TMI Blog2024 (4) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... e no genuine purchases. The other judicial precedents relied upon by the assessee are also considered where varying rates of additions are confirmed depending on the facts and circumstances of the case of each of the assessee in the range of 1%- 12.5 % . Therefore, in absence of similar facts, those cannot be applied blindly. As stated above the facts in the case of the assessee are unique where only alleged bogus purchases of diamonds are exported in the same quantity and there are no other genuine purchase transactions. Therefore, only the facts in the case of the assessee in earlier years could be a guiding factor. In the case of the assessee in earlier years assessment year 2008 09 and 2007 08 CIT A has restricted the addition to the extent of 3% of the bogus purchases which is not disputed by the revenue, therefore, we also find it reasonable to retain the addition to the extent of 3% of the bogus purchases. Accordingly, appeal of the assessee is partly allowed. - Shri Prashant Maharishi, AM And Shri Raj Kumar Chauhan, JM For the Assessee : Shri K.A. Vaidyalingan, AR For the Revenue : Shri H.M. Bhatt, DR ORDER PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by M/s Chait ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the addition/disallowance made by the learned AO even to the extent of Rs. 32,08,953/- (though quantum addition is reduced from Rs. 1,31,65,072/-) of the alleged bogus purchases as unexplained expenditure u/s. 69C even though the impugned transactions have been recorded in the duly audited regular books of account of the Appellant and all payments have been made through banking channel. 6. On the facts, the learned CIT (A) completely erred in his observation that GP is a meagre 12.64%. The results give credence to the suspicions raised by the assessing authority without understanding the diamond trade fully, where even the Report of the Task group for diamond sector submitted to Department of Commerce, Government of India, suggested that the net profit that could be derived in the diamond in trading activity thereof, the profitability range is 1% to 3% only. With this wrong notion and misunderstanding of GP%, the learned CIT (A) erred in upholding the addition/disallowance to the extent of Rs. 32,08,953/-, which almost works out to approx. 25% of the impugned purchases. 03. Fact shows that assessee is a partnership firm engaged in the business of trading, export and import in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus purchases allegedly of Rs. 13,165,072. Thus, there are no other entities that were supplied to the assessee other than these two alleged bogus entities. The gross profit on by the assessee is bigger 12.64%. He also found that there is a difference between the cost of goods sold which were purchased from these two different entities. According to him goods purchased from Mukti Exports are Rs, 11,205 per carat whereas from the other party it is Rs. 11,325 per carat. Therefore, he applied the purchases rate of Pankaj Exports to Purchases of Mukti Exports and found that all goods purchased should be valued at Rs. 11,000 325/ per carat. Therefore, he applied per carat cost of purchases from Pankaj Exports to purchases from Mukti Exports and made the addition of Rs. 32,08,953/ . Thus, the appeal of the assessee was partly allowed. 05. Assessee is aggrieved with that appellate order and is in appeal before us. Assessee submitted that assessee has shown the gross profit of 12.64% same is not meagre because of the reason that report of the task group for diamond sector submitted to the Department of commerce, government of India suggested that the net profit that could be derived in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross profit earned by the assessee from regular suppliers. Therefore, the learned CIT A, the purchases of goods from both the alleged bogus suppliers at the same rate and made the addition made the suppliers purchase price was less than the other suppliers purchase value. Thus, there is no infirmity in the order of the learned CIT A. 07. We have carefully considered the rival contention and perused the orders of the lower authorities. The fact shows that in the present case on dispute facts shows that assessee has purchased diamonds from two different entities amounting to Rs. 13,165,072/ . An accommodation entry provider operated both these entities. Assessee has exported these diamonds and realized export proceeds. Quantitative details of purchases in carats are also shown. On page number 57 of the paper book, it was shown that 270.99 carats of diamonds purchased on 25/5/2009 from one party or exported on 1/6/2009. Similarly other purchases of diamonds from alleged bogus suppliers were also exported in the same quantity. Assessee has also produced the stock register where one to one core relation between the alleged bogus purchases compared to exports was established. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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