2018 (9) TMI 1235

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....e') by filing the present appeals sought to set aside the consolidated impugned order dated 26.05.2017 passed by learned Commissioner of Income Tax (Appeals)-17, New Delhi, for assessment years 2012-13 and 2013-14 respectively on the grounds, inter alia, that: "1. That the assumption of jurisdiction by the learned A.O. to initiate proceedings u/s 147, is bad on various factual & legal grounds. 2. That the proceedings initiated u/s 147 by the learned A.O. merely on the basis of an information received, without applying his own mind and also without making any verification of such information, are illegal and thus, deserves to be quashed. 3. That on the facts of the case and under the law, the learned CIT(A) has err....

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.... Ltd. has not even responded to the notice issued under section 133(6) of the Act, declining the contention raised by the assessee. Then the Assessing Officer (AO) proceeded to conclude that on the basis of investigation conducted by Investigation Wing, it is proved that parties are engaged in the business of providing accommodation entries only and have been issuing bill without any physical stock and this fact has been admitted before the Income Tax Authorities by Sh. Bhanwar Lal Jain. The assessee has not shown the exact sale of diamond jewellery alleged to have been purchased from M/s. Nice Diamond Ltd. Consequently, the AO estimated the Gross Profit (GP) on bogus purchases made from M/s. Nice Diamonds Ltd. @ 25%, as against the decl....

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.... 2012-13 and on bogus purchase of Rs. 5,13,400/- for assessment year 2013-14. 7. In the backdrop of the aforesaid undisputed facts and circumstances, the learned Authorized Representative for the assessee by relying upon the decision rendered by the coordinate bench of Tribunal in ITA No. 4760/Mum/2017 (AY: 2009-10) (in the case of M/s. Natik Gems Vs. Income Tax Officer) contented that at the most, GP rate in the case of jewellery business may be enhanced by 3% of the said bogus purchases. 8. For ready perusal, operative part of the order passed by the coordinate bench of Tribunal in the case of M/s. Naitik Gems (supra), is extracted below: "3.5 There is merit in the arguments of the AO as given above and following such argum....

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....inistry of commerce and Industry, after considering the BAP scheme, recommended presumptive tax for net profit calculated (c)2% of M/s.Naitik Gems trading activity and 3% for manufacturing activity or @ 2.5% across the board. It is also stated that the operative profit in case of diamond trading for computation of ALP by the TP wing is consistently in the region of around 1.75% to 3%. It is also brought to my notice that in similar cases of diamond business, some CIT(A)'s have taken a view that 3% of the disputed purchases should be considered as fair additional profit. In view of the above and also since the profit margin is lesser in this sector, adopting 6% as the additional profit by the AO, is not based on correct or footing. Consi....