TaxTMI 
TaxTMI 
2018 (4) TMI 690
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....sed as not pressed. 3. The 2nd and 3rd grounds of appeal address a common issue and therefore, they are discussed together below. The 2nd ground of appeal The learned CIT-(A) has erred in confirming an addition of Rs. 7,16,98,624/- and Rs. 45,17,013/- being undisclosed income (bogus purchases) and undisclosed income declared by Mr. Anil Vanani, respectively. The addition is unjust, unfair, contrary to the facts of the case and not as per applicable provisions of the law. The 3rd ground of appeal Without prejudice, the appellant submits that declared additional income be reduced by the income already included as per the rate of G.P. since disclosed in the return and assessment. 4. Briefly stated, the facts of the case are that the AO completed the assessment u/s 143(3) on 30.09.2009 assessing the income at Rs. 18,98,59,230/-. Subsequently, the Deputy Director of Income Tax (Inv.), Unit-VII(1) & (2), Mumbai (hereinafter 'DDIT') carried out a survey u/s 133A in the business premises of certain entities who were involved in providing accommodation entries through their various concerns floated for the purpose of providing bogus purchase/sale bi....
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.... the same had been fully exported outside India. (d) The firm has also realized the money for the exports during the respective accounting years and those, which have remained to be realized, have since been realized in the succeeding accounting year. All the money realized through RBI only. (e) Since the firm is in the business of exports of polished diamonds, 95.64% of the total turnover of the firm for the assessment years 2006-07 was exports, 86% for assessment year 2007-08 respectively. Also 86% of the total turnover of the firm during the current accounting year (01.04.2008 to 31.03 2009) i.e. until date hereof also is exports. Therefore, your honour, on the above facts there is not apparent ground for holding that the purchases are not genuine. Without prejudice to the above facts and with a view to avoid the protracted litigation with the department in respect of the genuineness of their purchase, the firm has agreed to offer the gross profit percentage of purchases for the AY 2006-07, 2007-08 and the running A.Y 2009-10. The firm is agreed offer an additional income of the firm according to the above GP percentage of for the respective assessm....
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....ore, concluded that : "In my considered opinion, in the case of bogus purchases, the element of investment going into such purchases has to be treated as additional income besides the profit element. In the case of bogus sales, there is scope of rotation of some investment a number of times. But, the bogus purchase has a simple effect of increasing the appellant's expense, thereby reducing his income by the amount of bogus purchase. This was also known to the appellant at the time of confession of additional income. It is not out of place here to mention that such confession was given by the appellant in the presence of his tax advisor, who being a professional Chartered Account, had correctly advised the appellant to come clean on these transactions. Therefore, I see no justification in bringing to tax only the profit element, and ignoring the investment portion. Accordingly, the action of the Ld. AO in bringing to tax the amount of purchase from these firms alongwith the profit thereon is upheld." 6. Before us, the Ld. counsel of the assessee files a Paper Book (P/B) and submits that during the course of survey, the statement on oath of Shri Gautam B. Jain was recorde....
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....d accordingly his statement was recorded by the AO on 08.02.2012. It is pointed out by him that the Ld. CIT(A) overlooked the above cross-examination while confirming the addition made by the AO. It is submitted by him that the Ld. CIT(A) had called for the remand report from the AO in order to give the assessee an opportunity to cross-examine Shri Gautam Jain which was demanded by the assessee in the course of proceedings. In the remand report, the AO has not commented upon the examination-in-chief recorded by the AO and thereafter, the cross-examination of Shri Gautam Jain by Shri Anil B. Vanani, partner of the asssessee-firm. It is stated by him that the examination-in-chief and cross-examination of Shri Gautam Jain on 8.2.2012 clinches the issue in as much as Shri Gautam Jain has accepted that the transactions of purchase of rough diamonds/polished diamonds by the assessee-firm from his various concerns were genuine for which he had produced the stock registers, sales register, account confirmation, Bank statement, audited accounts and returns of income. The aforesaid facts have been admitted once again in the cross- examination by Shri Gautam Jain. Finally it is state....