2017 (8) TMI 1302

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....n relating to bogus purchases. The revenue is aggrieved by the decision of Ld CIT(A) in granting partial relief to the assessee. Both the appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. The assessee company is engaged in the business of import and export of diamonds. It filed its original return of income u/s 139(1) of the Act on 27-10-2007 declaring a total income of Rs. 81,59,896/-. The AO completed the regular assessment u/s 143(3) of the Act on 29-09-2011 determining the total income at Rs. 83,29,411/-. Later on, the AO reopened the assessment and passed assessment order u/s 143(3) r.w.s. 147 of the Act on 04-12-2012 determining the total income at Rs. 97,52,120/-. 3. Sub....

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....t procedure for the assessees engaged in the diamond manufacturing and trading, wherein it was stated that the income exceeding 6% of the turnover declared by the assessee should be accepted. Accordingly the AO came to the conclusion that average G.P rate declared in the diamond trade is 6% and accordingly preferred to adopt 9% as the profit margin embedded in the alleged bogus purchases. Accordingly he added 9% of the alleged bogus purchases, i.e., 9% of Rs. 10.83 crores amounting to Rs. 97,50,311/-to the total income of the assessee. 4. The Ld CIT(A) noticed that the notices issued by the AO u/s 133(6) of the Act to the suppliers have been served and they have also filed their replies. He noticed that the AO was not satisfied with the ....

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....urchases. On the contrary, the AO has rightly placed reliance on the report given by investigation wing, before whom Shri Bhanwarlal Jain has accepted that he and his group companies were engaged in providing only accommodation entries. Accordingly the Ld CIT-DR said that the reopening of assessment was on the basis of proper reasoning and material. She further submitted that the Ld CIT(A), after accepting the non-genuineness of purchases, should not have reduced the addition to 3% as against 9% estimated by the AO. She submitted that the AO has given proper basis for arriving at the estimate of 9% and hence the same should not have been tinkered with by the Ld CIT(A). 8. The Ld A.R, on the contrary, submitted that the AO has reopened th....

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.... Accordingly he submitted that no addition was warranted as the assessee has fully proved the genuineness of purchases. 10. We have heard rival contentions and perused the record. We notice that the assessing officer has reopened the assessment for the second time after expiry of four years from the end of the assessment year, on the basis of information received from the investigation wing about the bogus nature of transactions entered by Shri Bhanwarlal Jain group. Even though the AO has mentioned the reasons that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, yet he has not specified the manner of failure. 11. On the contrary, we notice that the assessee has pr....