TaxTMI 
TaxTMI 
2003 (11) TMI 285
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....ct was put to the assessee and an opportunity to cross-examine was also given to the assessee after which it was concluded that the above addition was valid." 2. Brief facts are, the assessee is a registered firm deriving income from trading in stainless steel and service charges for import of goods for others. Original assessment was framed on 29th Jan., 1986. The assessee had shown that it had earned service charges of Rs. 10,68,925 at 3 per cent from following parties against the goods imported by it and supplied to them: (i) M/s Formeta Industrial Corporation (ii) M/s Arihant Metal Industries (iii) M/s Parshuram Metal Industries The AO issued summons under s. 131 to these parties, who denied these transactions. The AO held that these transactions of sale to these parties remained unverified and are not genuine. The assessee itself imported these goods and sold these goods not to these parties but in the open market. In view whereof, the AO estimated that the assessee earned additional profit of 5 per cent on these transactions (over and above 3 per cent already declared by the assessee) and made an addition of Rs. 7,22,238. Aggrieved, the assessee preferred first appeal wh....
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....ent the AO had made addition only on account of service charges, whereas in reframed assessment consequent to Tribunal direction not only addition on account of extra profits was made but also the sale proceeds received by the assessee were held as assessee's undisclosed money and the addition was made. Aggrieved, the assessee preferred first appeal and contended that the addition made on account of sale proceeds was highly unjustified. The Department had accepted that the goods were imported by the assessee by investing its own money and there was no doubt about the same. The dispute was that the assessee had sold goods not to these three parties but in open market and these three parties were only hawala givers. Having accepted the source of purchase, the goods were at the disposal of the assessee and there may be doubt about the person to whom the goods are sold but as far as the sale proceeds were concerned, they cannot be held as undisclosed income of the assessee as the purchases were duly effected and were accepted by Department. 4. Regarding GP addition on account of extra income, the assessee contended that similar goods were sold by it to five other parties from whom ser....
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....sale proceeds, whereas the assessee is before us against retention of 5 per cent as additional GP. 6. The learned counsel for the assessee reiterated the facts and contended that against original assessment order the issue before Tribunal was only estimation of GP, the assessment was set aside and restored back to AO only in this context and not in the context of making addition on account of sale proceeds. It is further clear from the Tribunal order in para 6 that there was no mention about the normal gross profit rate applied in the cases where the goods were imported into the country and not sold on high sea basis. This concluding remark in setting aside order by Tribunal clearly shows that what was set aside to AO was only the question of estimation of GP and not the addition on account of sale proceeds. Regarding GP, the learned counsel contended that the assessee sold imported goods to eight parties out of which five were accepted by the Department and three parties denied to have purchased the goods and the AO has treated them as hawala parties. In any case, the facts remain undisputed that the goods were sold by the assessee. The Department has accepted similar transaction....
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....he amount was rightly added by the AO. The CIT(A) has held that the addition was on the basis of surmises and conjectures and had no legs to stand, is not borne out from the record as it is amply clear that the transactions were dubious in nature. The order of AO was relied on. 8. The learned counsel for the assessee, in reply to GP addition, contended that the Tribunal set aside the matter on limited issue to examine the market GP rate; whole order of assessment was not set aside. The AO had no jurisdiction to go into other aspects. Reliance was placed on CIT vs. Mahindra & Co. (1995) 125 CTR (Raj) 81 : (1995) 215 ITR 922 (Raj). Regarding the other issue, the learned counsel took us through the CIT(A)'s order and contended that the Department has itself accepted that the purchases of these imported items were genuinely made by the assessee and entered in the account books. Therefore, the source of sale of these goods was with the assessee. Even the factum of sale is not doubted by the Department. The doubt cast is only regarding the fact whether the sales were effected to those three persons or other persons. Three persons having denied about the purchase; the logical conclusion ....