TMI Blog2019 (1) TMI 1922X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing is in the range of 1.5% to 4.5% and in trading it is in the range of 1% to 3% The Task Group for Diamond Sector submitted to Department of Commerce also suggests that the profit margin in trading of goods is in the range of 1% to 3%. In the circumstance we direct the Assessing Officer to estimate the profit element from the purchases treated as non-genuine at the rate of 2% uniformly for all the Assessment Years 2007-08, 2008-09, 2010-11, 2011-12 and 2013-14 As in the present case the ld. CIT(A) on similar reasoning has directed 3% disallowance. The A.O. himself has made similar disallowance in the subsequent years. In our considered opinion, there is no infirmity in the same. Accordingly, we uphold the same. - ITA Nos. 345 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 by the DGIT, Investigation Wing, Mumbai, in the group cases of Snri Bhanwarlal Jain. During the course of the operation, it was found that several name lending dummy directors, partners/ proprietors of various concerns, which were literally controlled, operated and managed by Bhanwarlal Jain and the persons-in-charge of the dummy concerns, belongs to their native place. Those persons admitted this fact in the sworn statements recorded during the course of search operation and they have also admitted that they were made to the position, by Shri Bhanwarlal Jain. It was found that the group concerns are all paper companies/firms, proprietorship concern with no real business activities, operating solely with the purpose of facilitating frau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales are claimed to be genuine the goods must have purchased from the grey market and benefited by margin of grey market and without accepting the purchase rate as mentioned in the supplier's sales invoice, AO decided to estimate the additional GP margin on the total purchases made from Bhanwarlal group concerns. The margin is estimated at 8% and the reasons stated for adopting such percentage are that the same should take care of the margin earned, most of the traders operate at this level of margin in the open market which is identified by the Government by introducing Benign Assessment Procedure (BAP) who are into the manufacturing and trading of diamonds a profit margin of 8% of their turnover, though on the net profit margin f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such a scenario, wherein there are circumstantial r evidences of obtaining of bills from Bhanwarlal Jain group concerns, but having GP margin in such Instances which is even more than the normal GP of the assessee, the benefit obtained by the assessee would not be more than 3% of the purchases cost debited against Bhanwartal Jain grop concerns. This should take care of the margin earned by the assessee to indulge into such transaction. The reason, why this margin looks practical is that most of the traders in the market actually operate at this level of margin in the open market. In fact, this fact was also identified in the report of the Task Group constituted by Department of Commerce in '013, in which the margin in diamond trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar reasoning, he restricted the disallowance of A.Y. 2007-08 also to 3%. 9. Against the above order, the Revenue is in appeal for us. 10. We have heard both the counsel and perused the records. The ld. Counsel of the assessee relied upon the following case laws: 1. M/s. Choron Diamond (I) Pvt. Ltd. (in ITA Nos. 4449/Mum/2016 and others vide order dated 30.10.2017) for the proposition of 2% disallowance of bogus purchase. 2. Pr. CIT vs. Tejua Rohitkumar Kapadia (in Special Leave Petition (Civil) Diary No(s). 12670/2018) for the proposition that when there is no defect in documentation, no disallowance for bogus purchase is required. 11. Upon careful consideration, we note that this is a case of disallowance on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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