TaxTMI 
TaxTMI 
2017 (11) TMI 180
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....ovisions of Section 10A entire profit of assessee was exempted. In the year under consideration assessee filed its return at income at Rs. 12,318/-. Return was subject to scrutiny and assessment was completed u/s.143(3) on 22/09/2008 determining business income at Rs. 9,85,900 and income from other sources of Rs. 2,34,440/-. After scrutiny assessment was over, the AO reopened the assessment on the plea that survey u/s.133A was carried out in the case of Shri Hiten L. Raval Prop, of M/s. Zalak Impex by the office of Dy. Director of Income tax (Inv.), Unit-IV (3), Mumbai on 04/10/2006. As a result of survey operation, it was unearthed that this person was issuing bogus purchase bills to various concerns. It was further found that the above mentioned assessee i.e. M/s. Stones & Jewellery (India) P. Ltd. has also made purchase of Rs. 81, 55,385/-during the A.Y. 2006-07 from M/s. Zalak Impex. 6. In view of the facts and circumstances stated above, assessment in this case was reopened u/s. 147 and a notice u/s. 148 was issued vide notice dated 07/12/2010 which was duly served on the assessee on 08/12/2010. In response to the notice u/s. 148 the assessee, vide its Idler dated 06/01/2011 ....
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....nvolved in this appeal is that when the purchases are held to be 'fake/bogus' but the sales are not be disproved by the I.T. department - the genuineness of the sales stands established - so much so that the export out of India of the jewellery is proved and cannot be impeached by the I.T. department - other independent agencies like , SEEPZ Authorities - further inward remittance of foreign exchange is all proved - then can the A.O. on the basis of statement of oath recorded during the course of survey of the alleged supplier Shri Hiten L. Rawal Prop, of M/s. Zalak Impex hold the entire purchases to be bogus and disallow the same. The appellant has contended that since all the purchases are through inspection by an independent authority - SEEPZ - SEZ and under the complete control of the Deputy Commissioner of Customs and when the 'diamonds' are passed through SEEPZ customs - the relevant documents are stamped and entered in the SEEPZ register - stock record of the unit are updated and then diamonds are issued for manufacturing of jewellery - finished jewellery is exported - after it is examined and checked by SEEPZ Customs - export documents are prepared as per RB....
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....be applied. 5.7 In the appellant's case, the position of G.P. is as follows: Assessment year G.P. Ratio 2004-05 17.25 2005-06 17.82 2006-07 15.20 The above shows that in A.Y. 2004-05 when the question of fake/bogus purchase was not there, the appellant had shown a G.P. of 17.25%. Similarly in A.Y. 2005-06, the appellant has shown a G.P. of 17.82% and there was no question of bogus / fake purchase. However, in A.Y. 2006-07, there has been a fall in G.P. to 15.20% -which show that over the earlier years, the G.P. has declined by 2.05% to 2.62%. 5.8 Hence, the magnitude of adjustment required to be done in appellant's case on account of bogus/fake purchases will be in the range of 2.05% to 3% approximately of G.P. since, purchases have been manipulated and the identity of the purchaser is not established but at the same time, total sales have been proved to be genuine - and thus, the trading results of earlier years when there was no such manipulation serve as a relevant guide. 5.9 Hence, I direct the A.O. to make a addition of G.P. rate of 3% to the disclosed G.P. of 15.20% shown by the appellant during the year - also following the logic of Hon'ble Mu....
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.... we found that scrutiny assessment of assessee was carried out by the AO vide order dated 22/09/2008, wherein full information with regard to the entire purchase was called for and filed by the assessee. The same was also verified by the AO and thereafter scrutiny assessment was framed. After the date of scrutiny assessment there was survey at the place of Hiten L Rawal and on the basis of his statement, AO presumed that assessee has made bogus purchases. We found that issue under consideration is squarely covered by the decision of Co-ordinate Bench in the case of Tristar Jewellery (supra), wherein Tribunal with regard to the same survey and addition made by the AO by estimating extra G.P. on bogus purchases was deleted by the Tribunal after having the following observation:- 8. Having heard the parties and having perused the material on record, we find that the completed assessment of the assessee was reopened on the basis of the statement of Shri Hiten L. Rawal, the proprietor of M/s Zalak Impex. In this statement recorded u/s 131 of the Act, Shri Rawal confessed to have provided accommodation entries in the form of sales and purchases, to various parties. The assessee was sta....