TaxTMI 
TaxTMI 
2019 (4) TMI 1105
X X X X Extracts X X X X
X X X X Extracts X X X X
....ravelling charges amounting to Rs. 47,753/- being 10% of Rs. 4,77,526/- inspite of proper explanations and/or documents submitted by the appellant. 4. The Appellant craves leave to add/alter any of the grounds of appeal on or before the date of final hearing. 2. At the very outset, it is noticed that none has appeared on behalf of assessee in spite of calls and even no application for adjournment was moved. From the records, we noticed that the notice was issued on the address supplied by the assessee through RPAD, but the same was returned back with the remarks 'Left' by the postal authority. Assessee was under obligation to supply the correct address but the same has not been done. Therefore in such circumstances, we are left no other option to proceed the assessee ex-parte. On the other hand Ld. DR is present in the court and is ready with arguments. Therefore we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record. 3. The brief facts of the case are that the assessee is a company engaged in the business of trading in diamonds. It furnished its return of income for A.Y.2012-13 on 29/09/2012 declarin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ogus invoices issued in the names of the companies/firms floated by Bhanwarlal Group (as many as 70 concerns), the AO has brought to tax 9 % of bogus purchases standing in the names of the so-called sellers, u/s 69C of the Act as the explanation given by the appellant was not satisfactory to him. The argument of the appellant was that unless the AO proves positively that the material was not delivered to the assessee and the payment made through the Bank channels are bogus or the amounts paid in the names of the suppliers have come back to the purchaser-assessee, the AO cannot make any addition u/s.69C. Further, as the AO has not doubted the sales disclosed by the appellant he has to allow the purchases since there cannot be any sales without the purchase of the material. As was rightly pointed out by the Id.AR, when the quantity details of stock is tallying with the stock register, the purchases cannot be doubted. He further argued that addition cannot be made based on the statements given by a third-party i.e. Bhanwarlal Jain and his team that too without giving the assessee an opportunity to cross-examining them. 4.2.1. There is some force in the arguments of both the parties.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es were given (2 concerns) those names are duly appearing in the books of the appellant, Therefore, the live link between the bogus concerns floated by the entry operators on the one hand and the appellant company who accounted the purchases in the names of such bogus concerns on the other, is established. Further, the argument of the Id.AR that the addition was made based on the statement given by a third-party is not acceptable for the simple reason that the fact of providing accommodation entries was admitted by the very authors of the so-called bogus companies/firms. The story of retraction by Bhanwarlal Jain is also not acceptable to the Revenue since the entry operators could not substantiate with evidence that the statements were taken from them by exerting force, threat or coercion. The argument that the appellant was not supplied with statement recorded from Bhanwarlal Jain group, a third-party, does not sport merit since the facts of the investigation were already brought to the notice of the appellant during the course of assessment proceedings and the appellant is aware of the entire gamut of the facts. Another argument that the name of the appellant company not mention....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ircumstances of that particular case before them. I arn of the considered opinion that the theory laid down by the Hon'ble Guj'rat High Court in the case of Simit P Seth (supra.) should be applied in the instant case. The decision rendered by Gujarat High Court in the above case is on the basis of VAT benefit the appellant might have saved by taking accommodation entries. While deciding this case the Honorable High Court has drawn strength from its earlier decision in the case of Vijay Proteins P Ltd., 58 ITAT 428. In Simit P Seth's case the Honorable High Court has ordered the disallowance at 12.5% since the VAT rates are higher (10%) in the type of goods dealt by Simit P Seth, iron &steel, (where the average GP in such trade was 2.5%). In the case of diamond business, which the appellant is dealing, the VAT charges are only 1% and the customs duty, when imported, is about 2%. Keeping in view the above tax rates, the intention of the assessee to save from the transaction should be viewed only to the extent of saving from the above taxes/levies by indulging in taking accommodation entries. It is also pertinent to mention here the relevance of the Board's Instruction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the assessee stands dismissed. Ground No. 3. 8. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the adhoc disallowance made by AO @ 10% on the Conveyance, Telephone and Travelling charges amounting to Rs. 47,753/- being 10% of Rs. 4,77,526/-. 9. We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above ground raised by the assessee in para no. 5.3 & 5.3.1 of its order and the same is reproduced below:- 5.2 I have carefully considered the facts and submissions made by the Id. AR, It is seen from the details filed during the course of appellate proceedings that the appellant has paid the assortment charges of Rs. 16, 35, 588 to various parties after subjecting the amount to TDS, therefore, the expenditure needs to be allowed. The AO is ....