TaxTMI 
TaxTMI 
2017 (8) TMI 1633
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....sale of pharmaceutical products. The revenue received information from the Sales tax department that certain dealers (popularly called Hawala dealers) are engaged in providing accommodation bills without actually supplying the materials. From the details collected from the Sales tax department, it was noticed that the assessee has purchased materials from those hawala dealers during the years relevant to the AY 2009-10 and 2010-11. Accordingly the AO re-opened the assessment of the assessment year 2009-10. He estimated the additional income earned by the assessee at 10% of the alleged bogus purchases and added the same to the total income of the assessee. In assessment year 2010- 11 also, the AO added 10% of the alleged bogus purchases as i....
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....totally different. 5. The Ld A.R submitted that the assessing officer did not make any addition in respect of purchases alleged to have been made from the parties mentioned in the reasons for reopening of assessment. In the absence of making any addition on account of reasons recorded for recorded for reopening, the assessing officer is not entitled to make any further addition in respect of other issues. In support of this proposition, he placed reliance on the decision rendered by Hon'ble jurisdictional Bombay High Court in the case of Jet Airways Ltd (2011)(331 ITR 236). 6. On the contrary, the Ld D.R submitted that the assessing officer has reopened the assessment on the basis of information received from the sales tax department that....
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.... of law that the provisions of income tax should be construed strictly. In the case of reopening of already completed assessment, the relevant provisions shall be subjected to more strict interpretation. Accordingly we are of the view that there is merit in the contentions of the assessee that the AO did not make any addition in respect of the alleged escaped income for which the assessment was reopened. 8. Now the question that arises is whether the AO is entitled to make addition in respect of any other escaped income, if he did not make any addition in respect of items for which the assessment was reopened. This question came to the consideration of Hon'ble jurisdictional Bombay High Court in the case of Jet Airways Ltd (supra) and it w....
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....ssessee submitted that the actual purchase made from the above said concern was only Rs. 3.29 crores. It also contended that the assessee has declared gross profit of 4.16% from the above transactions and hence estimation at 10% over and above the gross profit declared by the assessee is arbitrary. The assessee submitted that the entire goods purchased from M/s Maxilla Pharma has been sold to M/s Manish Enterprises and hence there is one to one reconciliation of purchases and sales. It was submitted that the AO did not make any enquiry to disprove the purchases or sales and accordingly pleaded that the entire addition should be deleted as it has been made merely on presumptions. The assessee relied upon following case laws in support of its....
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.... & others (ITA No.3537, 3538 & 3540/Mum/2016 and others) and submitted that the bench was convinced that the addition was not warranted, yet it sustained the addition in the range of 3.5% to 4% to meet the anomalies, if any. He submitted that in the above said case, the AO conducted enquiries by sending notices u/s 133(6) of the Act, whereas, in the instant case, the AO has made the addition without making any enquiry and hence the entire addition should be deleted. 14. On the contrary, the Ld D.R placed strong reliance on the order passed by Ld CIT(A). He submitted that the AO had received concrete information about the accommodation bills obtained by the assessee and the assessee could not prove the transportation of materials. Further t....
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....the range of 3.5% to 4% of the value of purchases. 17. In the instant case also, we notice that the assessee has reconciled the purchases with sales. There should not be any doubt that the sales could not be made without making corresponding purchases. The AO has also accepted the purchases as well as sales. However, since the assessee did not furnish evidences for transportation of goods, the AO presumed that the assessee would have made extra profit and accordingly estimated the same at 10% of the value of purchases. We have noticed that the AO has made the addition without making any independent enquiries. The decision relied upon by the assessee (supra) also considers certain decisions wherein identical addition made by the AO has been....