2020 (4) TMI 462 - AT - Income Tax

Bogus purchases - CIT(A) restricting the disallowance @ 3% of bogus purchases against 100% made by AO - assessee is a trader in cut and polished diamonds - HELD THAT:- Considering the salient feature of the diamond industry, we are in agreement with Ld. CIT(A) that the margin derived by the diamond manufacturers are between 1.5% to 4.5% and in trading profits are in the range 1 to 3%. When the AO has not doubted the sales declared by the assessee and merely rejecting the purchases is not proper. Assessee must have taken advantage by taking accommodation entries. Therefore, we are inclined to accept the finding of Ld. CIT(A). Accordingly, grounds raised by the revenue are dismissed.