TMI Blog2010 (9) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no cogent reason to attract the provisions of section 145(3) and hold that the purchases shown by the assessee are bogus. Undisputedly, the trading results shown by the assessee are better as in the immediately preceding year the gross profit rate shown by the assessee was 12.3 percent whereas in the year under consideration the gross profit rate shown is 13.03 percent, thus no basis to make any addition. Accepted past history is the best guide to consider the gross profit rate of the year under consideration. Past history reveals gross profit accepted by the Department at 12.08 percent and in the year under consideration the same is 13.03 percent, therefore, there was no reason to make any addition or sustain the addition in part. Commissioner of Income-tax (Appeals) has accepted the contentions of the assessee. However, without giving any reason, he sustained part addition of Rs. 20 lakhs - we delete the addition as sustained by the learned Commissioner of Income-tax (Appeals). The ground of the assessee is allowed. TP Adjustment - addition of the arm's length price in view of the provisions of section 92C - international transaction with M/s. Rawat Gems, Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phone details. The confirmation of the parties bearing permanent account number was also filed along with the reply. It was further submitted that payments have been made through account payee cheques. The Assessing Officer did not accept the contention of the assessee for the reasons that issue of M/s. Manvi Exports has arisen in case of M/s. Euro Jewels, one of the sister-concerns of the assessee. In that case, the assessee failed to produce the above party. Efforts to serve the summons on this concern at the given address have failed as no one resides at the given address. The Assessing Officer also observed that a search was carried on M/s. Sanjeev Prakashan Group and thereafter detailed investigation was made by the Investigation Wing of the Department about the affairs and activities of some parties and M/s. Manvi Exports is one of them. The enquiry made in the case of M/s. Manvi Exports has been tabulated in the order of the Assessing Officer. In the case of M/s. Creative Gems, the Assessing Officer reported the result of enquiry conducted in the case of M/s. S. K. Jewellers. It was found that the party was issuing bills on the basis of commission at 0.25 percent It was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at after the assessment proceedings the assessee has been able to lay hand on an affidavit executed by late Shri Shubhkaran Jain, son of Shri Suwalal Jain, aged 72 years, wherein he affirmed on oath that he was the proprietor of M/s. Creative Gems. This affidavit was duly attested by a notary public, dated April 4, 2001, and a copy of the same was also filed. It was also contended that there were purchases, actual delivery has taken place, the amount has been taken by account payee cheques and the entire goods so purchased from M/s. Creative Gems in the same shape and the same form without any change have been exported to the foreign consignee. Accordingly, it was submitted that there is no iota of evidence to come to the conclusion that the purchases of Rs. 55 lakhs and odd are bogus or non-genuine. With regard to purchases from M/s. Manvi Exports, it was contended that it purchased cut and polished diamonds tabiz and cut and polished diamond triangle. It was contended that complete details have been filed which are duly found verifiable and mainly on credit, payments for which were made at a later stage on July 22, 2002 by account payee cheques. It was further submitted that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Attention of the Bench was drawn on copy of the order of the Tribunal placed on record. It was further submitted that the results shown by the assessee are better. Whatever purchases have been shown, they have exported in the same shape. Sales have been accepted by the Department and without purchases sales cannot be effected. If any addition can be made that can be made if the assessee has shown lower gross profit rate on account of non-verification of purchase. However, in the present case the gross profit rate shown by the assessee is better. The turnover of the assessee has increased 2.5 times. The various cases on which reliance was placed by the Assessing Officer are not applicable to the facts of the present case. It was further submitted that having placed reliance on the decision of the hon'ble Delhi High Court in CIT v. La Medica [2001] 250 ITR 575 which is not applicable to the facts of the present case as in that case purchases were claimed to have been made from one "K" and on enquiry it was found that "K" did not exist and in that case even the bank accounts were found operated by other persons, whereas in the present case both the purchasers have been found, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer directly. We also find in the contention of the learned authorised representative that the proprietor of M/s. Creative Gems from whom the purchases were made for Rs. 55 lakhs and odd has died sometime in the year 2004 whereas enquiries were made in the year 2006 from some other persons. Therefore, it cannot be held that any proper enquiries have been made from M/s. Creative Gems. While examining in other cases, i.e., M/s. Sanjeev Prakashan Group or in the case of M/s. Euro Jewels, however, no direct enquiry has been made in the case of the assessee. Therefore, in our considered view, there was no cogent reason to attract the provisions of section 145(3) and hold that the purchases shown by the assessee are bogus. Undisputedly, the trading results shown by the assessee are better as in the immediately preceding year the gross profit rate shown by the assessee was 12.3 percent whereas in the year under consideration the gross profit rate shown is 13.03 percent Therefore, there is no basis to make any addition. Accepted past history is the best guide to consider the gross profit rate of the year under consideration. Past history reveals gross profit accepted by the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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