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TMI Blog2023 (9) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... racted statement. (3) On the facts and circumstances of the case and laws, the reopening is required to be quashed. (II) Addition on Account of Bogus Purchases of Rs. 23,93,599/- (1) The learned CIT(A) was not justified in confirming the addition at 25% of bogus purchase from the Rajendra Jain Group on the basis of statement on Rajendra Jain by relying on the factually inapplicable decision in case of Vijay Proteins Ltd. (58 taxmann.com 44) (2) The appellant submits that the addition was required to be deleted in entirety, since the statement based on which addition was made was retracted. (3) The appellant submits that there was no justification whatsoever for confirming 25% estimate when complete particulars and evidence were furnished regarding purchases, payments, confirmations, stock and subsequent sales which cannot be considered as bogus purchases. (III) Miscellaneous: (1) All of the above grounds are prejudice to one another. (2) The appellant craves leave to add, alter or vary any of the grounds of appeal." 3. At the outset, I note that Learned Counsel for assessee did not argue/press ground no.1, raised by the assessee, therefore I dismiss ground no.1 rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the matter than the view so taken by the Division Bench of this Tribunal in the case of Pankaj K. Chaudhary, in ITA No.1152/Ahd/2017, order dated 27.09.2021.In this order, the Tribunal has inter alia observed 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 thorough investigation and concluded that Bhanwarlal Jain Group and his associates including his sons were indulging in managing about 70 benami concerns. The benami concerns were engaged in providing accommodation entries. The assessee is one of the beneficiaries of such accommodation entries. In the transaction of accommodation entries, the documentary evidences are created in such a way, so that the bogus transaction is looks like genuine transaction. In bogus transaction, the fabricated evidences are always maintained perfectly. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 report of Investigation Wing. The report of wing and the statement of Bhanwarlal Jain were not provided to the assessee. The AO has not disputed the sales of assessee. No sale is possible in absence of purchase. The books of accounts were not rejected. The AO made the disallowance of entire purchases. The assessing officer not provided cross examination of the alleged hawala dealers. The disallowances sustained by the Ld. CIT(A) @ 12.5% of the impugned purchases, is on higher side and deserve to be deleted in total. The ld.AR of the assessee submits that entire purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, 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 the ground of appeal against the reopening held that the AO has received report from investigation wing Mumbai, which indicate that the assessee is beneficiary of the accommodation entry operators. The accommodation entry provider admitted before investigation wing that he has given such entry to various persons; based on such report the AO has reason to believe that the income of the assessee has escaped assessment and thus the action of AO in reopening is justified. 18. We find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd Vs DCIT (supra) while considering the validity of similar noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases 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 case was also engaged in the trading of polished diamonds. The ld CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(A) the disallowances were maintained. However, the Tribunal gave partial relief to the assessee directing to sustain the addition @12% of such bogus purchases. And on further appeal, the Hon'ble High Court sustained Gross Profit Rate @ 5% being average rate of profit in industry. 20. Now adverting to the facts of the present case, the ld.CIT(A) held that in some other similar cases; though he had sustain 5% of Gross Profit Rate, considering the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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