TMI Blog2022 (7) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 - GUJARAT HIGH COURT] - Therefore, respectfully following the order of Hon ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. Mandatory Permission u/s 151 - The other objection raised by the ld AR of the assessee that no permissions as required under section 151 was obtained by the assessing officer. We find that the ld AR for the assessee raised this objection for the first time, however, no evidence to substantiate such submission is placed on record. Thus, in absence of any proof or evidence that no permission under section 151 was availed by assessing officer before making reopening has substance. Therefore, we do not find any merit in the ground No. 1 of appeal by assessee. Hence, the ground No. 1 in assessee s appeal is dismissed. Estimation of income for bogus purchases - As profit margin in the trade and business of assessee is ranging from 5% to 7% and the disallowances restricted by the assessing officer are at 12.5% of the disputed/ impugned purchase shown from the entry provider. Considering all disallowance restricted by Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad case. The assessee in his appeal in ITA No. 1383/Ahd/2017 has raised following grounds of appeal: 1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in erred in treating the appellant as diamond trader, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties and the addition was made without providing any opportunity of cross examination, without any corroborative evidence and without providing copy of statements relied upon. 3. On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in estimating the profit @ 12.50% on alleged bogus purchase, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties. 4. The appellant craves leave to add, alter or delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 132(4) of the Act, wherein he had admitted that his family members are managing various entities which are providing accommodation entries. During the course of search, blank cheque book signed by dummy partners/directors proprietor of entities were found and seized. It was informed 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 business entity managed by Bhanwarlal Jain and his group: Name of the entry provider Amount (in Rs.) M/s A2 Jewels (AAMFA7751J) 4,58,51,133/- Daksh Diamonds (AURPS3696K) 8,20,59,531/- Jewel Diam (ABUPV3494J) 5,44,97,395/- Kothari Co. (ABQPK7967H) 6,49,14,929/- Little Diam (AABFL1469R) 56,48,005/- Total 25,29,70,993/- 6. On the basis of such information, the Assessing Officer (AO) formed opinion that income of the assessee has escaped from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS was deducted on the commission by principal. There is no corroborative evidence to prove that the assessee has taken accommodation entry from such concerns. The assessee also filed copy of audited accounts, profits and loss account, balance sheet, copy of contract note of purchase/ sales of goods, debit and credit note of alleged commission and the statement of commission received. The assessee demanded copy of the statement of Bhanwarlal Jain, cross examination of Bhanwarlal Jain. 9. The reply of the assessee was not accepted by Assessing Officer. The Assessing Officer without making specific reference of various evidences filed by the assessee, solely relied upon the information received from DGIT (Investigation) Mumbai and recorded that search and seizure action was carried on Bhanwarlal Jain Group on 3rd Oct, 2013 which resulted in collection of evidences, which conclusive prove that Bhanwarlal Jain Group provided entries of Rs. 25,000/- crore through their 70 benami entities. The Assessing Officer noted that Bhanwarlal Jain was providing bogus entry of unsecure loan and bogus purchase without actual delivery of goods. From the evidences collected from the premises of Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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 Bhanwarlal 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 Bhanwarlal Jain and from modus operandi recorded by the investigation wing, Mumbai has created sufficient suspicion regarding the purchase made by the assessee. It is also observed that the said suppliers are assessed with Central Circle, Mumbai, wherein they are being treated as entry providers and assessed accordingly. 13. The ld. CIT(A) by referring the decision of Tribunal in Bholanath Polyfab Pvt. Ltd. in ITA No. 137/AHD/2009 dated 26.07.2011 wherein it was held that in case of bogus purchases disallowance of 100% of purchase is not justified and only a reasonable percentage of purchases to avoid the possibility revenue leakage, may be made. The ld. CIT(A) further referring the decision of jurisdictional High Court in case of M/s Maya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is invalid and all subsequent action is liable to be set aside. 15. On the other hand, the learned Commissioner of income-tax departmental representative (ld. CIT-DR) for the revenue submits that the AO received credible 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. The assessee has not disputed the fact that the assessee has not made purchases from the entity, which was owned by entry provider. 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), 16. We have considered the submissions of the parties and have gone through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well-known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. The other objection raised by the ld AR of the assessee that no permissions as required under section 151 was obtained by the assessing officer. We find that the ld AR for the assessee raised this objection for the first time, however, no evidence to substantiate such submission is placed on record. Thus, in absence of any proof or evidence that no permission under section 151 was availed by assessing officer before making reopening has substance. Therefore, we do not find any merit in the ground No. 1 of appeal by assessee. Hence, the ground No. 1 in assessee s appeal is dismissed. 