TMI Blog2022 (11) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... f turnover ,as against that in the preceding year of Rs.4.6 lacs net profit against turnover of Rs.204.82, making it 2.24 % of turnover. Moreover in the succeeding year the Ld.CIT(A) restricted identical purchase of bogus diamonds to the extent of 25% of the purchases. No reason to disallow the entire purchases when the facts as above suggest the possibility of the assessee having not probably purchased diamonds of the said worth from Mayank Impex, but from some other party. The consistent decisions of the coordinate benches of the ITAT in similar facts and circumstances, relied upon by the Ld.Counsel for the assessee, holding disallowance of profit element only embedded in such purchases as reasonable, as also the decision of the Ld.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... call of the impugned order dated 3.4.2019. After considering the pleadings and submissions of the assessee, the Tribunal vide order dated 20.7.2022 recalled the order dated 3.4.2019, and listed the appeal of the assessee for de novo hearing. Accordingly, the matter case has come up before me for adjudication on merit. 3. The effective grounds of appeal raised by the assessee are as under: 1. The Ld. Commissioner of Income Tax (Appeals)-2, Vadodara has erred in law and in facts in confirming the action of the Ld. A.O. in reopening the assessment by issue of notice u/s. 148, which is claimed to have been based on receipt of information from the third party regarding bogus purchase transactions made by the appellant. The Ld. CIT(A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls for accommodation entry only. The appellant has not furnished confirmation from the said party that M/s. Mayank Impex had actually sold Diamond to the appellant. Although the appellant has furnished copy of Invoices for purchase of Diamond but in the absence of confirmation, same cannot be accepted as concrete evidence. On perusal of Invoice dated 02.01.2007, it is noticed that the appellant has shown purchase of cut and polished diamonds at 32.40 carrot for Rs.6,80,400/-. The Ld. Authorized Representative was specifically asked to prove that the said purchases are duly reflected in sales. However, no evidence in this regard has been furnished. On perusal of the Balance Sheet and Profit and Loss Account, I find that Inventory as per Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly invoices on account of purchase of diamond and in the absence of confirmation of the said party, the ld.CIT(A) refused to accept this evidence. The ld.CIT(A), he pointed out, further noted that the assessee was unable to demonstrate that the purchases relating to these amounts was reflected in the sales of the assessee. He further noted that even quantitative analysis provided in the balance sheet and profit loss account of the assessee showed no details of cut and polished diamonds which were purportedly purchased through these bills. He therefore held that the genuineness of the purchases had remained unproved and applying the decision of Hon ble jurisdictional High Court, which was upheld by the Hon ble Supreme Court by dismissing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page No.44-45. He therefore stated that the assessee had in fact evidenced purchase of 32.4 Carats of uncut polished diamonds, to which this alleged bogus purchases pertained, and also the fact of their utilization for manufacturing ornaments. He thereafter pointed out that in identical facts and circumstances, in the case of alleged bogus purchases of diamonds, the ITAT had consistently held that it is only the profit element imbedded in the said bogus purchases which ought to be added to the incomes of assesses. Ld.Counsel for the assessee pointed out that the decision of Hon ble Supreme Court in the case N.K. Proteins (supra) relied upon by the Revenue, was also dealt and distinguished therein. He drew my attention to the following decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly confirmed by the ld.CIT(A). 11. I have heard both the parties. The purchases amounting to Rs.6,80,400/- have been held to be bogus based on investigation and inquiry by way of search action conducted on various persons including the proprietor of Mayank Impex, who admitted to providing bogus bills of diamond purchase and explained their modus operandi also. The impugned purchases having been made from the said party by the assessee and was accordingly held to be bogus. The assessee at the same time has filed all possible evidences to prove genuineness of the purchase, giving quantitative details of stock, purchases and consumption and sale of the said type of diamonds, bills, bank statements showing payment made for purchases and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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