TMI Blog2023 (10) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ( PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV ) 1. Both these appeals arise out of orders of the Income Tax Appellate Tribunal, Surat, dated 31.12.2022 in the respective Tax Appeals. 2. Facts as narrated in the appeal memo read as under. 2.1 The appellant is an individual and has filed his return of Income for the A.Y. 2013-14 on 30.09.2013 declaring total income at Rs. 4,21,090/-. The appellant is also covered under provisions of audit as per section 44AB of the Act and accordingly has filed audit report in Form 3CB-3CD along with duly audited financial statements. 2.2 The Appellant was engaged in the business of Import, export, trading in all kinds of diamonds in the name and style of his proprietary concern viz. Aditi Exports. 2.3 Search and seizure action was carried out by Investigation wing, Mumbai in Shri Gautam Kumar Jain group of Mumbai on 03.10.2013 during which, it was alleged that evidences were found about the racket operated through benami concerns run by these groups which provided accommodation entries in form of bogus unsecured loans, bogus purchases and sales, etc. The same was also accepted by them in statements recorded u/s 132(4) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the fact that appellant has produced all the documentary evidences supporting the transactions including stock statement; (4) Whether the impugned order passed by ld. Income Tax Appellate Tribunal is bad in law being perverse for non-appreciation of facts, circumstances and documentary evidences; 5. Mr.Hardik Vora learned counsel for the appellants would submit that appellant has already filed detailed submission stating that all the purchase transactions are bona-fide and contention was also supported by copy of ledger accounts, invoices and bank statement highlighting payments. Further, appellant also submitted the stock register showing that the diamonds purchased from various parties are also further sold to other parties. However, Assessing Officer without considering the fact that assessee has submitted all the documentary evidences, passed the order disallowing purchases amounting to Rs. 4,44,44,172/-. 5.1 He would further submit that there is no dispute that the assessee has made payments by account payee cheques which have been cleared through the normal banking channels, Assessee had furnished the bills, delivery challans and ledger confirmations and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce its true profits by inflating its expenses including purchase expenses by taking accommodation entries from such parties. Thus, in the books of accounts of the assessee, the purchases to the extent made from the above said parties remained unverifiable and hence undersigned arrived at a conclusion that the purchases shown by the assessee in the books of accounts are initiated and bogus purchases are debited to trading account to suppress the true profits to be disclosed to the Department. The onus was upon the assessee to establish the genuineness of purchases made by the assessee. 7. Hence, the Assessing Officer held that the purchases made by the assessees and claimed as expenses in its profit and loss account, are not genuine. The CIT(A) partly allowed the appeal restricting the disallowance to 5% of the impugned purchases. The Tribunal held as under: 27. 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 main grievance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , keeping in view that the NP declared by the assessee is extremely on lower side. 13. On the validity of reopening, the ld.CITDR for the revenue submits that the AO received credible information about the accommodation entry provided by Bhanwarlal Jain Group. The assessee is one of the beneficiaries, who had availed accommodation entries from such hawala trader. At the time of recording reasons, the mere suspicious about the accommodation entry is sufficient as held by Hon'ble jurisdictional High Court in various cases. To support his submissions, the ld.CIT-DR relied upon the decision; Pushpak Bullion (P) Ltd Vs DCIT [2017] 85 taxmann.com 84(Gujarat High Court), Peass Industrial Engineers (P) Ltd Vs DCIT [2016] 73 taxmann.com 185 (Gujarat High Court), ITO Vs Purushttom Dass Bangur [1997] 90 Taxman 541 (SC) and Mayank Diamond Private Limited (2014) (11) TMI 812 (Gujarat High Court). AGR Investment Vs Additional Commissioner 197 Taxman 177 (Delhi) and Chuharmal Vs CIT [1998] 38 Taxman 190 (SC). 14. On the other hand, the ld.AR of the assessee submits that he has challenged the validity of reopening as well as restricting the addition to the extent of 12.50% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Surat I.T.A. No.776 1180/AHD/2017 4. The PCIT-5 vs. M/s. Shodiman Investments Pvt. Ltd. TTANO. 1297 OF 2015 (Bombay High Court) 5. ShilpiJewellers Pvt. Ltd. vs. Union of India Ors. WRIT PETITION NO. 3540 OF 2018 (Bombay High Court) 6. CIT in Vs. Mohmed Juned Dadani 355 ITR 172 (Gujarat) 7. Micro Inks Pvt. Ltd. Vs. ACIT [2017] 79 taxmann.com 153 (Gujarat) 8. Shakti Karnawat Vs. ITO - 2(3)(8), Surat ITA 1504/Ahd/2017 and 1381 /Ahd/2017 9. Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) 10. PCIT, Surat 1 Vs. Tejua Rohit kumar Kapadia [2018] 94 taxmann.com 325 (SC) 11. The PCIT-17 vs. M/s Mohommad Haji Adam Co. ITA NO. 1004 OF 2016(Bombay High Court) 12. Pankaj Kanwarlal Jain HUF Vs. ITO 2(3)(8) Surat ITA.No.269/SRT/2017 16. In the rejoinder submissions the ld. CITDR for the revenue submits that that rigour of the rules of evidence contained in the Evidence Act is not applicable before the tax authorities. It was submitted that the ratio of various case laws relied by the ld. AR for the assessee is not applicable on the facts of the present cases. The ratio of decision of Hon ble Gujarat High Court in Mayank Diam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning assessment. Further similar view was taken by Hon ble Jurisdictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee s appeal is dismissed. 19. Ground No. 2 in assessee s appeal and the grounds of appeal raised by the revenue are interconnected, which relates to restricting the disallowance of bogus purchases to the extent of 12.5%. The AO made of 100% of purchases shown from the hawala dealers/ entry provider namely Bhanwarlal Jain. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,458/-. The assessee has shown Gross Profit @ .78% and net Profit @ .02% (page 11 of paper Book). The assessee while filing the return of income has declared taxable income of Rs.1,81,840/- only. We are conscious of the facts that dispute before us is only with regard of the disputed purchases of Rs, 4.34 Crore, which was shown to have purchased from the entity managed by Bhanwarlal Jain Group. During the search action on Bhanwarlal Jain no stock of goods/ material was found to the investigation party. Bhanwarlal Jain while filing return of income has offered commission income (entry provider). Before us, the ld CIT-DR for the revenue vehemently submitted that the ratio of decision of Hon ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly applicable on the facts of the present case. We find that in Mayank Diamonds the Hon ble High Court restricted the additions to 5% of GP. We have seen that in Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs. 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law that under Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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