18. Ground No. 2 in assessee s and ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tkumar Kapadia [2018] 94 taxmann.com 325 (SC) 11 The PCIT-17 vs. M/s Mohommad Haji Adam Co. ITA NO. 1004 OF 2016(Bombay High Court) 12 Pankaj Kanwarlal Jain HUF Vs. ITO 2(3)(8) Surat ITA.No.269/SRT/2017 19. On the other hand, ld. CIT-DR for the revenue supported the order of Assessing Officer. The ld. CIT-DR for revenue submits that investigation wing of the department has made full-fledged investigation during the search action on Bhanwarlal Jain and its group. The investigation wing investigated about the beneficiary of accommodation entry provided by Bhanwarlal Jain. The assessee is one of the beneficiaries of such purchases/accommodation entry. No stock of any goods/diamonds was found at the premises of Bhanwarlal Jain. The entire purchases shown by assessee from Bhanwarlal Jain are bogus and liable to disallow to the extent it was disallowed by assessing officer. The ld. CIT-DR for the revenue submits that no evidence is filed by the assessee to substantiate that he was merely commission agent. No detail of TDS on account is place on record. No confirmation of the principal on whose behalf the assessee was allegedly made sale is filed on record. The ld CIT-DR for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anwarlal 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 are partly allowed and the ground No. 1 2 of the appeal of the revenue is dismissed. 22. In the result, appeal of the assessee is partly allowed and the appeal of the revenue is dismissed. 23. In ITA No. 1520/Ahd/2017 for A.Y. 2008-09 by Revenue has raised following grounds of appeal (Anil G Kumavat): 1 On the facts and circumstances of the case and in law, the CIT(A) has erred in restricting the addition made by the AO on account of disallowance of nongenuine purchases from Rs. 20,08,55,410/- to Rs. 10,04,27,705/- 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in directing to make an addition of 12.5% of unverified purchases which is not as per law. Once purchases are not genuine then either entire such purchases are to be disallowed or books of accounts ought to have been rejected and G.P. estimated. 3. On the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is partly allowed and the appeal of the revenue is dismissed. Appeal in case of Mohit P Kawadia for AY 2008-09 2009-10. 27. The assessee in his appeals in ITA No. 245 246/Srt/2017 for A.Y. 2008- 09 2009-10 has raised following common grounds of appeal; 1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in treating the appellant as diamond trader, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties and the addition was made without providing any opportunity of cross examination, without any corroborative evidence and without providing copy of statements relied upon. 3. On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in estimating the profit @ 12.50% on alleged bogus purchase, without appreciating the fact that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 ?. 4. On the facts and circumstances of the case and in law, It is therefore, prayed that the order of the Ld.CIT(A) Surat may be set aside to that extent and that of the AO's may be restored to that extent. 30. We find that the assessee as well as revenue has raised similar grounds of appeal as raised in appeal except variation of figure of disallowance as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed with similar direction as contained in para-21 (supra). 31. In the result, the appeals of the assessee for both years (AY 2008-09 2009-10) are partly allowed and the appeals of the revenue for both is dismissed. Appeal in case of Naresh R Pareek for AY 2007-08 2008-09. 32. The assessee in his appeal in ITA No. 1392/Ahd/2017 and 254/Srt/2017 has raised following common grounds of appeals; 1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t providing copy of statements relied upon. 3. On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in estimating the profit @ 12.50% on alleged bogus purchase, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties. 4. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal. 36. We find that the assessee has raised similar grounds of appeal as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly with similar direction as contained in para-21 (supra). 37. In the result, the appeals of the assessee for years (AY 2007-08) is partly allowed. Appeal in case of Gain Chand Jain (AY 2007-08 to 2010) by assessee. 38. The revenue in its appeal in ITA No. 1521/Ahd/ 2017 for AY 2007-08 has raised following grounds of appeal; 1. On the facts and circumstances of the case and in law, the CIT(A) has err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... add, alter or delete all or modify any or all the above grounds of appeal. 40. We find that the assessee as well as revenue has raised similar grounds of appeal as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thereby partly allowed the appeal of assessee and dismissed the appeal of revenue. Thus, considering the principal of consistency, the appeal of the assessee for all three years is partly and the appeal of revenue in Ay 2007-08 is dismissed with similar direction as contained in para-21 (supra). 41. In the result, the appeals of the assessee for AYs 2007-08 to 2009-10 is partly allowed and appeal of revenue for AY 2007-08 is dismissed. Appeal in case of Manohar Lal Choradia in AY 2008-09 42. The revenue in it s appeal in ITA No. 225/Srt/2017 for A.Y. 2008-09 has raised following grounds of appeal; 1 On the facts and circumstances of the case and in law, the CIT(A) has erred in restricting the addition made by the AO on account of disallowance of nongenuine purchases from Rs. 6,78,20,409/- to Rs. 3,39,10,204/-. 2. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed with similar direction as contained in para-21 (supra). 45. In the result, the appeal of the assessee for AY 2008-09 is are partly allowed and the appeal of the revenue is dismissed. Appeal in case of Virendra Kumar Lodha ( Ay 2007-08) 46. The assessee in his appeal in ITA No. 1380/Ahd/2017 for A.Y 2007-08 has raised following grounds of appeal; 1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in treating the appellant as diamond trader, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties and the addition was made without providing any opportunity of cross e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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