TMI Blog2021 (3) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation has been furnished that the said order has been reversed by the Hon ble Jurisdictional High Court, following the said precedent, we uphold the order of the CIT(A). - ITA No. 47/Mum/2019 ITA Nos. 46/Mum/2019 ITA No. 7186/Mum/2018 ITA No. 7254/Mum/2018 - - - Dated:- 12-3-2021 - SRI SHAMIM YAHYA , AM AND SRI RAM LAL NEGI , JM Appellant by : Shri Dharmesh Shah , AR Respondent by : Shri T. S Khalsa , DR ORDER PER SHAMIM YAHYA, AM: These are cross appeals from the Revenue and assesee arising out of the common order of the learned Commissioner of Income Tax (Appeals)-10 [in short CIT(A)] dated 18.09.2018 for Assessment Years 2013-14 and 2014-15. 2. The Revenue has challenged that the reduction on account of bogus purchases from 12.5% to 2%, while the assesee is challenged that the sustainance of 2% addition on the bogus purchases. 3. Brief facts of the case are that the assesee is a manufacture, importer and exporter and trader of cut and polished diamonds. The assessment has been framed pursuant to search action Under Section 132 of the Act conducted by investigated wing of the Department in Rajendra Jain Group. Pursuant to the information tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries from the concerns without actual delivery of any goods/materials. 4.6 However, the assessee has submitted that for the each of purchases made, have been utilized towards sales. The income arising from such sales have been shown and offered by the assessee in the Profit Loss A/c. Perusal of the above submission reveals that there is some element of merit in the same for the fact remains that even if the transactions from the parties are accommodative in nature the fact cannot be denied that there is both a purchase and sale angle to them. Considering the facts of the case, it is evident that assessee has purchased goods from open / grey market for benefits like lower duties, better credit facility, greater bargaining power etc. for reasons best known to the assessee and to set right the record, assessee obtained accommodation purchase bills from the two parties, M/s.Mayank Impex and M/s.Dharam Impex. Therefore, the amount of purchases mentioned in the alleged bills cannot be accepted, the reason being that the assessee did make purchases but at a lower price so as to increase its overall profits. By recording the bogus purchases at a higher level, the assessee managed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered rival contentions and carefully gone through the orders of the authorities below and found from record that assessee is engaged in manufacturing and export of diamonds. During the course of assessment, assessee has filed ledger copy of Mayank Impex and Nazar Impex Pvt. Ltd, along with their confirmation which are alleged to be bogus suppliers. Copy of invoice cum delivery challans, copy of bank statements, highlighting payment made to Mayank lmpex and Nazar Impex Pvt. Ltd were also filed. Details of opening stock purchases and sales and closing stock details along with quantitative tally in carats. Stock register for purchase and corresponding sales in the form of export, purchases against H forms and corresponding export sales forms were also filed. Since there was export of the goods alleged to be purchased through bogus suppliers, 1 % addition on account of VAT is not warranted. Accordingly, we modify the order of the CIT(A) to restrict the addition to the extent of 2% of the bogus purchases in place of 3% as upheld by him. 9. In the result, appeals of the revenue are dismissed on the account of tax effect and appeals of assessee are allowed in part in both the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- to the total income of the appellant is sustained. The appellant gets relief of ₹ 1,48,48,887/- (₹ 1,76,77,246/- minus ₹ 28,28,359/-). 6.3.5 For AY 2014-15, the profit embedded in accommodation entries of purchase of diamonds is estimated @ 2% of the purchase amount of ₹ 5,51,11,159/- and an addition of ₹ 11,02,223/- to the total income of the appellant is sustained. The appellant gets relief of ₹ 57,86,672/- (₹ 68,88,895/- minus ₹ 11,02,223/-). 6.3.6 Accordingly, these grounds of the appeals are partly allowed. 5. Against the above order, the Revenue and assessee are in cross appeal. As regards to the Revenue s appeal, the learned counsel for the assessee submitted that the tax effect in Revenue s appeal is below the limit fixed by CBDT for filing appeals before ITAT in CBDT Circular No.17/2019 dated 8th Auggust, 2019. Per contra, the learned Departmental Representative could not dispute the proposition that the tax effect in this case is below the limit fixed by CBDT for filing appeals before ITAT. However, he sought liberty for restoration of Revenue s appeal if tax effect is found to be above the limit s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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