TMI Blog2018 (4) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... PRADHAN, AM The captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-40 [in short CIT(A) ], Mumbai and arise out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961 (the Act ). As common issues are involved, we are proceeding to dispose them off through a consolidated order for the sake of convenience. 2. Facts being identical, we begin with the assessment year 2006-07. The 1st ground of appeal is regarding the reopening of assessment made u/s 147 by the Assessing Officer (AO). The Ld. counsel of the assessee has filed a written submission dated 18.01.2017 stating that the above ground of appeal is not pressed. Considering the same, the 1st ground of appeal is dismissed as not pressed. 3. The 2nd and 3rd grounds of appeal address a common issue and therefore, they are discussed together below. The 2nd ground of appeal The learned CIT-(A) has erred in confirming an addition of ₹ 7,16,98,624/- and ₹ 45,17,013/- being undisclosed income (bogus purchases) and undisclosed income declared by Mr. Anil Vanani, respectively. The addition is unjust, unfair, contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that certain purchases of rough diamonds and polished diamonds made during the above said assessment years from the following parties may not be considered genuine purchases by the Income Tax Department (i) M/s Simran Gems, (ii) M/s Krishna Diam, (iii) M/s Mihir Diamonds, (iv) M/s Kanak Impex Your honour, but we had not agreed on this view due to the following reasons- (a) The firm had made the purchases from the above parties by account payee cheques and vouchers support the purchases (b) The above transactions are fully accounted in stock register of the firm. We are enclosing the stock registers highlighting mentioning the concerned party's names on the same for your reference (c) The firm manufactured the polished diamonds after the purchases of rough diamonds from the above parties and the same had been fully exported outside India. (d) The firm has also realized the money for the exports during the respective accounting years and those, which have remained to be realized, have since been realized in the succeeding accounting year. All the money realized through RBI only. (e) Since the firm is in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 7,16,98,624/- being undisclosed investment in guise of bogus purchases. 5. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). Since the reopening of assessment was done by the AO on a statement dated 20.10.2008 given by Shri Gautam Jain, during the course of survey u/s 133A, the Ld. CIT(A) directed the AO to provide an opportunity to cross-examine Shri Jain. Such opportunity was provided to the assessee by the AO on 08.02.2012 and a statement on oath of Shri Gautam Jain was also recorded u/s 131. The AO also submitted a remand report incorporating the above to the Ld. CIT(A). The Ld. CIT(A) observed that the declaration of additional income was made by the assessee voluntarily to avoid any prosecution proceeding against the partners and also to buy piece. The assessee then sought to retract from the said declaration contending duress under undue pressure. The Ld. CIT(A) observed that there was no evidence to prove so, particularly when the statement itself was a voluntary one prepared with the help of their tax advisors. The Ld. CIT(A), therefore, concluded that : In my considered opinion, in the case of bogus purchases, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni, without prejudice to the aforesaid, in order to avoid protracted litigation agreed to offer additional gross profit of 6.30% in AY 2006-07 in respect of the purchases of diamonds effected from the aforesaid three concerns and accordingly offered additional profit/income of ₹ 45,17,013/- in the AY 2006-07. The Ld. counsel submits that the AO overlooked the fact that the said purchase of diamonds are already recorded in the stock register and export sales of the said diamonds were effected and recorded in the regular books of accounts and thus income arising therefrom is offered and taxed in the case of the assessee-firm. Our attention is drawn to the affidavit of Shri Gautam B. Jain dated 16.10.2008, wherein he had retracted his statement recorded on 20.12.2008. Therefore, it is stated that the statement of Shri Jain cannot be accepted without there being corroborative evidence in support thereof. The Ld. counsel submits that during the course of appellate proceedings, at the instance of the Ld. CIT(A), the assessee was given an opportunity to cross-examine Shri Gautam B. Jain and accordingly his statement was recorded by the AO on 08.02.2012. It is pointed out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld resolve the contentious issues in the instant case. It is stated therein that the assessee-firm is prepared to offer additional income of ₹ 45,17,013/- (at the GP percentage 6.30 on purchase of ₹ 7,16,98,624/-) for AY 2006-07 and ₹ 1,46,63,286/- (at the GP percentage 6.63 on purchases of ₹ 22,11,65,706/-) for AY 2007-08. The Hon ble Supreme Court in Chuharmal v. CIT (1988) 172 ITR 250 (SC) pointed out to the following guidelines in CIT v. Durga Prasad More (1971) 82 ITR 540 (SC), which reads as under: Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law. Based on the facts and circumstances of the case as discussed hereinbefore, we are of the considered view that end of justice will be met in this case, if GP ratio of 10% on alleged bogus purchase is added to income of the assessee against which cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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