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Dy. Commissioner of Income Tax Central Circle–2 (4) , Mumbai Versus M/s. Ronak Gems Pvt. Ltd.

2017 (10) TMI 585 - ITAT MUMBAI

Addition on account of bogus purchases - onus on the assessee to prove the genuineness of purchases - Held that:- Primary onus cast upon the assessee to prove the genuineness of purchases has sufficiently been discharged. If the Assessing Officer still had doubt regarding the purchases made from the concerned parties, it should have triggered further enquiry or investigation at his end and he should have brought cogent evidence on record to establish the fact that purchases claimed to have been .....

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surmises and on the sole reasoning that the assessee was unable to produce delivery challan / angadia receipts. In this context, assessee’s explanation that diamond did not require to be transported through vehicle appears plausible. In view of the aforesaid facts, we hold that, even, disallowance @ 2.5% as made by the learned Commissioner (Appeals) is also unjustified. - Decided in favour of assessee. - ITA no.3118/Mum./2017 And C.O. no.193/Mum./2017 - Dated:- 4-10-2017 - SHRI SAKTIJIT DEY, JUD .....

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us purchases. Whereas, in the cross objection the assessee apart from challenging the addition partly sustained by the learned Commissioner (Appeals) on account of bogus purchase has also raised a legal issue challenging the validity of re-assessment under section 147 of the Income-tax Act, 1961 (for short the Act ). 3. At the outset, we propose to deal with the ground raised by the Revenue in its appeal along with corresponding ground raised on merits by assessee being ground no.5 of the cross .....

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153A of the Act assessee initiated against the assessee. In response to the notice issued under section 153A of the Act assessee was filed its return of income and ultimately the Assessing Officer completed assessment under section 143(3) r/w section 153A of the Act vide order dated 31st December 2010, determining the total income at ₹ 1,52,78,500. Against the assessment order so passed, the assessee approached appellate authorities with which we are not concerned with in the present proc .....

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sessing Officer called upon the assessee to prove the genuineness of purchases made from the concerned parties with supporting evidence. That besides, to ascertain the genuineness of purchase transactions the Assessing Officer conducted enquiry independently by issuing notices under section 133(6) of the Act to the concerned parties calling for various information as noted in Para-5 of the assessment order. In response to the query raised by the Assessing Officer, the assessee submitted purchase .....

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eceipts, etc., to prove actual delivery of goods at assessee s business premises. He, therefore, held that purchases claimed to have been made from the two parties are not genuine. However, considering the fact that the assessee has maintained stock register and was able to furnish the quantitative details of purchases along with the corresponding sales, the Assessing Officer observed that the goods have entered into assessee s stock from undisclosed source and probably from grey market. He, the .....

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ficer that the purchases made from the concerned parties cannot be treated as genuine, however, he sustained disallowance @ 2.5% of the alleged bogus purchases. 7. Learned Departmental Representative relying upon the observations of the Assessing Officer submitted that disallowance @ 8% of the bogus purchase being reasonable should be restored. 8. Learned Authorised Representative submitted that during the original assessment proceedings, each and every purchases made by the assessee was examine .....

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submitted, the concerned parties have also complied to the notices issued under section 133(6) of the Act by the Assessing Officer by furnishing of documentary evidences in support of the sales made to the assessee. He submitted, without making any further enquiry and merely because the assessee was unable to produce delivery challan / angadia receipts, the Assessing Officer has disallowed a part of the purchases. The learned Authorised Representative submitted, since the assessee deals in diam .....

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e material available on record. It is evident, pursuant to a search and seizure action in case of Rajendra Jain Group and some other persons conducted on 3rd October 2013, the DGIT (Inv.), Mumbai, reported to the Assessing Officer that the assessee is a beneficiary of accommodation entries provided by M/s. Mouli Mani Impex Pvt. Ltd. and M/s. Sparsh Exports Pvt. Ltd., through bogus purchase of diamond. However, the nature of information / material available implicating the assessee has neither be .....

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rove the genuineness of certain purchases excluding the purchases made from the two parties which are subject matter of dispute in the present appeal. After examining the details, the Assessing Officer disallowed purchases of ₹ 62,98,980, from two parties and added back to the income of the assessee. However, in appeal proceedings, the Tribunal deleted such addition. Even during the re-assessment proceedings, in response to the query raised by the Assessing Officer the assessee had again p .....

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turn file by you for assessment year 2008-09; iii) Copy of ledger of M/s. Ronak Gems Pvt. Ltd. for A.Y. 2008-09 appearing in your books of account; iv) Ledger accounting evidencing the purchase / sale from M/s. Ronak Gems Pvt. Ltd. v) The copy of Bank Statement for the above period reflecting / highlighting the above transactions; vi) Details of total purchased / sold during the above period to the above party and submit the copies of bills and vouchers; and vii) Confirmation of the transaction .....

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e was no cash withdrawal to indicate that money was refunded back to the assessee. Further, the Assessing Officer has also accepted the fact that though the genuineness of purchases from these two parties is doubted but the genuineness of purchases as a whole cannot be doubted since the assessee has not only maintained the details of stock but was able to co-relate purchases with sales by furnishing quantitative details. Thus, from the aforesaid facts, it is very much clear that all documentary .....

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