Scrutiny of income tax

jiteshjain (Querist) 28 October 2016 This query is : Resolved
Hello All,

My freind Pratik is under going an scrutiny from Income Tax. The case is as follows:

His uncle started a business on his name of Diamond Trading in Surat. For the Business his uncle opened a Bank account in Axis Bank for the Financial Year 2011-12. He was just adviced to sign blank cheques and other activity of business was carried out by his uncle. He nither knew about what was happening about that business. When he received his Income Tax return the turnover was 100cr. in which the profits was only 4 Lakhs shown. Now, from last 1 and half years he was receiving notice from Income Tax to present the Sales and Purchase Register and Bank Statement. He contacted the uncle but uncle was not available at that moment.
Uncle adviced directly to visit the CA who had audited his accounts but CA refused to attend the notice on behalf of him. He contacted the orginal party who did all the transactions on his name. They also did not entertained him. At last he appointed a new CA to attend the Case. They both went to the Assesing Officer and informed him orally about the whole story. The AO issued 133(6) summon to the orginal party and the Bank to provide the details of my freind. As soon as the notice was received by the original party and the CA both became active and CA summited all Purchase and Sales register and Bank statements but that my friend had given him for submission. The AO asked for Letter of Authority from the CA but he didn't had the same and left. AO called my friend and told to give statement in written for the whole story but my friend did not submitted and left from his office as his new CA adviced not to submit because if the orginal party did not accept the case then all the liabilty would be transfered to pratik.
AO wanted to close the case by 31st Mar 2015 but was unable to do. In this Case the AO is not agreeing with the calculation of Profit Margin which is shown as 0.04% on the total turnover. AO says the profit should be atleat 4% on the total turnover rather than 0.04%

Please advise now what action should pratik take as he is innocent on the case and do not want any further liability.

Currently the Case is under an appeal in Income Tax but my friend has not attended the appeal. 2 Hearing were called out. for the same. Can any one advise what can he do now for saving himself.
Is there any possibility under Law to book a case against his uncle for this fraud.

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R.K Nanda (Expert) 30 October 2016
consult tax lawyer.

Rajendra K Goyal (Expert) 31 October 2016
Full case details needed for any advice.

Discuss in detail with local tax consultant.

krishna mohan (Expert) 09 November 2016
You are saying you have signed for your uncle. Your uncle will be able to solve the issue as he is the beneficiary by adhering to ITO order or challenging that. You can also consult leading lawyer to analyze form the legal angle to advise you or represent before the ITO. Is it a proprietorship company? Registration documents with tax authorities may provide you vital evidence to prove that you are not the real beneficiary.