Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 118 - AT - Income TaxEstimation of income - Bogus purchases - statement of key person of assessee group i.e. Shri Saket Sudhir Mehta was recorded u/s 132(4) wherein he was directed to explain the modus operandi of purchases made by various group concerns since there were allegations that the assessee group indulged in accepting accommodation entries of bogus purchases - HELD THAT:- The basic onus to establish the genuineness of the purchase remained un-discharged. At the same time, the assessee was in possession of purchase invoices and the payment to the suppliers was through banking channels. The ledger confirmation as well as PAN of suppliers was placed on record. The import as well as exports was certified by the custom authorities - complete quantitative tally of stock was provided along with correlation of purchases with corresponding sales. There could be no sale without actual purchase of material keeping in mind the fact that the assessee was engaged in trading activities - this make it a fit case for estimation of profit element embedded in these purchase transactions to plug the possible leakage of revenue. The approach of Ld. CIT(A) in estimating the profit could not be faulted with. Estimation made by Ld. CIT(A) - As under similar facts and circumstances, the coordinate bench of this Tribunal, in the cited order of M/s Sur Gem (an associated concern of the assessee) has estimated profit rate of 6% of bogus purchases minus GP already declared by the assessee. The said estimation is in accordance with CBDT instruction no.2 of 2008 dated 22/08/2008 wherein the CBDT has directed all the AOs to accept profit of 6% in diamond business. The assessee, in the present case, has reflected GP rate in the range of 3% to 3.5% in AYs 2012-13 & 2013-14 as is evident from its financial statements. Therefore, following the cited decision of Tribunal and for ease of computations, we direct Ld. AO to make addition of 3% (net) of tainted purchases without any further benefit. The same works out to be ₹ 14,11,982/- (3% of ₹ 4,70,66,091/-) for AY 2012-13 and ₹ 4,81,103/- (3% of ₹ 1,60,36,782/-) for AY 2013-14. The addition to that extent stand confirmed in both the years. Disallowance of labour charges - AO, going by the material as well as admission made during search operations, formed an opinion that the assessee group booked bogus labour expenditure - HELD THAT:- It is evident that the assessee imported rough diamonds and exported polished diamonds during the year. The conversion of rough diamonds into polished diamond would certainly require certain labour / job work as rightly noted by Ld. CIT(A). In whole of the year, the assessee has claimed labour charges of ₹ 42,445/- only which has been fully disallowed. We further find that the payment to the labour contractor is though account payee cheques after deduction of tax at source. Therefore, the additions on mere suspicion, in our opinion, could not be sustained in the eyes of law. On different reasoning, would not require any interference on our part. The ground raised by the revenue stand dismissed. The revenue’s appeal for AY 2013-14 stand dismissed.
|