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TMI Blog2017 (10) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in all these appeals is that Ld.CIT(A) erred in confirming the addition at 4% of the purchases as against 8% of the purchases treated as non-genuine/bogus by the Assessing Officer. 3. Briefly stated facts are that, the assessments for all these three Assessment Years were reopened u/s. 147 of the Act based on the information received from the DGIT(Investigations), Mumbai that the assessee company is beneficiary of bogus purchases made from the entities operated/managed by Shri Bhanwarlal Jain and Shri Praveen Kuman Jain Group. During the course of search in the case of Shri Bhanwarlal Jain and Shri Praveen Kumar Jain they have admitted in the statement taken on oath u/s. 132(4) of the Act that they have indulged in providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The Assessing Officer concluded that the transactions made by these entities managed by the Shri Bhanwarlal Jain/ Shri Praveen Kumar Jain group are only providing accommodation entries to the beneficiaries and assessee is one among such beneficiaries. Therefore, the Assessing Officer concluded that the material was debited against various suppliers have entered into stock register and the assessee has shown corresponding sales against the said purchases debited, this could only mean that the diamonds were brought by the assessee from gray market which is very common practice prevalent in Surat and Mumbai, without bill and to adjust this transaction into the Books of Accounts assessee has obtained bogus bills from Shri Bhanwarlal Jain/ S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales from assessee are 'H' Form sales and they are for associated enterprises and since sales are not disputed and since there was no transfer pricing adjustment made by the TPO on the sales to Associate Enterprise and as the addition is made on the assumption that the alleged purchases are most likely from gray market and as the Ld.CIT(A) has categorically accepted that the assessee is into trading of diamonds, it was submitted that the restriction of addition to 4% by the Ld.CIT(A) is not justified. 8. Ld. DR vehemently supported the orders of the Ld.CIT(A). She further submits that there is no appeal by the Revenue against the order of the Ld.CIT(A) restricting the addition to 4% of the purchases which is very much reasonable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the name of Bhanwarlal Jain & Family. The suppliers/ bogus parties could not be produced before the A.O for examination. The A.O therefore concluded that the appellant had merely received bills but not the material/goods from these parties. Though the appellant had shown corresponding sales against the purchases claimed, purchases were most likely made from grey market. Without bill and to adjust these transactions, bogus bills were obtained from Bhanwarlal Jain Group. The A.O concluded that the diamonds purchased from the grey market are cheaper than the diamonds sourced from genuine dealers. Subsequently there is an element of discount in the case of cash purchased in the grey market. The A.O. therefore computed the additional G.P earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase bills by the appellant by signing on the face of the bill as is the practice in diamond trade. The allegation that the purchase is from grey market is based on presumptions and surmises. It was also contended that the estimation of gross profits @8% was quite high Reference was made to its own transfer pricing study report and the report of task group submitted in February 2013 presented to the Commerce and Industry Ministry. It was also submitted that all the impugned purchases are exported. Polished diamonds are purchased locally and exported. Further, that where H form is submitted, there is no levy of VAT and in the cases where VAT is levied, the same is refunded subsequently after export of diamonds. The appellant relied on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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