2021 (9) TMI 1116

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....these purchases overlooking that the alleged suppliers were admittedly engaged only in giving accommodation entries to several parties including the assessee?" 3. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in presuming that purchases have been made from unknown parties whereas bills have been received from accommodation entry provider.?" 4. "Whether on the facts and in the circumstances of the case and in law, if the Ld. CIT(A) has made a presumption that purchases have been made from unknown parties, the Ld. CIT(A) has not clarified how the payment was made and whether section 69 of the IT Act, 1961 will be applicable?" 5. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not considering the order of Hon'ble Supreme court in the case of N K Protein Ltd. dated 16.01.2017, which is on similar issue of bogus purchases and when the apex court order was already the law of the land when the Ld. CIT(A) has pronounced its order on 16.08.2018?" 6. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored. 3. The grounds of ....

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....hey are merely employees of Shri Rajendra Jain family and are shown as directors, partners and proprietors and the management of the concern lies in the hands of Rajendra & his family members. Post search investigation revealed that the appellant taken accommodation entries from these parties. Ld. AO held that in absence of the supply of goods, even though the documentation aspect of the transaction was not being denied, it would lead to the only human probability that the goods mentioned in the paper transaction were purchased by the appellant from undisclosed entities from the grey market. Hence, Ld. AO assumed that since the sales made by the appellant were confirmed, purchases had definitely taken place though not from the aforementioned suppliers. Therefore, the AO came to the conclusion that there was a definite probability that purchases were made from undisclosed entities from the grey market and got benefited by the additional GP margin earned by purchasing from the grey market which was estimated @100% of such total purchases made from those concerns and added to the total income. In estimating the profit margin at 100% of such purchases, the AO solely relied on the decis....

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....he premises of M/s N. K. Proteins Ltd. Place v' The alleged bogus purchases were added on the basis of search taken place at the premises of Mr Rajendra Jain / Bhanwarlal Jain Group and not at your appellant's premises. However, your appellant had purchased diamonds from them and same were accepted by the seller of the diamonds 6.14 Thus it is seen that the facts of the instant case are completely different and distinct then the facts of the case relied upon by the AO to estimate the profit margin at 100% of such purchases. While deciding the profit element embedded in the bogus purchase cases, Gujarat High Court adopted the profit @ 12.5% by taking the benefit derived out of the saving of taxes, considering the profit margin in that line of trade. In the light of the above, one has to see in the present case, who are in the manufacturing and trading of diamonds, the profit element embedded estimation @ 100% is correct or not. Coming to the profit margin in the trade, the taskforce group for diamond industry constituted by the Government of India, Ministry of Commerce and Industry, after considering the BAP scheme, recommended presumptive tax for net profit calculated @2....

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....chase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from the Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). In this case, the Hon'ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However, in that case all the supplies were to the government agency. In the present case, the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of nonpayment of tax and others at the expense of the exchequer. In such situation, in our considered opinion, on the facts and circumstances of the case, 3% disallowance out of the bogus purchases meets the end of justice, as reasoned by the ld. CIT(A) above. The case law quoted by the Revenue in the grounds of appeal is a dismissal of SLP simplicitor by the Hon'ble Apex Court. It does not meagre the order of the Hon'ble Apex Court with that. 10. Similarly, ITAT in the case of Shailesh & Co (supra) has concluded as under:- 10. We hav....