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TMI Blog2022 (11) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-14. The Revenue has raised the following grounds of appeal: - "(i) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in restricted the addition of Rs.6,17,02,781/- on account of bogus purchases to 5%. (ii) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is sustained by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the LD. CIT(A)-1 Surat maybe se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase made by the assessee are genuine and are supported with purchases invoices, stock register and the payment was made through cheque. The Assessing Officer after considering the reply of assessee held that acceptable to him. The Assessing Officer on the basis of information provided by investigation wing Mumbai about the modus operandi adopted Gautam Jain Group rejected the books of account of assessee and treated the entire aggregate received of purchase received from Shri Gautam Jain Group was treated as bogus purchases and added back of Rs.6.170 crores to the income of assessee. 3. Aggrieved the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee filed written statement which is recorded in para-5 of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat & Maharashtra also. 4. The Ld. CIT(A) after considering the submission of assessee held that on similar set of fact, he has passed order in case of Gagnani Impex A.Y 2013-14, in Appeal No. CAS-3/5112/2015- 16 date of order 24.11.2016, wherein by following the decision of Tribunal in the case of Bholanath Polyfab Private Limited in ITA No.137/AHD/2009 dated 26.07.2011, wherein the addition was restricted to the extent of profit element embedded in such similar disputed / bogus purchases. The Ld. CIT(A) also examined the gross profit and net profit ratio of assessee and held that where the assessee has shown abnormal low gross profit, similar addition was restricted either 5% or 12.5% based on the gross profit / net profit disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. 6. We have heard the submission of Ld. CIT-DR for the Revenue and have gone through the orders of lower authorities carefully. The ld. CIT-DR for the Revenue submits that assessee is a beneficiary of bogus purchase as the assessee has obtained bogus entries from the entities managed by Shri Gautam Jain Group, who was well known hawala operator and was indulging in providing accommodation entry without actual delivery of goods. The Investigation Wing of Mumbai made a full-fledged enquiry and came to the conclusion on the basis of search material and the statement of Shri Gautam Jain Group recorded under section 132, that they were not doing actual or real business except accommodating entries. The assessee is a beneficiary of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is matter of common knowledge that Shri Gautam Jain was well known bogus entry provider, who has provided entry of several thousand crores of rupees. During the search action on Shri Gautam Jain Group no stock of any goods was found by search team. In the statement he admitted that he is mere entry provider. The assessee has not disputed that he has not transacted with the entity of Shri Gautam Jain Group. 8. We find that the ld CIT(A) restricted the addition to the extent of 5% of aggregate of purchases shown from the entity of Shri Gautam Jain Group. In our view the disallowance to the extent of 5% is on lower side particularly when the assessee has shown negligible net profit. The assessee has shown return income of Rs.5,11,120/-on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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