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TMI Blog2018 (2) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified in sustaining addition of Rs. 3,14,545/- for which the requested opportunity to cross examine the seller M/s. JPK Trading (I) Pvt. Ltd was not provided to the assessee (2011) 334 ITR 262 (SC) 2.1 Apropos Ground No. 1 to 3 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- "3.1.2 Determination (i) I have duly considered the submissions of the appellant, assessment order and the material placed on record. It is evident from the assessment order that the AO was having sufficient information in his possession that the appellant had taken accommodation entries from Shri Praveen Kumar Jain who admitted himself to working as an entry operator in the statement recorded on oath u/s 132(4) of the Act. It was deposited by Shri Praveen Kumar Jain (P.K. Jain) that he was issuing bogus invoices to the needy parties on commission basis. The appellant had also claimed to make purchases amountingnto Rs. 20,96,965/- from M/s. JPK Trading Pvt. Ltd., a company controlled and managed by Shri P.K. Jain. It is therefore, held that the AO has reason to belive that the income had escaped assessment. (ii) It may be mentioned that the Courts cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, this ground of appeal is rejected. "3.3.2 Determination Rejection of books of accounts: (i) I have duly considered the assessment order, submissions of the appellant and the material placed on record. The appellant firm was engaged in the export of business of precious and semi-precious stones. It is noted from the assessment order that the Investigation Wing, Mumbai had conducted search and seizure operation over the group concern of Shri P.K. Jain (Praveen Kumar Jain) and it was established by the Investigation Wing that Shri P.K Jain was induldged into providing bogus bills to the needy persons without actually delivery of goods. This fact was established on the basis of the evidences recorded by the Investigation Wing. The Investigation Wing of the department recorded the statement of Shri P.K. Jain who was running a number of bogus concerns wherein it was stated by him that his business concerns were indulged in providing the accommodation bills to needy persons on commission basis. He further noted that he used to issue bogus sales invoices as per the requirement of parties on prefixed commission on the bill amount. (ii) During the year under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above facts that the purchases shown to be made by the appellant from M/s. JPK Trading Pvt.Ltd remain unproved i.e. the trading results declared by the appellant remained unverifiable. It is therefore, held that the AO was justified in rejecting the books of account u/s 145(3) of the Act as held in a number of judicial pronouncements. Estimation of income (vi) It is noted that in various recent judgement of ITAT, Jaipur Bench, the Hon'ble Bench has upheld 15% disallowance of bogus / unverifiable purchases following its judgement dated 22-10-2014 in batch of cases Anuj Kumar Varshney vs ITO (ITA No. 187/JP/2012) and others. The AO has not doubted the sale of the appellant meaning there by the appellant must have purchased the goods sold by it from some other sources and in order to inflate its expenses, it procured bogus invoices from the concern controlled by Shri P.K. Jain. Respectfully following the above referred decision of Hon'ble ITAT Jaipur , it is held tht the 15% of unverifiable/bogus purchases is to be added to the income of the appellant. Therefore, out of the addition of Rs. 5,24,240/- made by the AO the addition to the extent of Rs. 3,14,545/- (being 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had shown purchases from the above company of Shri Praveen Kumar Jain amounting to Rs. 20,96,965/-. The AO on examination of the records found that no actual purchases were made from these parties but their names were only used to inflate the business expenses and thereby reducing the income chargeable to tax. According to the AO, it is established on the basis of information provided by the Investigation Wing that purchase from the parties are bogus and the bogus purchases pertaining to the Assessment Year under consideration representing income of Rs. 20,96,965/- had therefore, escaped assessment. The AO noted that it was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Hence reasons for reopening of the cases were recorded and notice u/s 148 was issued on 24-03-2014 which was duly served upon the assessee. It is also noted that copy of reasons recorded were supplied to the assessee alongwith notice u/s 142(1) and notice u/s 143(2) dated 21-04-2014. The AO on examination of purchase details noted that the assessee had shown purchases from M/s. JPK Trading Pvt. Ltd amounting to Rs. 20,96,965/-. As per the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion, it is held that the AO was justified in reopening the case of the appellant for the year under consideration u/s 147 of the Act. Hence, this ground of appeal is rejected.'' Further the ld. CIT(A) has reduced the trading addition to Rs. 5,24,240/- in view of the decision of ITAT Jaipur bench dated 22-10-2014 in the cases of Anuj Kumar Varshney vs ITO (ITA No.187/JP/2012) wherein the ITAT Jaipur bench has held that 15% of the unverifiable / bogus purchase is to be added to the income of the assessee. The relevant observation of the ld. CIT(A) is as under:- "(vi) It is noted that in various recent judgement of ITAT, Jaipur Bench, the Hon'ble Bench has upheld 15% disallowance of bogus / unverifiable purchases following its judgement dated 22-10-2014 in batch of cases Anuj Kumar Varshney vs ITO (ITA No. 187/JP/2012) and others. The AO has not doubted the sale of the appellant meaning there by the appellant must have purchased the goods sold by it from some other sources and in order to inflate its expenses, it procured bogus invoices from the concern controlled by Shri P.K. Jain. Respectfully following the above referred decision of Hon'ble ITAT Jaipur , it is held ..... 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