TMI Blog2017 (9) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... ases. Therefore, considering the overall facts & circumstances of the case and also relying upon the ratio of case laws discussed above, we are of the view that in the case of bogus purchases, only profit element embedded in such purchases needs to be taxed but not total purchases. Accordingly, we direct the AO to estimate net profit at 12.5% on total alleged bogus purchases. - Decided in favour of assessee partly . - I.T.A No.5442-5444/Mum/2016 - - - Dated:- 13-9-2017 - Shri C.N. Prasad (JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Assessee : Shri Manish Agrawal For The Revenue : Dr. M.C. Omi Ningshen ORDER Per G Manjunatha, AM : These are appeals filed by assessee are directed against the separate but identical orders of CIT(A)-41, Mumbai for assessment years 2007-08, 2008-09 2009-10. Since the facts are identical and issue is also common, for the sake of convenience, these appeals were heard together and are disposed of by this common order. 2. In these appeals, the assessee has more or less raised common grounds. However, the only solitary issue arising from those grounds of appeal relate to additions made by the AO toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation entries of purchases from M/s Little Diam and hence, the purchases from M/s Little Diam has been treated as unexplained expenditure u/s 69C of the Act, and added back the same to the total income of the assessee. 5. Aggrieved by the assessment order, the assessee preferred appeal before CIT(A). Before CIT(A), the assessee reiterated its stand taken before the AO. The assessee further submitted that merely because a third party has alleged that certain parties are involved in providing accommodation entries and also they are listed as suspicious hawala operators, addition cannot be made ignoring all evidences filed in the form of purchase invoice, export invoices, shipping bills, airways bills, export bill realization certificates, bank statement showing payment for purchases and stock details to prove that the purchases made from the said parties are sold in the normal course of business. The assessee further submitted that it is in the business of export of diamonds and purchases from M/s Little Diam has been exported for which necessary evidences in the form of export invoices, shipping bills, airways bills, export bill realization certificates, bank statement showing pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases were made wholly and exclusively for the purposes of business and the purchases are exported in the normal course of business of the assessee. The Ld.AR further submitted that merely because third parties had made unsubstantiated statements, it cannot not be said that the purchases made by the assessee were bogus or unverifiable. The assessee has discharged its onus by furnishing all details called for to prove the genuineness of the purchases. In the absence of incorrectness of books of account or stock registers, merely on the basis of third party statement addition cannot be made in spite of producing all the details. 8. On the other hand, the Ld.DR submitted that the AO has brought out clear facts to the effect that purchases from above parties are bogus in nature which is evident from the fact that the parties have accepted before DGIT (Inv) that they are involved in providing accommodation entries. The Ld.DR referring to the decision of Hon ble Supreme Court in the case of N.K. Proteins Ltd in SLP 759 of 2017 dated 16-01-2017 submitted that once it is proved that the purchases are bogus, then addition should be made for entire purchases and not for profit element emb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in providing accommodation entries. No doubt, the assessee has furnished certain evidences to prove the purchases as genuine. But the fact remains that the notices issued u/s 133(6) to the addresses given by the assessee were returned unserved with remark no such parties are available at the given address. Therefore, we are of the considered view that mere production of purchase bill and payment proof would not absolve the assessee of his initial onus to prove the purchases, more particularly, when other facts clearly show a finger on the assessee that the above parties are involved in accommodation entries and the assessee is one of the beneficiaries of such accommodation entries. Therefore, the AO was right in treating the purchases made from above parties are not genuine. We further observe that the assessee has furnished certain evidences including purchase bills and payment proof to prove the purchases. The assessee also produced books of account and stock details before the AO. The AO has not pointed out any discrepancy in books of account and stock registers. The AO has never doubted sales declared by the assessee. In the absence of any finding as to the incorrectness i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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