TMI Blog2023 (1) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for the Authority concerned to restore the matter back to the AO, however, noticing the elaborate evidence consisting the details of purchase, PAN, etc., coupled with the AO and the CIT (Appeals) dealing with the case of Shri Bhanwarlal Jain and others involved therein, if addition directed of 6% of the disputed purchases by noting that the profit margin in the said industry is 5% to 7% without even going by the estimation of the possible profit margin in the industry, suffice to note that in all cases relating to Shri Bhanwarlal Jain, both, the AO and the CIT (Appeals), Mumbai, have chosen to make addition @ 3% to 5% of the bogus purchases. That view of the matter, no purpose is going to be served in interference. This Court in case of Mayank Diamonds Pvt. Ltd [ 2014 (11) TMI 812 - GUJARAT HIGH COURT] was required to decide the estimation of the gross profit @ 12.5% against the gross profit of 1.03% shown by the assessee. The Court allowed the gross profit rate of 5% holding that 12.5% is drastically higher. In N.K. Industries Pvt. Ltd [ 2016 (6) TMI 1139 - GUJARAT HIGH COURT] where the Court had considered the addition of entire amount on the ground that the fictitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32,060/- by relying on various judicial pronouncements. 6. The assessee preferred an appeal before the Income Tax Appellate Tribunal ( ITAT hereinafter), which partly allowed the appeal of the assessee restricting the addition to 6% of the disputed purchases by holding that the Tax Authority not entitled to tax entire transaction, but only income component of the disputed transactions, to prevent the possibility of the revenue leakage. 7. Aggrieved Authority has preferred this appeal, raising following substantial question of law for determination of this Court. (1) Whether, on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in estimating the addition in respect of bogus purchases at the rate of 6% of such purchases as against disallowance made by the A.O. at the rate of 100% of such purchases amounting to Rs.8,10,56,469/- ignoring the fact that these purchases are sham transactions fabricated through bogus paper concerns of Shri Bhanwarlal Jain Group which were engaged in providing accommodation entries ? (2) Whether, on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, if the said decision is read in contest of questions raised in the present appeal, it cannot be reads as having held that even if the material found during the course of search expose the falsity of the entries made in the regular books of accounts, the consequent concealed income cannot be assessed as undisclosed income in the block assessment under Chapter XIV-B. The said decision shall therefore not be applicable on the facts and circumstances of the present case. The Tribunal is justified in holding the same against the assessee and in favour of the revenue. 9. We have given it the due consideration and also noticed that a detailed order passed by the CIT (Appeals), where it has noticed two aspects; (i) that the opportunity to cross-examination was not provided, and (ii) there had been no independent inquiries made by the Assessing Officer. It relied on the report of the Investigation Wing, Mumbai. The CIT (Appeals) was of the opinion that the Assessing Officer has not discussed any of the details, books of accounts, documents, etc.; and that he is not even examined or found any defects in the stock registers, books of accounts, as also other documents. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the industry and we think it fit to make addition on account of % gross profit rate. ... 0.8 Also, the AR brought to my notice the decision of the Commissioner of Income Tax, Mahidharpura, (AT 2007-08) dated 21.03.2016, wherein on identical facts and after considering the above legal positions, the learned CIT (Appeals), has taken a view that the decision of the Hon ble High Court of Gujarat in the case of M/s. Mayank Diamond P Ltd., (supra) is binding and hence, confirmed the disallowance of 5% of the impugned purchases. 0.9 During the appeal proceedings, the AR has produced before me the copies of assessments done by many learned Aos at Mumbai, in the case of beneficiaries of accommodation entries of the same Bhanwarlal Group cases. In cases identical to the appellant, the learned AO (ACIT / ITOs) have not made 100% disallowances even if they have held that purchases are bogus. They have made disallowances ranging from 3% to 5% of the impugned purchases. A chart showing the details of those assessments is annexed as Annexure A . Similarly, the learned Commissioners of Income Tax (Appeals) in Mumbai have confirmed disallowance @ 3% in different cases. A table s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the assessee and had made the estimated additions of the pieces of the purchases. Both, the CIT (Appeals) and the Tribunal, have concurrently and rightly held to make the additions, which the CIT (Appeals) had done @ 12.5% of the impugned purchases, which have been reduced and restricted to 6%. It will not be out of place to make a mention that the Assessing Officer s inquiry was based on the report of the Investigation Wing, Mumbai, the copy of the statement of Shri Bhanwarlal Jain and others had been asked for by the assessee, which also had not been provided nor was he allowed a cross-examination. This, of course, could have been a reason for the Authority concerned to restore the matter back to the Assessing Officer, however, noticing the elaborate evidence consisting the details of purchase, PAN, etc., coupled with the Assessing Officer and the CIT (Appeals) dealing with the case of Shri Bhanwarlal Jain and others involved therein, if addition directed of 6% of the disputed purchases by noting that the profit margin in the said industry is 5% to 7% without even going by the estimation of the possible profit margin in the industry, suffice to note that in all cases ..... X X X X Extracts X X X X X X X X Extracts X X X X
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