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2022 (11) TMI 657 - AT - Income TaxBogus purchase of cut and polished diamonds in his business - HELD THAT:- The assessee at the same time has filed all possible evidences to prove genuineness of the purchase, giving quantitative details of stock, purchases and consumption and sale of the said type of diamonds, bills, bank statements showing payment made for purchases and also evidence showing utilization of the said purchase in making jewellery. As noted from the audited financial statements that the assessee has returned higher net profits in the impugned year, Rs.18.83 lacs net profit against turnover of Rs. 246.65 lacs, being 7.6% of turnover ,as against that in the preceding year of Rs.4.6 lacs net profit against turnover of Rs.204.82, making it 2.24 % of turnover. Moreover in the succeeding year the Ld.CIT(A) restricted identical purchase of bogus diamonds to the extent of 25% of the purchases. No reason to disallow the entire purchases when the facts as above suggest the possibility of the assessee having not probably purchased diamonds of the said worth from Mayank Impex, but from some other party. The consistent decisions of the coordinate benches of the ITAT in similar facts and circumstances, relied upon by the Ld.Counsel for the assessee, holding disallowance of profit element only embedded in such purchases as reasonable, as also the decision of the Ld.CIT(A) in the case of the assessee itself in the succeeding year restricting disallowance of similar bogus purchases to 25%, warrant no different view being taken in the present case before me. The said decisions we have noted have dealt with the Hon’ble Apex Court decision in the case of N K Proteins[2017 (1) TMI 1090 - SC ORDER] heavily relied upon by the Revenue before me. Direct restricting addition in the present case to the extent of 25% (twenty five percent) of the purchases found bogus, as done in the succeeding year in the case of the assessee. The ground of appeal of the assessee is allowed.
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