TMI Blog2024 (3) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, the assessee has sold the alleged bogus purchases and hence it was a trading transaction. Since the assessee has already declared gross profit rate of 1.42%, we are of the view the addition should be restricted to 1.58% (3% less 1.42%). Accordingly, we modify the order passed by Ld CIT(A) and direct the AO to restrict the addition to 1.58% of the value of alleged bogus purchases. Appeal filed by the assessee is partly allowed. - Justice (Rtd.) C.V. Bhadang (President) Shri B.R. Baskaran (AM) For the Assessee : Shri Bhupendra Shah For the Department : Smt. Mahita Nair ORDER PER B.R.BASKARAN (AM) : - The assessee has filed this appeal challenging the order dated 17.8.2023 passed by the learned CIT(A), National Faceless Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree years. The average rate of gross profit of A.Y. 2011-12 to 2013-14 worked out to 16.45%. Accordingly, the learned CIT(A) directed the Assessing Officer to restrict the addition to 16.45% of the value of alleged bogus purchase. Still aggrieved the assessee has filed this appeal before the Tribunal. 5. The Learned AR submitted that the assessee has purchased 398.44 carats of diamonds from M/s. Mayank Impex by way of three bills on 10.10.2011 to 12.10.2011. The entire quantity of diamonds has been sold to Gunjan Export on 13.10.2011. He submitted that the assessee has furnished copies of purchase bills and also copy of sales bill to the AO and they are also placed in the paper book. He submitted that the payment for purchases has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee could reconcile the purchases made from M/s Mayank Impex with the sales. The assessee could not have sold the goods without actually purchasing the same. Hence, if the AO accepts the genuineness of sales, then the purchases could not be doubted. Since there is allegation of getting accommodation bills, it is possible that the assessee could have purchased goods from someone else, while the purchase bills were obtained from some body else. In that case, there is a possibility that the assessee could have made some profit, which can be assessed by the AO. In this regard, we may refer to the observations made by the Hon ble jurisdictional Bombay High Court in the case of Nitin Ramdeoji Lohia (supra):- 7. From the above facts it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it has declared G P rate of 2.20% only. The Ld A.R submitted that the profit rate is high in the case of manufactured items, while in respect of trading of diamonds, it is around 3% only. We notice that above said submissions of ld A.R gets support from the decision rendered by the co-ordinate bench in the case of Oopal diamond vs. ACIT (144 taxmann.com 184)(Mum), wherein it was observed as under:- 4.2. The only issue that arises before us is as to whether the estimation on profit element made by the ld. CIT(A) at 3% is just and fair. It is pertinent to note that against the order of the ld. CIT(A), the Revenue had not preferred any appeal before us. As per the report of the Task Force for Diamond Sector constituted by the Ministry of Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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