9911796707
TMI Blog2023 (12) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... d; M/s Veer Corporation which were identified as bogus entry providers, completely run by Shri Chetan Kantilal Shah. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in partly deleting the addition without considering that Shri Chetan Kantilal Shah has admitted in his statement u/s. 131(1A) given in the course of survey u/s. 133A of the Act that he is involved in providing accommodation entries in the guise of loans, purchases and sales on commission basis. 3. On the facts and circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs. 80,00,000/- made on account of section 69A of the Act as the assessee neither in the assessment proceedings nor in the appeal proceedings produced any cogent evidences to prove that the deposits made in the Bank account represent the business receipts. 4. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition made by the Assessing officer u/s. 69A of the Act as the onus is on the assessee and not on the Assessing Officer to prove the source of the credits in the Bank account with corroborative evidences. 5. On the basis of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has partly allowed the appeal of the assessee. The ld CIT(A) noted that entire purchases cannot be added to the total income of the assessee and only profit element embedded in the purchases can be disallowed. Therefore, ld CIT(A), by relying on jurisdictional High Court's judgment and various other judicial pronouncements by Honorable High courts and ITATs, has restricted the addition to 13.05% of amount disallowed by assessing officer, that is, 13.05% of Rs. 75,10,503/-. 6. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before us. 7. The Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue, argued that Ld. CIT(A) has failed to appreciate the fact that the assessing officer has already accepted the plea of the assessee that Rs. 1,10,00,000/- was disclosed under PMGKY Scheme, 2016 and hence no addition was made with regard to disclosure amount. With respect to the other addition, assessing officer has observed that Shri Chetan K. Shah, in his oath, duly admitted that he was involved in providing accommodation entries in the guise of loan/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat against purchases of diamond corresponding sales of diamond also shown and duly taxed as sales, therefore if the purchases are supported by bills and there is payment by account payee cheques, no addition is called for as per Hon'ble Gujarat High Court decision in the case of M.K Brothers (1967) 163 ITR 249(Guj). Alternatively, ld Counsel argued that addition may be restricted up to 5% of purchases. 10. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In our considered view, it was wholly erroneous on the part of the assessing officer to make addition of 100% of purchases. Only a profit element embedded in the purchases may be added in the hands of the assessee. Based on information received from Investigation wing the learned assessing officer contested that these two parties viz. Veer Corporation and Dhaval Gems, are engaged in business of providing accommodation entries and thus the underlined purchases are not genuine. The assessing officer disallowed the entire purchases claiming them to be bogus. Before, ld CIT(A), the assessee filed supporting documents containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of CIT v. Bholanath Poly Fab (P.)Ltd. [2013] 355 ITR 290 (Guj). The view taken by the Tribunal in the case of Vijay Proteins Ltd. v. Asstt. CIT [1996] 58 ITD 428 (Ahd.) came to be approved. 8. If the entire purchases were wholly bogus and there was a finding of fact on record that no purchases were made at all, counsel for the Revenue would be justified in arguing that the entire amount of such bogus purchases should be added back to the income of the assessee. Such were the facts in the case of Pawanraj B. Bokadia (supra). 9. This being the position, the only question that survives is what should be the fair profit rate out of the bogus purchases which should be added back to the income of the assessee. The Commissioner adopted the ratio of 30 per cent of such total sales. The Tribunal, however, scaled down to 12.5 per cent. We may notice that in the immediately preceding year to the assessment year under consideration the assessee had declared the gross profit at 3.56 per cent of the total turnover. If the yardstick of 30 per cent, as adopted by the Commissioner (Appeals), is accepted the gross profit rate will be much higher. In essence, the Tribunal only estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 12. In the result, ground nos.1 and 2 raised by the Revenue, is dismissed. 13. Coming to grounds nos. 3 to 6 raised by the Revenue, which relate to an addition of Rs. 80,00,000/- made by assessing officer under section 69A of the Act. 14. Succinct facts qua the issue are that during the assessment proceedings, assessing officer has noticed that assessee has deposited Rs. 1.90 Crs in his bank account No.005205007591 maintained with ICICI bank, Athwalines Branch, Surat during the demonetization period. The Assessing Officer has requested to explain the source of cash deposits during the period under consideration with necessary evidences and accordingly assessee has replied that out of this amount, Rs. 1.10 Crs was declared PMGKY Scheme, 2016 and submitted related documents also. A show cause notice was issued to assessee on 26.11.2019 and 02.12.2019 with a request to submit the details of cash deposits made in bank account during the period under consideration alongwith purchase book, sales book, Bank book and cash book for the period. However, while verifying the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the details of customers with address and PAN to the tune of Rs. 39,61,223/-. The sales of jewellery / bars were through counters in shop and most of the customers pay the bills in cash. The receipts and accumulation of cash on hand, as per accounts, is quite obvious and the same ought to be accepted more particularly when books of accounts are not rejected. The quantum of sales depends on marriage / Diwali and such auspicious days. If we look into the monthly sales lying on page 34 of the paper book, there was huge sales in April, 2016 and September, 2016 though there was less sale during demonetization. The assessee had cash on hand of Rs. 61,19,899/- as per the cash book on 29.09.2016 and the same was further increased to Rs. 83,03,182/- on 08.11.2016. The assessee had sufficient cash on hand of Rs. 83,03,182/- on 08.11.2016 out of which Rs. 80/- lacs were deposited during the demonetization period. The assessee used to maintain quantity details/ account and the same was filed alongwith tax audit report which lies on page 31 to 33 of the paper book. We note that assessee has already covered huge amount of Rs. 1.10 crores under PMGKY scheme against the doubtful transactions. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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