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2022 (7) TMI 543 - AT - Income TaxValidity of Reopening of assessment u/s 147 - Bogus purchases - HELD THAT:- Assessee has not brought any material to our notice as to why the re-opening is bad in law and he simply argued that Daksh Diamonds is not managed by Bhanwarlal Jain and that the reopening is not valid. We find that the Hon'ble jurisdictional High Court in the case of Pass Industrial Engineers Pvt. Ltd. [2016 (8) TMI 280 - GUJARAT HIGH COURT] on similar set of facts held that when after scrutiny assessment the Assessing Officer received information from Investigation Wing that well known entry operators of Country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, the Assessing Officer was justified in re-opening assessment. No merit in the submission raised by assessee. Thus, Ground No.1 raised by assessee is dismissed. Addition of 25% on account of disputed / bogus purchases shown by assessee from Daksh Diamonds - We find that neither the books of account of assessee were rejected nor sale of assessee was doubted by Assessing Officer. And the assessing officer made the disallowance @ 25% of purchase shown from Daksh Diamonds on the basis of information of investigation wing. CIT(A) confirmed the action of AO, without giving any specific finding. We find that the assessee is in the business of cut and polish diamonds and the disallowances confirmed by the lower authorities are on excessive side in the business of assessee. We are of the view that when there is allegation of bogus purchases against the assessee and the assessee claimed that the transaction is genuine and payments are made through bank, only the component of profit element embedded in such transaction may be disallowed to avoid the possibility of revenue leakage. This combination in a number of cases of similar type of purchase, wherein purchase are shown either from Bhanwarlal Jain or Gautam Jain Group or Pankaj K Chaudhary have restricted the similar disallowance @ 6% of purchase. Therefore, following the consistency the Assessing Officer is directed to restrict the disallowance @ 6% of the purchase shown by assessee from Daksh Diamonds. In the result, ground No.2 raised by assessee is partly allowed.
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