TMI Blog2020 (11) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 18.01.2019 for the A.Y. 2007-08. 2. Assessee has raised following grounds in its appeal: - 1) In the facts and the circumstances of the case and in law, the learned A.O. erred in passing the order u/s 143(3) r.w.s 147 and therefore rendering the whole re-assessment bad in law, that too after a gap of four years and also on the basis of borrowed satisfaction and without furnishing copies of the statements recorded by DG(Inv), Mumbai from those two suppliers. 2) In the facts and circumstances of the case and in law, the Assessing Officer erred in adding ₹ 15,42,185/- as alleged Accommodation bills being 100% of the total purchases amounting to ₹ 15,42,185/- and the Commissioner of Income Tax (A) erred in confirmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the purchases made from M/s. A2 Jewels and M/s. Kothari Co. which was referred to in the Assessment Order. The assessee produced purchase bills showing details of sales, bank statements, copy of ledger account showing payment made to the said parties and submitted that the purchases made are genuine. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of materials. It is the finding of the Assessing Officer since the purchases made by the assessee and claimed as expenses in his Profit and Loss Account are not genuine, the purchases to that extent remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is valid and I do not find any valid reason to interfere with the findings of the Ld.CIT(A). Hence the ground raised by the Assessee against reopening of assessment is dismissed. 8. Coming to the merits of the case, on a perusal of the Assessment Order, I find that the Assessing Officer treated the purchases made by the assessee from M/s. A2 Jewels and M/s. Kothari Co. as non-genuine solely based on the information received from DGIT (Inv.), Mumbai that assessee has booked bogus purchases through one of the concerns which issued only accommodation entries. No independent enquiries have been conducted by the Assessing Officer before treating such purchases as bogus. The Assessing Officer has issued notice u/s. 133(6) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sector submitted to the Department of Commerce observing as under: - 4.2. The A.O called upon the appellant to establish the genuineness of the purchases. The AO noted that the concerns from whom purchases were shown did not have documents to prove the delivery of goods of the appellant. The concerns from whom purchases were claimed to be made were operating from premises which were in 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 likel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. No defects have been found in the books. The copies of the material based on which the A.O. concluded that the purchases are not genuine was not provided to the appellant. Once the sales (primarily exports) are not doubted, no addition can be made by doubting the purchases. As regards the absence of delivery challan, it was submitted that the A.O completely ignored confirmation on the purchase 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 repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he range of 1.5 to 4.5% and in trading in the range of 1 to 3%. The appellants business is of trading in polished diamonds in respect of the impugned purchases. Thus, a margin of 4% is considered to be appropriate. 10. On a careful consideration of the totality of facts and circumstances and the findings of the Ld.CIT(A), we do not see any valid reason to interfere with the findings and the decision arrived at by the Ld.CIT(A) in estimating the Gross Profit at 4% of the bogus purchases as against 8% estimated by the Assessing Officer. Thus, we uphold the order of the Ld.CIT(A) for all these Assessment Years i.e. 2010-11, 2011-12 and 2012-13. 10. Respectfully following the said decision, I direct the Assessing Officer to estimate t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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