TaxTMI 
TaxTMI 
2017 (10) TMI 1013
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.... "1. on the facts and circumstances of the case and in law, whether Ld. CIT(A) was justif ied in sustaining only an addition@ 3% prof it rate on total purchases of Rs. 1,37,73,507/- made from four parties. 2. The appellant prays that the order of the Learned CIT(A) on the above grounds be set side and that of the A.O be restored. 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. The Appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored." 2. Briefly stated, the facts of the case are that the assessee firm which is engaged in the business of trading and manufacturing of diamond and jewellery had filed its return of income for A.Y 2007-08 on 29.10.2007, declaring total income of Rs. 12,97,280/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the 'Act'. Search and survey proceedings were conducted in the case of one Shri Bhanwarlal Jain and certain name sake dummy directors/partners/proprietors of various concerns that were actually being managed, controlled and operated by Shri Bhanwarlal Jain and his family members....
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....f purchase of goods which were claimed to by the assessee to have been made from the aforementioned parties. The A.O on the basis of the aforesaid facts, being of the considered view that the assessee had failed to discharge the onus as regards the genuineness and veracity of the transactions of purchase which were claimed to have been made from the aforementioned parties, therefore, concluded that the information received from the DGIT(Inv.), Mumbai that the assessee had merely obtained accommodation bills from the said concerns and had not carried out any genuine purchases, thus was proved to the hilt. The A.O characterised the transactions of purchase of goods by the assessee from the aforesaid dummy concerns as bogus transactions, by observing as under: "a. That the physical delivery of the goods were obtained from the party based in grey market and to give it colour of being a genuine purchase, the bogus bill/accommodation bill was obtained from the supplier. b. Though the purchase alleged as genuine is shown to has been made by making payment thereof by an account payee cheques, the cheques have been deposited in bank accounts ostensibly in the name of the apparent selle....
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....ssee." Thus, on the basis of the aforesaid observations the A.O holding a strong conviction that as the assessee had failed to discharge the onus in respect of proving the genuineness and veracity of the transactions of purchase of goods which were claimed to have been made from the aforementioned bogus concerns, therefore, concluded that the said transactions were proved to be not genuine. The A.O on the basis of his aforesaid observations, being of the view that as the purchases to the extent the same were claimed to have been made from the aforesaid parties, viz. (i) Prime star; (ii) Rajan diamond; (iii) Mayur exports; and (iv) Parvati Exports aggregating to Rs. 1,37,73,507/- had remained unverifiable, therefore, rejected the books of account of the assessee under Sec. 145(3) of the 'Act'. The A.O finally concluded that the purchases claimed by the assessee to have been made from Bhanwarlal Jain group were not just to cover up the grey market purchases, but was with the intent to suppress the taxable profit and defraud the revenue, therefore, on the basis of his said conviction disallowed the entire amount of purchases of Rs. 1,37,73,507/- and added back the same to the return....
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....hus, the CIT(A) after finding himself as being in agreement with the view of the A.O that the genuineness of the purchase transactions could not be established by the assessee, therefore, concluded that the same could safely be characterized as bogus transactions. The CIT(A) further observed that the contention of the assessee that it was obligatory on the part of the A.O to have produced the aforesaid parties for verification, as they as per the assessees version happened to be the witnesses of the revenue, did not merit acceptance. The CIT(A) remained of the view that now when the assessee had claimed to have entered into purchase transactions with the aforementioned parties, therefore, the onus to prove the genuineness of the said transactions was cast upon it. 5. The CIT(A) after deliberating on the facts of the case, therein found himself as being in agreement with the view of the A.O that the assessee had not carried out any genuine purchases from the aforementioned bogus concerns. However, the CIT(A) observed that as the goods claimed by the assessee to have been purchased from the aforesaid bogus concerns were entered into the stock register, and the corresponding sales of....
