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2021 (7) TMI 1223 - AT - Income TaxReopening of assessment u/s 147 - Bogus purchases - information gathered from DGIT (Investigation) Mumbai that Sanjay Choudhary group persons had floated various companies which are engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus purchases, bogus capital gains and assessee also was one of the beneficiaries by obtaining bogus purchases - HELD THAT:- Admittedly this information was obtained by the Ld. AO based on search and seizure action carried out in the case of Shri Sanjay Choudhary group wherein it was found that the said group was engaged in providing accommodation entries without actual supply of goods, which had ultimately triggered the reopening of assessment in the case of the assessee. CIT(A) had observed that from the information so received, the assessee's name appeared in the list of beneficiaries who had taken accommodation entries. Obviously this would result in formation of belief in the mind of the AO that income of the assessee had escaped the assessment as the said information constituted tangible material. We find that the Ld. CIT(A) had also placed reliance on the decision of the Hon'ble Gujarat High Court in the case of Peass Industrial Engineers Pvt. Ltd.[2016 (8) TMI 280 - GUJARAT HIGH COURT]in support of its contentions, while upholding the validity of reopening. Hence, we do not find any infirmity in the order of the Ld. CIT(A) upholding the validity of reopening of the assessment in the instant case. Accordingly, the ground No. 1 raised by the assessee for both the years is hereby dismissed. Bogus purchases - In the instant case, the sales made by the assessee within the disputed purchases had not been doubted by the Revenue. Hence, it could be safely concluded that assessee could have made purchases from grey market in order to have some savings in indirect taxes and incidental profit element thereon by making cash purchases. Hence, it would be just and fair to bring to tax only profit element embedded in the value of such disputed purchases. We find based on the report of the task group for diamond sector published by the Government of India, Ministry of Commerce and Industry, in this regard, wherein the benign/presumptive taxation threshold was set at 2.5%. We hold that profit percentage embedded in the value of disputed purchases estimated at 2.5% thereon, would meet the ends of justice. The Ld. AO is directed accordingly.
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