was initially processed u/s 143(1) and thereafter it was taken up for scrutiny by issuing statutory notice u/s 143(2) on 22.9.2008. The assessee is engaged in the business of manufacturing and trading in gold ornaments. The assessee disclosed sales of about ₹ 58.14 crore. The consumption of raw-material has been shown at ₹ 53.53 crore. The ratio of finished goods to the material consumed is 96.87%, and the assessee had shown gross profit ratio at 3.27%. The net profit ratio stands at 0.79%. 2.1 The AO conducted certain enquiries in the course of assessment proceedings, on the basis of which he came to the conclusion that the books of account are not reliable. Therefore, the books were rejected. Thereafter, the income was computed at 12% of average capital employed during the year. Thus, the total income was assessed at ₹ 1,72,39,090/-. 2.2 The matter was agitated in appeal. In the impugned order, it is mentioned that the three parti....
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....he course of remand proceedings and the AO reported that this party confirmed to have supplied stones to the assessee. Similar position is obtained in the case of Gaurav Exports and Ayush Enterprises. In the case of Raju Gems, the summons were served in the course of assessment proceedings but the party did not respond. However, confirmation was supplied in the course of remand proceedings that it supplied rawmaterial to the assessee. Saumalaya Impex could not be served notice in assessment proceedings as the notice was returned with the remark "no such party at given address". However, summons were served in the course of remand proceedings. The party confirmed the transactions with the assessee in regard to sales and filed a copy of its return of income. In the statement, it was deposed that he had vacated his office premises at Karol Bagh and thereafter started functioning from Preet Vihar. The remaining three parties could not be contacted even in remand proceedings. The ld. CIT(Appeals) gave adverse finding on account of non-compliance of these three parties. In respect of these parties also, the assessee has given further details that although confirmation was obtained from M....
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....tigation has been going on between him and the assessee. In such a circumstance, it was expected that he shall not respond to the query made by the AO. The complaint in the matter has been placed in the paper book on page nos. 109 to 121. In the case of Vijay Chaudhary, the details were inadvertently not furnished in the course of assessment proceedings. However, the ledger account and the bill were submitted in the remand proceedings which have now been placed in the paper book on page nos. 102 and 103. In the case of Anita Mahendroo, the assessee did not conduct any transaction in the relevant previous year. The account for financial years 2005-06 and 2006-07 has been placed before the lower authorities and now placed in the paper book on page nos. 94 and 98. On the basis of these facts, it is argued that no discrepancy whatsoever existed in so far as the transactions of the assessee with these four customers are concerned. (iv) In regard to the loans, the assessee was unable to file confirmation from Bherumal Shamandas. However, summons were served finally in the course of remand proceedings and it sent a reply along with the copy of account of the assessee showing debit balan....
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.... were returned "unserved" or with remarks as "left" or no reply was furnished by the parties. Secondly, it was observed by the Assessing Officer that the assessee has not been able to submit quantitative reconciliation of gold and diamond jewellery stock based on sale and purchase vouchers. Drawing adverse inference from the above, the AO rejected the books of account of the appellant and completed assessment on estimate basis by adopting rate of return of 12% on average funds/capital employed, thereby estimating the income of the appellant at ₹ 1,72,39,091/- as against the returned income of ₹ 47,49,887/-. It is observed that ordinarily, a trader is not required to know the identity of the customer who buys the goods, makes the payment in cash and does not maintain any account with the traders. In such a situation, it cannot be the responsibility of the trader to produce the customer for verification of sale. However, this may not be applicable to the trade purchases and/or job works. However, when repeated purchases and/or job works of substantial amounts are made during the year to the same persons/parties in this situation, there is a valid presumption that the pers....