2020 (12) TMI 1153

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....ssue is that the Ld. CIT(A) has erred in confirming the addition made by the Ld. AO, who had disallowed purchases aggregating to Rs. 98,69,910/- by treating it to be 'bogus purchases'. 3. Brief facts of the case are that the assessee is a firm, engaged in the business of trading in jewelry. A search and seizure operation u/s. 132 of the Income Tax Act [Act] was carried out in the case of Shri Bhanwarlal Jain group on 03-10-2013, wherein it was revealed that they are operating and managing 70 Benami Concerns through which they had provided accommodation entries towards un-secured loans and bogus purchases to various beneficiaries. It was further revealed that M/s. Bhanwarlal Group concerns have received an amount of Rs. 98,69,702/....

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....assessee without delivery of diamonds and it was also revealed that the vendor concerns merely existed on paper and they were not actually trading diamonds. 4.1. Ld. AO further observed in his order that during the course of survey conducted in the case of the assessee u/s. 133A of the Act on 02-02-2007 it was revealed that excess stock of diamonds valued at Rs. 40,17,462/- was found in the hands of the assessee. The assessee had accepted the same as 'un-accounted stock of diamonds' and offered the same in the return of income. Keeping in view of the above state of affairs of the assessee and the findings that the assessee had purchased diamonds valued at Rs. 98,69,702/- by way of account payee cheques, which turned out to be bog....

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....ed that these accommodation entries and revealed their modus operandi, the explanation given by the applicant falls flat. The applicant has not brought any evidence to show that statement of Bhanwarlal Group were incorrect or otherwise. e. Only information that payments have been made in cheque, cannot be sole criteria for establishing the transaction to be genuine. As per the modus operandi given during the search of Bhanwarlal Group that the whole transaction would be conducted through bank entries and the amount of money will be returned in cash. Since applicant itself has submitted that Sri Kanaiyalal Varma would handle the purchase etc and would go to Surat for it by road, cash transaction at this meeting points cannot be rule....

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....xamining the Balance Sheet and examining the details submitted by the assessee in its Paper Book, we find that the total turnover of the assessee is as follows: S. No. Amount Rs. 1. Sale of gold ornaments within the state 6,29,910 PB Pg.No.16,18 2. Sale of gold ornaments out of state 3,88,61,050 PB Pg.No.16,18 3. Sale of diamonds 10,60,000 PB Pg.No.16,17   Total: 4,05,50,960 8.1. Against the turnover of Rs. 4,05,50,960/-, the assessee has declared net profit of Rs. 1,33,921/- only. Thus, the assessee's net profit from trading of gold jewelry and diamonds is only 0.33% of turnover which is abnormally low taking into account of the nature of business of the assessee. It apparently appea....