TMI Blog2024 (2) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 13/01/2023. Therefore, taking a consistent view, the order of ld. CIT(A) is modified and the disallowance restricted to the extent of 0.50% is increased to 6% of the impugned purchases. We further find that in a similar case in PCIT Vs Surya Impex [ 2023 (1) TMI 835 - GUJARAT HIGH COURT] the Hon ble Jurisdictional High Court affirms the decisions of this Tribunal on similar facts. Therefore, order of CIT(A) is modified and the assessing officer is directed to restrict the disallowance of purchases from there three parties be restricted to 6% of aggregate of purchase of Rs. 2.01 Crore. Grounds of appeal raised by the revenue are partly allowed. - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Department : Shri Ravi Kant Gupta, CIT-DR with Shri Vinod Kumar, Sr.DR For the Assessee : None ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the revenue are directed against the separate orders of learned Commissioner of Income Tax (Appeals)-1, Surat [in short, the ld. CIT(A)] dated 12/06/2017 and 25/10/2019 for the Assessment year (AY) 2007-08 and 2008-09 respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surat may be set-aside and that of the Assessing Officer's order may be restored. 2. Brief facts of the case are that the assessee being individual and proprietor of Sanman Exports, was engaged in dealing of diamonds, filed his return of income for A.Y. 2007-08 on 26/10/2007 declaring income of Rs. 1,51,590/-. The case of assessee was reopened in the month of March 2014 on the basis of information of Investigation Wing, Mumbai that in Gautam Jain and other group, a search was carried out on 03/10/2013 which resulted in collection of evidence that Gautam Jain and his associates was running a number of Benami concerns for providing accommodation entry to various parties in the form of bogus purchase, sale and unsecured loan. The assessee was one of the beneficiary of purchases shown from various concerned of Gautam Jain and company. Name of such entities consisting Mihir Diamonds, Krishna Diam P. Ltd. and Krishna Diamonds Pvt. Ltd. who have provided such accommodation entry of purchases aggregating of Rs. 2.01 crores to the assessee was forwarded to the assessing officer. On the basis of such information, the Assessing Officer after recording reasons under Section 147 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. 3. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before ld. CIT(A), the assessee challenged the validity of reopening of case as well as addition on merit. Before the ld. CIT(A), the assessee filed detailed written submission. The submission of assessee are recorded in para 5 of order of ld. CIT(A). In the submission, the assessee stated that the assessee is working as commission agent (Pucca Aadthiya) of rough and polished diamonds. Being the commission agent, he is earning only commission and no trading account was made. The Assessing Officer reopened the case on the basis of information of Investigation Wing without verifying the correctness of information and accepted vague information in a mechanical manner. The reasons recorded were not correct. On merit, the assessee submitted that the relationship of assessee and the traders were agent and principal. The accounts of assessee were subject to audit. The assessee has obtained tax audit report and filed his return of income. The Assessing Officer has not pointed out any defect in the books of account. The book results were not rejected.] 4. The ld. CIT(A) on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d letter and to file original postal receipt on record of this case. However such direction was not complied nor the death certificate of assessee was placed on record. To verify such fact, the Assessing Officer was directed to verify the fact and file fresh Form-36 by impleading legal heir of assessee. The Assessing officer/department/revenue has filed revised Form-36 impleading Lakshita Rajesh Jain as legal heir of assessee. On filing fresh Form-36, notice to the legal heir of assessee was issued at the address profited in fresh Form-36. However, the notice sent through registered post was returned bank. Neither the legal heir of assessee nor their representative appeared, thus we left no option except to decide the appeal on the basis of material available on record. 6. We have heard the submissions of learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue and perused the material available on record. The ld. CIT-DR for the revenue submits that the case of assessee was reopened on the basis of information received from Investigation Wing, Mumbai that the assessee is beneficiary of accommodation entry provided by Gautam Jain and his group. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d commission on such sale and purchase. We find that neither any detail on TDS of alleged commission was furnished nor any substantive evidence in the form of confirmation of parties or agreement/agency agreement was placed on record. We find that the ld. CIT(A) recorded that a profit element in similar bogus purchases can only be brought to tax. Despite the fact that the ld. CIT(A) restricted the addition to 0.50% without referring any material evidence available on record. We find that this combination in number of decisions wherein the purchases are shown from Gautam Jain, Bhanwarlal Jain or Rajendra Jain and Company, who were proved entry provider, similar addition was either restricted or enhanced to 6%. We further find a similar order was followed in the case of ITO Vs Rajesh Kumar Pamecha in ITA No. 87/Srt/2017, ITO Vs Mukesh Mahavirprasad Sen ITA No. 15/Srt/2020 and other cases dated 13/01/2023. Therefore, taking a consistent view, the order of ld. CIT(A) is modified and the disallowance restricted to the extent of 0.50% is increased to 6% of the impugned purchases. We further find that in a similar case in PCIT Vs Surya Impex (supra) the Hon ble Jurisdictional High Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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