TMI Blog2021 (9) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... the bogus bills against which no goods have been received? 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the addition on account of bogus purchases @3% of the total purchases of ₹ 17,44,48,759/-, as the profit element embedded in these purchases overlooking that the alleged suppliers were admittedly engaged only in giving accommodation entries to several parties including the assessee? 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in presuming that purchases have been made from unknown parties whereas bills have been received from accommodation entry provider.? 4. Whether on the facts and in the circumstances of the case and in law, if the Ld. CIT(A) has made a presumption that purchases have been made from unknown parties, the Ld. CIT(A) has not clarified how the payment was made and whether section 69 of the IT Act, 1961 will be applicable? 5. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not considering the order of Hon'ble Supreme court in the case of N K Protein Ltd. dated 16.01.2017, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup concerns of Shri Rajendra Jain, recorded from the in-charge persons of the dummy concerns and the post search investigation outcome of the investigation wing. It was noticed by the Ld. AO that all the said persons/ concerns from whom appellant had allegedly made purchases had testified before the Investigation authorities that they are merely employees of Shri Rajendra Jain family and are shown as directors, partners and proprietors and the management of the concern lies in the hands of Rajendra his family members. Post search investigation revealed that the appellant taken accommodation entries from these parties. Ld. AO held that in absence of the supply of goods, even though the documentation aspect of the transaction was not being denied, it would lead to the only human probability that the goods mentioned in the paper transaction were purchased by the appellant from undisclosed entities from the grey market. Hence, Ld. AO assumed that since the sales made by the appellant were confirmed, purchases had definitely taken place though not from the aforementioned suppliers. Therefore, the AO came to the conclusion that there was a definite probability that purchases were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No documents relating to such purchases were discovered at the time of search All documents re/at/n to such alleged bogus purchases were produced before your goods self. 3 The invoice were taken from billing agencies. There is no such case. All the invoices are genuine and produced from both the sides (i.e buyer and seller ) 4 The fact of bogus purchase came to the knowledge of the department only because of the search taken place at the premises of M/s N. K. Proteins Ltd. Place v' The alleged bogus purchases were added on the basis of search taken place at the premises of Mr Rajendra Jain / Bhanwarlal Jain Group and not at your appellant's premises. However, your appellant had purchased diamonds from them and same were accepted by the seller of the diamonds 6.14 Thus it is seen that the facts of the instant case are completely different and distinct then the facts of the case relied upon by the AO to estimate the profit margin at 100% of such purchases. While deciding the profit element embedded in the bogus purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Upon careful consideration, we note that facts of revenue s grounds are identical to the one dealt by this ITAT in the case of M/s. Dinal Diamonds (supra). The ITAT has concluded as under:- 10. Upon careful consideration we find that the assessee has provided the documentary evidence for the purchase. Adverse inference has been drawn by the A.O. on the investigation wing action on Gautam Jain group. No independent enquiry has been conducted by the A.O. himself. We find that in this case the sales have not been doubted. It is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from the Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). In this case, the Hon'ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However, in that case all the supplies were to the government agency. In the present case, the facts of the case indicate that assessee has made purchase from the grey market. Making purchases t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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