TMI Blog2023 (11) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... . There are concurrent findings with sound reasons. Also decided in Mayank Diamonds Pvt. Ltd. [ 2014 (11) TMI 812 - GUJARAT HIGH COURT ] 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 fictitious purchases is a factually different than what was already held at M/s. Mayank Diamonds Pvt. Ltd., (supra). In the other cases of Shri Bhanwarlal Jain also, addition rates are 3% to 5% where no further challenge possibly is there or it has not been processed further. Thus no substantial question of law arises for consideration of this court. - Honourable Mr. Justice Biren Vaishnav And Honourable Mr. Justice Bhargav D. Karia For the Appellant(s) : Mr Ketan H Shah, Mr. Aman K Shah For the Opponent(s) No. 1 : None ORAL ORDER PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV 1 Draft amendment is granted, to be carried out forthwith. 2 Since common questions of law are involved in these tax appeals, substantial questions of law raised in Tax Appeal No. 131 of 2023 are taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found and seized. It was informed that assessee is one of the beneficiaries of bogus purchase form three following entities managed by Bhanwarlal Jain Group. 3.4 On the basis of such information, the Assessing Officer (AO) formed opinion that income of the assesse has escaped from assessment and that he was satisfied that it is a fit case for reopening under section 147 of the Act. Notice under section 148 dated 29.03.2014 after recording reasons of reopening was served on the assessee. The assessee in response to notice under Sec.148, vide letter dated 28.04.2014 has stated that the original return of income filed on 23.10.2007 may be treated as return of income filed in response to notice under section 148 of the Act. The reasons of reopening was asked by the assessee. The assessee filed his objections against the reopening. The objection of the assessee was rejected in detailed and speaking order by the assessing officer. 3.5 During the course of assessment, the Assessing Officer has noted that the assessee has shown purchase from the entities managed by Bhanwarlal Jain Group. Bhanwarlal Jain Group is engaged in providing accommodation entry by various bogus concern. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain Group provided entries of Rs. 25,000/- crore through their 70 benami entities. The Assessing Officer noted that Bhanwarlal Jain Group, in search action, it was conclusively proved that said group was indulging in providing accommodation entry without actual delivery of goods. No stock of diamonds were found at the time of search except books of account of entries and the blank cheques book signed by the dummy partners, directors of proprietors. The Assessing Officer by relying upon report of investigation wing treated the transaction of 25,29,70,993/- The Assessing Officer worked out disallowance of Rs. 6,32,42,748/-. 3.8 Aggrieved by the addition as well as on reopening under section 147, the assessee filed appeal before CIT(A). Before ld.CIT(A), the assessee reiterated the similar submission on the additions of purchase as made before Assessing Officer. The Assessing Officer has not disclosed that he obtained permission of Commissioner for reopening. The assessee also requested for cross examination of third party, on the basis of which the additions / disallowance of purchase were made by Assessing Officer. The assessee also relied on certain case laws. 3.9 On the mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act Gross Profit (GP) shown by assessee of his turnover. Accordingly, the ld.CIT(A) restricted the disallowance to the extent of 12.5% impugned purchase / disputed purchase. Aggrieved by the addition restricted to 12.5% of the disputed purchase, the assessee as well as revenue both have filed their respective appeal before us. The assessee has challenged the addition of 12.5%, on the other hand the revenue has challenged the order in restricting the addition to the extent of 12.5% and to make it 25% as held by assessing officer. 4 The Income Tax Appellate Tribunal, on hearing the appeals of the assessee and the revenue, held as under: 18. Ground No.2 in assessee s and ground No.1 2 in revenues appeal are interconnected relates to the additions on account of bogus purchases. Thus, being considered together. The ld. AR of the assessee submits that Assessing Officer made addition on the basis of third party information. The Assessing Officer solely relied upon the report of investigation wing, Mumbai. The report of investigation, Mumbai was not provided to the assessee. The assessee demanded the copy of statement of Bhanwarlal jain and his cross examination. The Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation wing investigated about the beneficiary of accommodation entry provided by Bhanwarlal Jain. The assessee is one of the beneficiaries of such purchases / accommodation entry. No stock of any goods / diamonds was found at the premises of Bhanwarlal Jain. The entire purchases shown by assessee from Bhanwarlal Jain are bogus and liable to disallow to the extent it was disallowed by assessing officer. The ld. CIT-DR for the revenue submits that no evidence is filed by the assessee to substantiate that he was merely commission agent. No detail of TDS on account is place on record. No confirmation of the principal on whose behalf the assessee was allegedly made sale is filed on record. The ld CIT-DR for the revenue prayed to restore the order of assessing officer. 20. We have considered the submission of both the parties and have gone through the order of lower authorities. No documentary evidences is furnished either by the assessee or by revenue in the form of paper books. We have also deliberated on various case laws relied by Ld. CIT(A) as well as by Ld. AR for the assessee at the time of making his submissions. We find that the Assessing Officer made addition solely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue is dismissed. 5 On an identical question of law, by an order dated 16.01.2023, Division Bench of this Court has considered the same issue in Tax Appeal No. 674 of 2022 and held as under: 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 appellant has also produced day-today stock registers, details of purchases and sales, the trading account and the stock registers has shown that there is NIL opening and closing stock, which means that the purchases made during the year are all sold during the year. Also reasoned out that if the sales are treated as genuine and the impugned purchases are treated as bogus then th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 showing details is annexed as Annexure B . The annexures may be treated as integral part of this order. From the above, it is clear that the learned Aos and learned CsIT (Appeals) are of the view that the beneficiaries of accommodation entries have made a benefit of 3% to 5% of the impugned purchases. 10. This is dealt with again in extenso by the Tribunal as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer 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 relating to Shri Bhanwarlal Jain, both, the Assessing Officer 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. There are concurrent findings with sound reasons. We have also given an opportunity on 03.01.2023. An explicit order noting that there is a refe ..... 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