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.... case of instant cash purchase. It was observed by the CIT(A) that the profit element that would be involved in making of the purchases of diamonds by the assessee from the open/grey market could safely be adopted @3% after considering the following facts: (i) VAT levied on diamonds was 1%, while for purchases made from place like Surat were fully exempt; (ii) the task force for diamond industry constituted by the Government of India, Ministry of Commerce and Industry, after considering the BAP scheme, had recommended presumptive tax for net profit calculated @ 2% of trading activity and @ 3% for manufacturing activity or @ 2.5% across the board; (iii) That the operating profit in the case of diamond trading for computation of Arms Length Price (ALP) by the Transfer Pricing wing was also consistently in the region of around 1.75% to 3%.; AND (iv). That by way of a consistent practise the A.O's were adopting 3% on the purchases made from Bhanwarlal Jain/Rajendra Jain group concerns, as the profit element embedded in the assessments involving the similar facts in other cases The CIT(A) further observed that the assessee had during the course of the appellate proceedings subm....
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.... of the persons in charge of the said bogus concerns, as were recorded under oath by the investigation wing during the course of the Search and survey action, wherein they had admitted that they were only dummies and the concerns of which they were projected as the directors/partners/proprietors were as a matter of fact managed and controlled by Shri. Bhwarlal Jain and his family members, were only providing accommodation bills and had not carried out any genuine business transactions, had thus rightly concluded that the purchases claimed by the assessee from the said bogus parties could safely be characterized as bogus transactions. We are of the considered view that the CIT(A) had rightly appreciated that now when the assessee had absolutely failed to lead any primary evidence to substantiate the genuineness and veracity of the purchases transactions under consideration, therefore, there remained no occasion for the A.O to have held the purchase transactions under consideration as genuine. We are further persuaded to be in agreement with the CIT(A) that now when the sales of the assessee had not been doubted and dislodged by the A.O, therefore, it could safely be gathered that th....
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....t of the A.O be restored. 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing officer be restored." 10. Briefly stated, the facts of the case are that the assessee had filed its return of income for AY: 2009-10 on 30.09.2009, declaring total income of Rs. 11,03,580/-. The return of income was processed as such u/s 143(1) of the 'Act'. The assessment thereafter was completed u/s 143(3) at a total income of Rs. 11,40,280/-. Subsequently, on the basis of information received from DGIT (Inv.), Mumbai, that the assessee had taken accommodation entries from one M/s Megha Gems (a bogus concern of Bhanwarlal Jain group), in order to inflate its purchases, therefore, reopened the case of the assessee under Sec. 147 and a notice u/s 148 of the 'Act' was issued to the assessee on 25.03.2014. The A.O framed the assessment vide his order passed u/s 143(3) r.w.s 147, dated 27.03.2015, wherein after making addition of the entire purchases aggregating to Rs. 58,59,949/- which were claimed by the assessee to have been made from the afor....
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....any ground or add a new ground which may be necessary. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the assessing Officer be restored." 15. Briefly stated, the facts of the case are that the assessee had filed its return of income for A.Y 2012-13 on 27.09.2012, disclosing total income of Rs. 21,16,320/-. The case of the assessee was taken up for scrutiny assessment u/s 143(2). That during the course of the assessment proceedings the A.O observed that the assessee had booked bogus purchases aggregating to Rs. 4,24,96,885/- which were claimed to have been made from certain concerns, which were proved to be bogus concerns belonging to Bhanwarlal Jain Group, as under: Sr. No. Name of the hawal parties Bill amount 1. Ankita Exports 1498420 2. Meenaxi Diamonds Pvt. Ltd. 15337500 3. Parvati Exports 8220130 4. Malhar Exports 12407120 5. Balaji Impes 5033715 Total 42496885 The A.O framed the assessment vide his order passed u/s 143(3), dated 27.03.2015, wherein after making addition of the entire purchases aggregating to Rs. 4,24,96,885/- (supra) claimed by the assessee to have been made from the afo....