MANISH KUMAR VERMA ,GWALIOR vs. ITO1(1), GWALIOR

The case of the assessee was reopened vide notice u/s 148 dated 15-03-2013. The same was to verify the transactions as carried out by the assessee with Shri H.D. Joshi and others. It transpired that the assessee reflected income of Rs.1.28 Lacs against turnover of Rs.33.27 Lacs. Considering the provisions of Sec.44AF, 5% thereof would be deemed income which would be Rs.1.66 Lacs. The assessee reflected less income. Therefore, Ld. AO held that the income was not declared u/s 44AF. Finally, Ld. AO computed disallowance u/s 40A(3) for Rs.14.13 Lacs on account of cash purchases. The Ld. CIT(A) confirmed the assessment against which the assessee is in further appeal before us.

Upon perusal of reasons recoded to reopen the case of the assessee as kept on Page No.9 of the paper-book, we find that the assessment has been reopened merely on the allegation that the assessee has made unaccounted purchase / sale to Shri H.D. Joshi and others. It has been alleged that the assessee has made unaccounted transaction which has escaped assessment. However, no such addition has been made in the assessment order. The Ld. AO has merely made disallowance u/s 40A(3) which is against accounted purchases only. Further, there is no new tangible material before Ld. AO to form a belief that the income had escaped assessment. For these reasons alone, the assessment is liable to the quashed. We order so. Delving into the merits has been rendered academic in nature.