TaxTMI 
TaxTMI 
2009 (6) TMI 117
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....2 were reopened under s. 148 of the Act whereas in respect of asst. yr. 2002-03, the AO observed that a search action was carried out in the case of Shri Vinod Parasmal Jain and Shri Deepak Parasmal Jain who were carrying on the business in the proprietary firm names of Aloukik Exports and Rathod Exports respectively. During the search, it was observed that Shri Vinod Parasmal Jain and Shri Deepak Parasmal Jain had shown purchases from Viren Diamonds and Sweety Diamonds. The addresses of both these parties were stated to be at Surat. However, none of these parties were traceable at the address so given and hence, inquiries were made with the bank wherefrom it was found that the assessee was the proprietor of both these firms. Further, from ....
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....all person as far as to his financial status is concerned. His total capital is just Rs. 8.90 lacs without any immovable property. Under the circumstances the assessee failed to explain where he used to keep huge amount withdrawn from the bank as well as huge stock of diamond, the AO drew an inference that the assessee was engaged in giving hawala entries as well as the assessee had failed to prove the genuineness of various expenses debited in the P&L a/c, the books of account and the P&L a/c were not relied upon by the AO. In order to estimate the income of the assessee earned from giving hawala entries. the AO relied on the prevailing market practice. The AO observed that for giving hawala entries, the assessee earned commission which va....
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.... that the assessee is not a hawala dealer and he is registered with sales-tax authorities and is filing his required sales-tax return. It was contended that in absence of any omission, irregularity or other defects in the method of maintaining accounts or positive evidence to show that accounts did not disclose whole income of the assessee is not correct. The books of accounts were duly maintained, therefore, they cannot be rejected. Reliance was placed on the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Shivnarayan Jamnalal & Co. (1998) 232 ITR 311 (MP). 3.1 After considering the submissions and perusing the material on record, the CIT(A) was in agreement with the AO that penalty is leviable. Accordingly, levy....
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....evidence, it goes against the assessee. Reliance was placed on various other case laws reported in B.A. Balasubramaniam & Bros. Co. vs. CIT (1999) 157 CTR (SC) 556 : (1999) 236 ITR 977 (SC), Addl. CIT vs. Smt. Chandrakanta & Anr. (1992) 108 CTR (MP) 82 : (1994) 205 ITR 607 (MP) and A.M. Shah & Co. vs. CIT (1998) 150 CTR (Guj) 1 : (1999) 238 ITR 415 (Guj). 5. We have heard the rival submissions and considered them carefully. We have also perused the relevant material on record. After examining the relevant material on record, it is seen that the AO has estimated the income of the assessee by drawing an inference that the assessee was indulging in hawala transactions. The AO estimated the income of the assessee by applying 3 per cent rate o....