AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 1136
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....d in restricting the addition made by the AO on account of disallowance of non-genuine purchases from 2,13,33,709/- to Rs. 10,66,700/-. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in directing to make an addition of 5% of unverified purchases which is not as per law. Once purchases are not genuine then either entire such purchases are to be disallowed or books of accounts ought to have been rejected and G.P. estimated. 3. On the facts and circumstances of the case and in law, the CIT(A) has not considered the fact that even in the case of M/s.Mayank Diamonds Pvt.Ltd referred by him, the Hon'ble Guj.High Court has directed to estimate G.P. @5%, and not 5% of unverified purchases were directed to b....
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....ent. The AO noted that as per the information received from DDIT(Investigation Wing), Surat the assessee has sown purchases from Three hawala dealers, who have actually not purchased any diamonds, hence, there could be no sales. The assessee has shown purchases from three such parties: S.No Entry giver i.e. sellers Amount(Rs.) 1 Rutuja Gems (HirenKumar D shah) 4888860/- 2 Neelam Gems(Chintan SS Shah) 10590149/- 3 Hiren Gems (Nilesh B Pachighar) 5854700/- Total Rs. 2,13,33,709/- 3. During the assessment the AO issued show cause notice as to why the entire purchase from all these parties should not be treated as bogus. The assessee filed its reply vide its reply dated 23.03.2015 and stated that the assesse has made genu....
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....ld 5% Gross Profit Rate was upheld. The ld.CIT(A) after considering the submission of assessee restricted the disallowance of impugned purchase to the extent of 5%.. Thus, aggrieved by the order of the ld. CIT(A), the Revenue has filed present appeal before this Tribunal. 5. We have heard the submission of the ld. Departmental Representative (DR) for the Revenue and ld. Authorised Representative (AR) of the assessee and have gone through the orders of the Authorities below. The DR for the Revenue submits that the case of assessee was reopened on the basis of information received from DDIT, Investigation Wing, Surat. The investigation team made full-fledged investigation about the hawala dealers, who were indulged in providing accommodation....
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....ubted. No sale is possible in absence of purchase. The Assessing Officer has not given any findings on the documentary furnished by the assessee i.e. with regard to ledger account of the parties, invoices of purchases and the payment made through banking channels. 8. Before the Ld.CIT(A), the assessee filed a detailed written submission as recorded in para 7 of the impugned order. On filing of written submission of the assessee, the ld.CIT(A) directed the Assessing Officer to furnish the report of Investigation Wing along with its enclosure, record of enquiries made by the Assessing Officer along with notices issued and reply received if any. Copy of the seized documents pertaining to hawala parties by DDIT (I) Surat. The copy of statement....
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....ion was called by assessing officer under section 133(6) of the Act. The Assessing Officer simply relied on the report of DDIT, Investigation, Surat. The copy of statement required by ld.CIT(A) is not made available. Relevant incriminating material is also not made available. 10. The ld.CIT(A) after considering the submission of assessee, contents of remand report and the rejoinder submission by assessee concluded that considering the fact and circumstances of the case and various judicial decisions, the disallowance of 5% of impugned purchases would be reasonable. 11. We are also of the considered opinion that under Income Tax Act only real income can be taxed by the Revenue. We may further note that even in cases where the whole transac....