TMI Blog2023 (2) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue is partly allowed. - ITA No. 452/SRT /2019 - - - Dated:- 30-1-2023 - SHRI PAWAN SINGH, JM And DR. A. L. SAINI, AM For the Assessee : Shri P. M. Jagasheth, CA For the Respondent : Shri Ashok B. Koli, CIT-DR ORDER PER DR. A. L. SAINI , AM : The captioned appeal filed by the Revenue, pertaining to Assessment Year 2008-09, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-1, [in short ld. CIT(A) ], in Appeal No. CIT(A)- 1/10795/2018-19, dated 26.07.2019, which in turn arises out of an assessment order passed by Assessing Officer, u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as the Act ), dated 21.03.2016. 2. The grounds of appeal raised by the Revenue are as follows: 1. On the facts and the circumstances of the case and in Law, the Ld. CIT(A) has erred in restricting the addition made by the AO to the extent of 5% of entire purchase i.e Rs.3,28,72,462/- on account of bogus purchase. 2. 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 was bogus and it was only to supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is given as under: Sr. No. Name of the Entry Provider Amount (Rs.) 1 M/s Karishma Diamond P. Ltd. 78,65,729/- 2 M/s Parshwanath Gems P. Ltd. 1,87,00,651/- 3 M/s Mihir Diamond 19,99,988/- 4 M/s Krishna Diam P. Ltd. (unsecured loan) 43,06,094/- Total 3,28,72,462/- 4. Thereafter, the Assessing Officer, having discussed the modus operandi of the business of Gautam Jain group, held as follows: 8.3 Considering the facts and circumstances of the case discussed above, it is clear that the assessee has obtained the bogus bill to the tune of Rs.3,28,72,462/- from M/s Karisma Diamond Pvt. Ltd., M/s Parshwanath Gems P. Ltd., M/s Mihir Diamond and M/s. Krishna Diam Pvt. Ltd. respectively, without actually getting the material (diamond). Thus, the bill issued by the said group concern is nothing but accommod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that during the course of search action carried out on 03.10.2013 in Gautam Jain Group had, through benami concerns, run and operated by them and provided entries to various parties in respect of bogus purchases, sales, unsecured loan, share capital etc. During the search, Gautam Jain has admitted the entire nature of bogus transaction in their statement recorded u/s. 132(4) of the Act. It was also accepted by Gautam Jain Group, that he manages and controls the business affairs of all the concerns in which the persons who were his employees are also shown as directors, partners and proprietors. The details information and evidences available as mentioned above where the assessee has received bogus accommodation entries of purchases to the tune from following bogus concerns of Gautam Jain Group: Sr. No. Name of the entry provider Amount (Rs.) 1. M/s Karishma diamonds p. ltd. 78,65,729/- 2. M/s Parshwanath Gems p. ltd. 1,87,00,651/- 3. M/s Mihir Diamond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, Ld. Counsel submitted that assessee has submitted bills and vouchers and stock statements. The transactions are through banking channel, therefore even addition sustained by the ld. CIT(A) at the rate of 5% of bogus purchases should also be deleted. 11. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that issue under consideration is squarely covered by the judgment of Co-ordinate Bench in the case of ITO vs. Pankaj K. Chaudhary, in ITA No. 1152/AHD/2017, order dated 27.09.2021, wherein it was held as follows: 12. We have heard the submission of ld.CIT-DR for the Revenue and the ld. Authorised Representative (AR) of the assessee. We have also gone through the various documentary evidences furnished by assessee. The ld. CIT-DR for the Revenue supported the order of AO. The ld. CIT-DR submits that Investigation Wing, Mumbai made a search on Bhanwarlal Jain Group. During the search and after search, the Investigation Wing made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made any independent investigation. The AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommodation entry obtained by assessee was received by AO. There is no live link between the reasons recorded qua the assessee. Therefore, the re-opening is invalid and all subsequent action is liable to be set aside. 15. On account of additions of bogus purchases, the ld.AR submits that in the original assessment, the assessee filed its complete details of purchases to prove the genuineness of expenses. The AO accepted the same in the assessment order passed under section 143(3) on 10.03.2009. During re-assessment, the assessee again furnished complete details about the genuineness of purchases. The assessee filed confirmation purchases invoices, accounts of the parties, bank statement of assessee showing transaction to the banking channel. The AO has not made any comment on the documentary evidence furnished by assessee. The AO solely relied upon the statement of third party and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. We have also gone through the documentary evidences furnished in all cases. Ground No.1 in assessee s appeal relates to the validity of reopening. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of third party information, and without making any preliminary investigation, which was vague about the alleged accommodation entry by Bhanwarlal Jain Group. And that there was no specific information about the accommodation entry availed by the assessee. There is no live link between the reasons recorded qua the assessee. We find that the assessee has raised objection against the validity of the reopening before the AO. The objections of the assessee was duly disposed by AO in his order dated 09.02.2015. The assessee raised ground of appeal before ld CIT(A) while assailing the order of AO on reopening. The ld CIT(A) while considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation wing Mumbai. No independent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by the AO. The ld CIT(A) on further examination of the facts and various legal submissions find that Ahmedabad Tribunal in Bholanath Poly Fab Private Limited (supra) held that in the such cases the addition of bogus purchases was sustained to the extent of 12%, on the observation that the assessee may have made purchases from elsewhere and obtained the bills from impugned supplier to inflate Gross Profit Rate. The ld CIT(A) by considering the overall facts, concluded that the 100% disallowance of purchase is not justified. We also find that the ld.CIT(A) also considered the decision of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in Mayank Diamonds Pvt Ltd (supra) and noted that assessee in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, considering overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 2 of appeal raised by the assessee is partly allowed and the grounds of appeal raised by revenue are dismissed. 22. In the result the appeal of revenue is dismissed and the appeal of the assessee is partly allowed. 12. We note that issue is squarely covered by the judgment of the Co-ordinate Bench in the case of Pankaj K. Chaudhary (supra). However, we note that Assessing Officer made addition to the tune of Rs.3,28,72,462/- on account of bogus purchases, the details of which are as follows: Sr. No. Name of the entry provider Amount (Rs.) 1. M/s Karishma diamonds Pvt. Ltd. 78,65,729/- 2. M/s Parshwanath Gems Pvt. Ltd. 1,87,00,651/- 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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