TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 327
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....urchase transactions whose payment is done through account payee cheques in good faith amounting of Rs. 7,22,63,416/- as accommodation entries of non-verifiable purchase from various concerns during the year. 2. Assumption of jurisdiction by the learned Assessing Officer (AO) for the initiating reassessment proceedings u/s 148 of the Act is bad in law in force. 3. The brief facts of the case are that the assessee company is engaged in the business of trading in cut and polished diamonds, filed its return of income for AY 2008-09 on 26/09/2008, declaring total income of Rs. 1,24,680/-. The assessment has been completed u/s 143(3) of the I.T.Act, 1961 and determined total income at Rs. 2,16,130/-. Subsequently, the case has been reopened on the basis of information received from the DIT(Investigation)-II , as per which, the assessee is one of the beneficiary of accommodation entries of bogus purchases bills obtained from hawala dealers amounting to Rs. 6,61,52,954/- from three parties as listed by the Ld. AO in para 6 of his assessment order. The case was selected for scrutiny and the assessment has been completed u/s 143(3) r.w.s. 147 of the I.T.Act, 1961 on 08/03/2016, determini....
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....urchases are made from open market without insisting from the genuine bills, the suppliers may be willing to sell those products at a much lower rate as compared to the rat at which they may charge in case the dealer has to give a genuine sale invoice in respect of that sale and supply the godos. There may be various factors due to which there is bound to be a substantial difference between the purchase price of unaccounted material and rate of purchase of accounted for goods. Theremay be a saving on account of sales-tax and other taxes and duties which may be leviable in respect of manufacture of sale of goods in question. The suppliers or the manufacturers make a substantial saving in the incometax also in respect of in respect of income from sale of unaccounted goods produced and sold by them. This may also be one of the factors due to which the seller may be willing to charge lower rates for unaccounted goods as compared to accounted for goods. Thus the motive behind obtaining bogus bills is inflation of purchase price so as to suppress the profits. Therefore, the profit element embedded in such bogus purchase which the assesee could have made, has to be assessed as undisclosed....
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....esaid instruction cannot be ignored. 7.3.35 It is also observed that the Hon'ble ITAT, Mumbai in the decision dated 16.08.2017 in ITA No.3760/Mum/2016 in the case of ITO 5(3)(1), Mumbai vs M/s. Ratnalaya Diamonds Pvt.Ltd. has upheld an addition @6% fo the purchases in the decision dated 1/12/2017 in the case of Ralf Jems Pvt.Ltd. in ITA No. 3707 & 3761, in the decision dated 06/12/2017 in the case of Karp Impex Ltd. in ITA No.6761, 6760,6652,6653 & 6651/Mum/2016, in the decision dated 13/12/2017 in the case of Fancy Diamonds India Pvt.Ltd. in ITA Nos. 47/Mum/2017 & 167/Mum2017 and in the decision dated 08/11/2017 in case of Shikha Diamonds Pvt.Ltd. dated 08/11/2017 in ITA No. 3302/ Mum/2017. Further, in the decision dated 10/01/2018 in the case of Goenka Diamonds & Jewels Ltd. in ITA No. 216 & 153/JP/2014 & 124/JP/2015 the Hon'ble ITAT has sustained an addition @6.5% of the purchase shown from the impugned bogus parties. 7.3.36 The Hon'ble ITAT, Mumbai in the decision dated 19/05/2017 in the case of M/s Dhadda Gems Ltd. vs. ITO 5(1)(3), Mumbai in ITA No. 7310 to 7314 has also sustained an addition @8% of the purchases and in the decision dated 05/02/2018 in the case of M/s Ah....
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....ing the course of search and also inputs gathered during the course of assessment proceedings and came to the conclusion that although, the assesee has filed necessary basic evidence in support of purchases, but failed to file further evidences to prove the purchase to the satisfaction, more particularly in the backdrop of report of investigation wing and the statement of those parties, during the course of survey. It is the contention of the assesee before the lower authorities that purchases from those parties are genuine, which are supported by necessary evidences. All purchases were recorded in books of accounts. Payments against said purchase have been made through proper banking channels. The Ld. AO neither pointed out any discrepancies in books of accounts, nor made out a case of sales outside books of accounts. In absence of any incorrectness of books of accounts mere, no addition could be made towards alleged non genuine purchases, only on the basis of information collected from third party source, when the assessee has justified purchases with necessary evidences. 7. Having considered the relevant material on record, we find that the Ld.CIT(A) has categorically recorded....