TMI Blog2023 (12) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Appellant : Shri Vinod Kumar, Sr. DR For the Respondent : Shri Kiran K. Shah, CA ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Surat [in short the ld. CIT(A) ], National Faceless Appeal Centre (in short NFAC ), dated 02.06.2023, which in turn arises out of an assessment order passed by Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), dated 18.12.2019. 2. The grounds of appeal raised by the Revenue are as follows: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the assessing officer of Rs. 75,10,503/- to 13.05% of the same without appreciating the facts that the assessee had failed to prove the genuineness of the transaction made with M/s Dhaval gems and; M/s Veer Corporation which were identified as bogus entry providers, completely run by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear and apparent that the Assessee has availed accommodation entries totalling Rs. 75,10,503/- from M/s Veer Corporation and M/s Dhaval Gems for the period under consideration in the guise of purchases as claimed in its books. Further, the Assessee has shown the parties as creditors for goods amounting to Rs. 60,10,490/- in its Audit Report, as submitted in course of the assessment proceedings. The assessee was again requested to submit details, vide notice dated 27.07.2019 and a show cause notice dated 28.11.2019, to show cause as to why expenses should not be disallowed, as assessee failed to submit details with respect to genuineness and correctness of purchase expenses. In response to such notice the assessee submitted bills of the alleged entry providers. However, the assessing officer rejected the same and held that assessee is only a paper concerns which are not engaged in actual business and therefore made the addition of Rs. 75,10,503/- u/s section 69C of the Act. The assessing officer also held that income assessed u/s 69C of the Act is taxed u/s 115BBE of the Act, at the rate of 60%. 5. Aggrieved by the order of Assessing Officer, the assessee carried the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rushed to buy gold ornaments on the same day before midnight and hence the turnover of the business increased enormously.In addition to all above facts, to avoid litigation, assessee disclosed 1.10 Crores under PMGKY Scheme, 2016. 9. Learned Counsel further stated that stock has been reduced proportionality to the cash sales. Further, assessing officer has accepted the profit and reduction of stock without rejection of books. Books of accounts are audited. The assessing officer erred in not confronting the statement of Shri Chetan k. Shah and erred in not allowing the cross examination of the parties whose statement were relied upon. All payments were made by account payee cheques and included in the audit report. No addition is justified unless material evidence is confronted and cross examinations is allowed. Addition made on the base of third- party statement is not justified and bad in law. There is no evidence for the assessee that he has paid cash against payment of bills. The transactions with regard to purchases were confirmed by the parties in response to the notice u/s. 133(6) of the Act. The ld Counsel stated that against purchases of diamond corresponding sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing sales are not challenged). In this context, the ld CIT(A) relied on the following judgments: 1. The Hon'ble Gujarat High Court in the case of Commissioner of Income-tax vs. Simit P. Sheth reported in [2013] 38 taxmann.com 385 (Gujarat) has held as under: - In the present case, the Commissioner of Income-tax (Appeals) believed that when as a trader in steel the assessee sold certain quantity of steel, he would have purchased the same quantity from some source. When the total sale is accepted by the Assessing Officer, he could not have questioned the very basis of the purchases. In essence, therefore, the Commissioner (Appeals) believed the assessee's theory that the purchases were not bogus but were made from the parties other than those mentioned in the books of account. 7. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. So much is clear by the decision of this court. In particular, the court has also taken a similar view in the case of CIT v. Vijay M. Mistry Construction Ltd. [2013] 355 ITR 498 (Guj) and in the case of CIT v. Bholanath Poly Fab (P.)Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the extent of lower GP declared by the assessee in respect of bogus purchases as compared to G.P. on normal purchases. 5. PCIT vs. Jakharia Fabric (P) Ltd. (2020) 429 ITR 323 (Bom-HC) dated 10/02/2020 In the underlined case, honourable HC upheld the decision of IT AT for restricting adjustment to the tune of estimated profit element involved in bogus purchase. 11. The assessee has also submitted before ld CIT(A) that the entire amount should not be treated as bogus and reasonable gross profit at the rate of 5% shall be added to the total income of assessee in wake of various judicial precedence pronounced by ITAT. However, it was observed by ld CIT(A) that the assessee's business is recently started and it is into second year of its operations. During the year under consideration the gross profit earned by assessee is 13.05%. Therefore, ld CIT(A) restricted the addition to Rs. 9,80,121/- (Rs.75,10,503/- X 13.05%). We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was disclosed under Pradhan Mantri Garib Kalyan Yojana and the same money was deposited into bank account during demonetization. We note that before ld CIT(A), during the appellate proceedings, the assessee had submitted copy of letter which was filed with Assistant Director of Income Tax (Investigation) intimating for option to disclose amount of Rs. 1.1 crore. On perusal of said letter it was observed by ld CIT(A) that the assessee has suo -moto intimated to the Income Tax Department regarding such cash deposit during the demonetization which was declared by the assessee in PMGKY amnesty scheme. It is also observed that the assessee has paid due taxes as per the PMGKY amnesty scheme. The assessing officer has mentioned in the Assessment Order that assessee was not able to substantiate its claim, however on perusal of the supporting documentation, the claim of assessee is found to be acceptable and therefore the addition made by learned assessing officer for sum of Rs. 80,00,000/- was deleted by ld CIT(A). 19. We note that in this nature of assessee`s business, normally the sales are made in cash and the parties do not give any identification. However, the assessee had filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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