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2022 (5) TMI 837 - AT - Income TaxAddition made u/s 69C on account of bogus purchases - AO after recording reasons that the assessee is one of the beneficiary of the accommodation entry received from Bhanwar lal Jain proceeded for assessment. The assessing officer made the disallowance of the entire purchase shown from the entity managed by Bhanwar Lal Jain and his Group - HELD THAT:- Disallowance of 100% of the purchases are not justified when the sales of the assessee is not disputed. No doubt, the assessee is engaged in export of cut and polished diamonds and entire profit of the assessee from eligible export is exempt. Yet, the assessee has not fully established, the fact that entire purchases from the concern managed by Bhanwarlal Jain Group is genuine. The purchases from such hawala traders are mainly made to inflate the expenses. Assessing Officer has clearly recorded the modus operandi disclosed by Bhanwarlal Jain and his associates during the search action. The payments in such transaction is made through banking transaction to show the sham transaction as genuine transaction. The combination of this bench in other similar cases wherein the purchases are shown from Bhanwarlal Jain or Rajendra Jain or Gautam Jain group have restricted or enhanced the addition to the extent of 6% of such amount or disputed purchases. Order of Ld. CIT(A) is modified and the Assessing Officer is directed to restrict the disallowance of bogus purchases to the extent of 6% of aggregate purchases shown from four parties of Rs.3.09 crores. AO is further directed to work out the eligibility of exemption under section 10AA. In the result, grounds of appeal raised by Revenue are partly allowed.
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