TaxTMI 
TaxTMI 
2019 (10) TMI 307
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....% of the total bogus purchases of Rs. 11,17,20,486/- without considering the Supreme Court Judgment in the case of N.K. Proteins Ltd. SLP CC No. 769 of 2017 vs. DCIT dated 16.01.2017, wherein the addition of entire bogus purchases was upheld. 3. The Cross objections filed by the assessee are as under : 1. The Ld. CIT(A) erred in concluding that the impugned purchases were not genuine inspite of the fact, all supporting documents were filed and the supplier had responded to notice u/s 133(6) and no opportunity to cross examine the suppliers was given to the assessee. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the addition to the extent of 3% of the impugned purchases of Rs. 11,17,20,486/- 4. Briefly stated, the facts of the case are that the assessee is a trader in diamonds. It filed its return of income for the assessment year (AY) 2012-13 on 25.09.2012 declaring total income of Rs. 86,79,589/-. The return of income was processed u/s 143(1) of the Act. During the course of assessment proceedings, the Assessing Officer (AO) received information from the Investigation Wing that the assessee has taken accommodation entries....
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....sponding sales. In order to ascertain the genuineness of purchases, the AO issued summons u/s 131 to the above seven parties for compliance on 24.03.2015. The assessee vide letter dated 24.03.2015 submitted that the summons have been given to the respective parties. As the parties did not appear before the AO, he again vide order sheet noting dated 27.03.2015 asked the assessee to produce the said parties. However, the assessee failed to produce the said parties. Considering the fact that the assessee was a beneficiary of the accommodation bills issued by the above parties and there was no response fully from the said parties to the notices issued u/s 133(6) and summons u/s 131 of the Act, the AO made an addition of Rs. 11,17,20,486/- to the income declared by the assessee. 5. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). It is found that vide order dated 05.02.2018, the Ld. CIT(A) held : "4.11 In this case, information have been received from the Investigation Wing that Bhawarlal Jain Group have main business entities through which various interested parties have taken accommodation entries and one such interested party is the appellant....
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....tion entries. Though the Hon'ble Tribunals including jurisdictional Tribunals have held 2 to 3% as the profit reasonable in diamond trading particularly on purchases for which the accommodation entries have been taken from Bhanwarlal Jain & Others, however, I find it reasonable if 3% of the amount of so called bogus purchases are brought, to tax. I accordingly direct the A.O. to disallow 3% of the purchases under reference i.e. Rs. 11,17,20,486/-over and above the income returned, in place of total purchases. This addition is clear of profit disclosed by the appellant during the year." 6. Before us, the Ld. Departmental Representative (DR) submits that in the instant case, as per the information received from the Investigation Wing, the assessee has taken accommodation entries of bogus purchases from the benami concerns of Bhanwarlal Jain group. The AO did not receive the information called for in respect of three parties in response to notice u/s 133(6) of the Act. There was no response from the said parties to the summons issued by the AO u/s 131 of the Act. Thus the Ld. DR submits that there was no material before the Ld. CIT(A) to restrict the addition to 3% of the total b....
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....56, 3857, 3858, 3859 and 3864/MUM/2017), M/s Simoni Gems ITA No. 747, 748, 749, 750, 751 & 752/MUM/2018), M/s lndo Unique Trading Pvt. Ltd. ITA No.6341 & 6721/MUM/2016, Konark Structural Engg. Private Limited ITA No. 837/M/2015 dated 6.09.2019 and Pr. CIT v. Tejua Rohit Kumar Kapadia (T.A. No. 691 of 2017) by Gujarat High Court and the SLP filed by the revenue against this order dismissed by the Supreme Court. 8. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In the instant case, there was no response to the summons issued by the AO u/s 131 of the Act to the seven parties. The purpose for issuing the summons to the said parties was to establish the genuineness of the purchases. However, we find that as recorded by the AO at para 4.6 of the assessment order, the assessee had filed copy of the ledger accounts, sample bills, bank statements reflecting the above transactions and corresponding sales were provided. In N.K. Proteins Ltd. (supra), during the course of search proceedings at the office premises of NKPL, blank signed cheque books and vouchers of number of concerns were found. Accordingly, the....