TMI Blog2022 (4) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed purchases shown from such hawala dealers on the profit element embedded to avoid the possibility of revenue leakage is to be disallowed. No doubt made the assessee has shown extremely low G.P yet the disallowance at rate of 12.5% is on higher side. This combination in similar cases, wherein the purchases are shown from Bhawarlal Jain, have restricted or enhanced the addition to the extent of 6% of impugned or disputed purchases. Therefore, taking the consistent the disallowance of purchases in the present case is also restricted to 6% of the disputed purchases. In the result, the grounds of appeal raised by assessee is partly allowed. - ITA No. 250/SRT/2017 - - - Dated:- 28-3-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Appellant : Shri Suchek Anchalia, CA For the Respondent : MS. Anupama Singla, (Sr.DR) ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals-3), [in short ld. CIT(A)], Surat, dated 30.08.2017, for the Assessment Year (AY) 2008-09. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee is one of the beneficiaries of bogus purchase form three following entities managed by Bhanwarlal Jain Group. The assessee has shown following purchased from the said parties: Name of the Party Amount Rs. (000) Meridian Gems 167,30,142/- Rare Diamonds Pvt Ltd 20,000/- Mohit Enterprises 5,99,522/- 1,73,49,664/- 4. On the basis of such information, the Assessing Officer (AO) formed opinion that income of the assessee of ₹ 1,73,49,664/-has escaped from assessment and that he was satisfied that it is a fit case for reopening under section 147 of the Act. The assessee in response to notice under section 148, the assessee filed his reply vide his letter dated 06.07.2015 to treat the original return as return in response to notice under section 148. The reasons of reopening was asked by the assessee. The assessee filed his objections against the reopening. The objections of the assessee was rejected in detailed and speaking order by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ques only. No cash is received back by the assessee against the said purchase. No evidence is provided to the assessee that cash was received back. Purchase of goods from the said parties have been shown in the stock register. Subsequently, quantitative tally thereof is given in the tax audit report which is perfectly tallied with books of account. Once sales are accepted purchase cannot be doubted. The assessee maintained proper books of accounts, purchase register, sales register, stock register, ledger book, and bank book etc, and no specific defects or irregularity is either found or observed by the auditors or by the Assessing Officer. The statement of Bhawarlal Jain cannot be used against the assessee. The assessee furnished confirmation of parties, copes of purchase bill, stock register, statement showing corresponding sales, ITR acknowledgement of parties and bank statement. The assessee prayed for copy of statement if any, recorded Assessing Officer of any of the supplier and corroborative evidence to prove that assessee obtained accommodation entry, cross examination of Bhawarlal Jain and other director, partner or proprietor those concerns. 7. The reply of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of evidences furnished by the assessee to prove the purchase. The assessee filed books of accounts, other documents viz; stock register and sale register. During the assessment proceedings, the Assessing Officer has not examined nor pointed out any defect to discard such evidences. The assessee also produced day to day stock register of purchase and sale. There is nil opening and closing stock. This means, the purchase made during the year are sold during the year itself. If sales are treated as genuine and impugned purchases are treated as bogus then the stock will go into negative to the extent of impugned purchases. The day to day stock register shows the receipts and issue of diamonds and stock in hand along with the name of party to whom purchase and sales is made. The Assessing Officer while making addition relied on the statement of Bhawarlal Jain and report of investigation wing. No comments on the purchase bills, copy of bank statement and day to day registers was made. No deficiency or irregularity in the stock or sale is pointed out. The ld. CIT(A) further observed that from the statement of Bhawarlal Jain and from modus operandi recorded by the investigation wing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le information about the accommodation entry provided by Bhanwarlal Jain Group. The assessee is one of the beneficiaries, who had availed accommodation entries from such hawala trader. Whether, the assessee made purchases or sale all the transactions are bogus. The assessee has shown bogus transaction with the entity managed by Bhanwar Lal Jain Group. At the time of recording reasons, the mere suspicious about the accommodation entry is sufficient as held by Hon'ble jurisdictional High Court in various cases. To support his submissions, the ld.CIT-DR relied upon the decision; Pushpak Bullion (P) Ltd Vs DCIT [2017] 85 taxmann.com 84 (Gujarat High Court), Peass Industrial Engineers (P) Ltd Vs DCIT [2016] 73 taxmann.com 185 (Gujarat High Court), 15. We have considered the submissions of the parties and have gone through the order of the lower authorities. We have also deliberated on each and every case laws relied by both the parties. We have also examined the financial statement of all the assessee(s) consisting of computation of income and audit report. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee s appeal is dismissed. 17. Ground No. 2 relates to the additions on account of bogus purchases. The ld. AR of the assessee submits that Assessing Officer made addition on the basis of third party information. The Assessing Officer solely relied upon the report of investigation wing, Mumbai. The report of investigation, Mumbai was not provided to the assessee. The assessee demanded the copy of statement of Bhawarlal Jain and his cross examination. The Assessing Officer, nowhere rejected the demand of assessee. The assessee filed detailed evidence to prove that the purchases of assessee are genuine. The assessee provided complete details of purchase, PAN and addresses of parties, purchase invoice, stock register, day to day register and sales register. No comment was made by Assessing Officer on the documentary evidence furnished by assessee. The sales of assessee was not disputed. The books of accounts of assessee was not rejected. The Assessing Officer made estimation without reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough the order of lower authorities. We have also gone through the various documentary evidences furnished by assessee in the form of paper books. We have also deliberated on various case laws relied by Ld. CIT(A) as well as by Ld. AR for the assessee at the time of making his submissions. We find that the Assessing Officer made addition solely on the basis of third party information/report of investigation wing, Mumbai. The report of investigation, Mumbai was not provided to the assessee. During the assessment, the assessee demanded the copy of statement of Bhawarlal Jain and his cross examination, copy of such statement was not provided to the assessee. The Assessing Officer, nowhere rejected the demand of assessee. We find that the assessee filed detailed evidence consisting details of purchase, PAN and addresses of parties, purchase invoice, stock register, day to day register and sales register. No comment was made by Assessing Officer on the documentary evidence furnished by assessee. The sales of assessee was not disputed. No sale is possible in absence of purchases. The Assessing Officer estimated addition on account of purchases without rejecting books of accounts of asse ..... 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