AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 667
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Ld. AO who had made addition on account of bogus purchases of diamonds to the extent of Rs. 84,25,604/-. 3. The assessee has also raised an additional ground in his appeal questioning the reopening of assessment U/s. 147 of the Act instead of initiating proceedings U/s. 153C of the Act. 4. In the Revenue's appeal for the AY 2008-09 in ITA No. 1984/Hyd/2018 five grounds are raised; however, the crux of the issue is that "The Ld. CIT (A) has erred in sustaining the addition made by the Ld. AO only to the extent of 5% of the alleged bogus purchases of diamonds for Rs. 1,55,76,364/- as against the addition made by the Ld. AO for Rs. 1,55,76,364/- towards bogus purchases of diamonds recorded in the books of accounts". ITA No. 350/Hyd/2017 (Assessee's Appeal) 5. The brief facts of the case are that the assessee is an individual engaged in the business of trading in jewellery in the name and style of M/s. Om Karni Jewellers. A survey operation U/s. 133A was conducted in the business premises of the assessee and its two sister concerns on 2/2/2007. During the course of the survey proceedings it was revealed that the assessee had made unaccounted purchases of di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... On appeal the Ld. CIT (A) confirmed the order of the Ld. AO by observing as under:- "I disagree with the contention of the appellant for the following reasons: a. The applicant submitted that the payment was made only after the sale of diamonds. This is not possible s the diamonds sold, the seller cannot keep a tract of diamond used and whether that product has been sold as contended by the appellant. The seller is in Surat while the applicant who is the purchaser is in Hyderabad. The contention of having faith dos not arise in regard to commodity of high value and belief cannot be kept with sold goods. b. The receipt of purchases also could not be confirmed as the applicant's father has physically received. c. The applicant has pointed that during the survey these issues were informed. This is pertinent to note that this information was not generally in Hyderabad. The information was received from Bombay after search and seizure operation conducted in Sri Bhanwarlal Group in whose A1 Jewelles are part of it. Hence, the contention that during the survey, information has taken its finality, cannot be presumed. d. The applicant has not su....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and carefully examining the facts of the case We are of the view that, the Ld. AO had reasons to believe that the income chargeable to tax in the case of the assessee has escaped assessment due to the information received from the DIT, Investigation Wing Mumbai regarding the finding of the Revenue that the assessee was obtaining bogus invoices from Bhanwarlal Jain group of concerns. From this factual finding of the Revenue, it is also obvious that there is a failure in the part of the assessee to disclose fully and truly all material facts that are required for making the assessment. Hence, in our view, reopening of the assessment in the case of the assessee is valid even though it was beyond four years but within the stipulated period mentioned in the Act. It is also pertinent to mention that in the case of the assessee notice U/s. 153C of the Act is not necessary because none of the belongings of the assessee was found in the course of the search conducted in the premises of Sri Bhanwarlal Jain group of concerns. It was only revealed from the documents and accounts of Bhanwarlal Jain group of concerns that they have been issuing bogus bills to the assessee against cheque payment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e not identical to the facts of the case of the assessee. Further, on an identical situation, in the case of the firm M/s. Karni Jewellers, wherein the assessee is a partner, the Division Bench of the Hydrabad Tribunal in ITA No. 351/Hyd/2017 for the AY 2007-08 vide order dated 17/12/2020 had confirmed the addition made by the Ld. AO. The relevant portion of the order is extracted herein below for reference: "8. We have heard the rival submissions through video conference and carefully perused the material on record. On examining 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 jewellery and diamonds is only 0.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Revenue, we are of the considered view that the addition made by the Ld.AO for Rs. 98,69,702/- is justifiable when there is a corroborative evidence from the records maintained by the vendors of the assessee that the purchases made by the assessee is bogus. It is also pertinent to mention that considering the facts and circumstances of the case the decisions cited and relied by the assessee are not relevant. Hence, we hereby confirm the order of the Ld.CIT(A) in the case of assessee." 11. Therefore, considering the facts and circumstances of the case before us and the reasons recorded herein above, we hereby confirm the order of the Ld. CIT (A) of this issue. 12. In the result, the appeal of the assessee in ITA No. 350/Hyd/2017 is dismissed. ITA No.1984/Hyd/2018 (Revenue's Appeal) 13. The brief facts of the case are that, in the case of the assessee the Ld.AO had received information from Addl. CIT, Central Range, Surat that the assessee Shri Devaki Nandan Verma had obtained bogus purchase bills to the extent of Rs. 1,55,76,364/- during the Financial Year relevant to the assessment year 2008-09 from Sparsh Exports Private Limited, Aadi Impex, Sun Diam and Avi Export....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Ld. CIT (A) directed the Ld. AO to adopt the finding of the Ld. AO for the subsequent assessment year 2009-10 wherein he had estimated the income of the assessee towards the bogus purchase of diamonds at 5% of the alleged bogus purchases. Aggrieved by the order of the ld. CIT (A), the Revenue is now on appeal before us. 15. At the outset, we find the issue in the appeal is identical to the case of the assessee for the AY 2007-08 wherein we have held that the entire bogus purchases have to be disallowed as allowable deduction while computing the income of the assessee. This is a case where the assessee has claimed bogus purchases of diamonds to the tune of Rs. 1,55,76,364/- as its expenditure when the diamonds did not exist at all. Further the assessee has neither disclosed the sale of these diamonds in its P & L Account nor shown the unsold diamonds as closing stock. Therefore, the corresponding revenue from sale of diamonds and the stock position is not disclosed in the P & L Account. Moreover, there is evidence received by the Revenue that the entire purchases made by the assessee is bogus i.e., the assessee has not received any diamonds though it has debited the purchase va....