TaxTMI 
TaxTMI 
2018 (8) TMI 1915
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....leged bogus purchases. 3. Rival contentions have been heard and record perused. 4. The facts of the case, in brief, are that the assessee company is engaged in the business of import, export and manufacturing of cut & polished diamonds. It furnished its return of income for the A.Y.2011-12 on 29/11/2011 declaring total income of Rs. 20,64,43,122/- and book profit as per sec.115JB(2) is computed at Rs. 22,44,62,158/-. On scrutiny notice u/s 143(2) was issued and served upon the assessee. The AO passed order u/s 143(3)(ii) on 31/03/2015. In the assessment order AO observed that information has been received from the Investigation Wing of the Department, Mumbai, that the assessee company has taken purchase bills from 11 concerns operated....
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....the impugned order CIT(A) declined the theory of peak credit and the addition made by AO u/s.69C of I.T.Act. However he restricted the addition to the extent of 3% of alleged bogus purchases after observing that even though Bhanwarlal Jain in his statement has not mentioned the name of assessees, they have given the name of various concerns in whose names the invoices were given to the assessee. The CIT(A) further observed that the assessee has submitted following details for purchase of goods from various concerns to prove genuineness of the purchase transactions. • Ledger account with confirmation of parties mentioned in show cause notice. • Copies of purchase bills. • Stock Register/ Quantitative De....
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....ase parties of the above mentioned concerns before the A.O to prove genuineness of the transaction of purchase of goods from above party. 11. The Ld. A.O. has not acceded to the request of assessee nor considered the documents submitted by the assessee and also not provided the opportunity for Cross examination of Bhanwarlal Jain and /or Partner/Proprietor of the purchase parties. AO made the addition by applying the peak theory solely on the basis of the statement of Shri Bhanwarlal Jain given before Investigation Wing, Mumbai without any corroborative evidence and on the basis of guess and estimation. 12. It is crystal clear that AO has made addition u/s.69C as unexplained expenditure. The basic idea behind the peak credit theory is....
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....nable and in consonance with normal profit rate shown in the diamond industry. The Ld. CIT (A) has summarily rejected the argument placed by the assessee relating to the following request made by the assessee before the Ld. A.O., which the Ld. A.O. did not provide: 1. Copy of statement of Bhanwarlal Jain. 2. Copy of statements of parties, if any. 3. Cross examination of Bhanwarlal Jain. 4. Cross examination of parties if any who had given the statement. 5. Any corroborative evidence to prove that the appellant has purchased goods from grey market. 6. Purchase parties are available and can be produced before the ld. AO or the Ld. AO can issue summon u/s.131 of the Act to verify the genuin....
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....judicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examin....