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TMI Blog2018 (10) TMI 1741X X X X Extracts X X X X X X X X Extracts X X X X ..... t years. Even if we accept the contention of the Revenue that 25% mark up was justified based on the judgment of Gujarat High Court in the case of Sanjay Oil Cake Industries [ 2008 (3) TMI 323 - GUJARAT HIGH COURT ] , what could at the best be added is only the shortfall between declared gross profit and the estimated gross profit of 25%, and such shortfall fell within the range of 5 to 6%. In such circumstances, in order to give a quietus to the matter, we are inclined to follow the decision of M/s. Ralf Jems Pvt. Ltd [ 2017 (12) TMI 746 - ITAT MUMBAI ] Addition that are to be made is fixed at 6%, of what is considered as value of the alleged bogus purchases and nothing more. We direct the ld. Assessing Officer to recalculate the addition accordingly. Alleged commission, in the first place, assessees had not claimed any commission payment. Estimate of ₹ 5,000/- per bill was based on pure surmises. Such additions are therefore deleted. - I.T.A. Nos.653, 654, 1464 & 1465/CHNY/2017, 655/CHNY/2017 Assessment years : 2009-10, 2011-12, 2007-08 & 2008-09 - - - Dated:- 24-10-2018 - Shri Abraham P. George, Accountant Member And Shri Duvvuru Rl Reddy, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed purchases of diamond worth ₹ 2,72,320/- from one M/s. Marvin Enterprises during the previous year relevant to assessment year 2009-2010. 3. Ld. Assessing Officer was of the opinion that Investigation done by the Department clearly indicated the above purchases to be bogus. Assessees were put on notice. Reply of the assessees were that the purchases were supported by proper invoices and delivery of the items recorded in its stock register. As per the assessees, they had received the material and effected sales therefrom. Assessee also pointed out that the payments were effected through bank and suppliers had both GST and TIN. Thus, as per the assessees, purchases were not bogus, but true and genuine. 4. Ld. Assessing Officer thereupon required the assessee to produce the intermediaries through whom the purchases were effected. Assessees thereupon intimated that intermediaries were not traceable due to lapse of time. Ld. Assessing Officer then issued show cause notices to the assessees, requiring it to explain why 25% of the unverifiable purchases should not be considered as unexplained income of the assessee. Assessees replied that the gross profit e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 655/CHNY/17 VBC Jewellers 2009-10 M/s. Marvin Enterprises, Surat ₹ 2,72,320/- 68,080 5,000/- 6. Aggrieved, both the assessees moved in appeal before ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) however confirmed the addition made by the ld. Assessing Officer observing that there were material evidence on record for considering the purchases claimed by the assessees as bogus. Further, according to him, judgment of Hon ble Gujarat High Court in the case of Sanjay Oil Cake Industries (supra) supported the addition made by the ld. Assessing Officer. 7. Now before us, ld. Authorised Representative strongly assailing the orders of the lower authorities submitted that gross profit returned by the assessees for the impugned assessment years varied between 8.91% to 20.88%. According to him, even if 25% markup was presumed on the alleged unverified purchases, addition should be restricted to difference between gross profit rate declared by the assessee and adopted percentage of 25. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68,080 According to him, judgment of Hon ble Gujarat High Court in the case of Sanjay Oil Cake Industries (supra) was one where account payee cheques issued by the assessee were deposited in bank account which were ostensibly in the name of apparent sellers and entire amount were withdrawn by bearer cheques with no trace or identity of the person withdrawing the amount from the bank. As against this, as per the ld. Authorised Representative, in a case similar to that of the assessee, decided by a Co-ordinate Bench viz Sheetal V. Bhat vs. ACIT (in ITA No.272/Mds/2017, dated 28.06.2017), it was held that ld. Assessing Officer, having not taken the steps subsequent to issue of notice u/s.133(6) of the Act, disallowance of purchases and additions made on presumptions could not be upheld. Reliance was also placed on a decision of Mumbai Bench of the Tribunal in the case of M/s. Ralf Jems Pvt. Ltd vs. ITO (ITA Nos.3707 and 3761 /Mum/2016, dated 11.12.2017). As per the ld. Authorised Representative in the case considered by the Mumbai Bench, addition was based on a search conducted in the very same M/s. Bhanwarlal Jain Group, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to a best of judgment assessment and made an addition of 25%, of what was considered by him as bogus purchases. It is not disputed that assessees had produced invoices from the concerned vendors and said invoices carried TIN as well as GST details of the vendors. It is also not disputed that the receipt of the material were properly recorded by the assessees in their stock registers. The sales effected by the assessees was never disbelieved. When the sales are accepted, we cannot say that there were no corresponding purchases. Nevertheless, it is true that assessee despite claiming the purchases to have been effected through some intermediaries, were unable to produce the intermediaries or file confirmations from them. Hence, we cannot say that assessee had made all necessary efforts for proving the purchases claimed to have been made from the parties mentioned in the table above, beyond preponderance of probability. A similar case, where an addition was made disbelieving purchases, based on search operations conducted in M/s. Bhanwarlal Jain Group, had come up before the Mumbai Bench of the Tribunal in ITA Nos.3707 3761/Mum/2016, dated 11.12.2017). What was held by the Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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