TaxTMI 
TaxTMI 
2021 (10) TMI 216
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....n made by the assessing officer of Rs. 6,49,99,999/- on account of bogus purchase. 2. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has erred in rejecting book result by invoking provisions of section 145(3) of the Act. 3. It is therefore prayed that the above addition made by assessing Officer and confirmed by learned Commissioner of Income-tax (Appeals) may please be deleted. 4. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. Succinct facts are that assessee before us is an individual and has filed its return of income for A.Y. 2013- 14 on 27.09.2013 showing total income of Rs. 11,40,170/- which was processed u/s 143(1) of the Act and accepted the returned income. Later on, case was selected through CASS and notice u/s 143(2) of the I.T. Act was issued on 05.09.2014. The search proceedings have been carried out by DDIT (INV) Mumbai in the case of Gautam Jain Group at Mumbai. From various incriminating documentary evidence collected and the statement of Shri Gautam Jain, during the course of search, the investigation wing in its report concluded....
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....ed the addition to @5% of impugned purchases ofRs. 6,49,99,999/- which worked out to Rs. 32,50,000/- in view of the decision of jurisdictional High Court in the case of M/s. Mayank Diamonds (2014) 11 TMI 812 (Guj). 6. Aggrieved by the order of ld CIT(A), the Revenue as well as assessee, both are in appeals before us. 7. Shri O.P. Vaishnav, Learned DR for the Revenue has fairly agreed that ld CIT(A) has sustained the addition @5% of impugned purchases, relying on the judgment of the jurisdictional High Court in the case of M/s. Mayank Diamonds (2014) 11 TMI 812 (Guj), therefore, the Bench should confirm the addition sustained by the ld CIT(A). 8. Per contra Learned Counsel, Shri Rasesh Shah, begins by pointing out that allegation of the AO about bogus purchases/accommodation entry was not correct. The assessee has claimed that entire purchase and sales were genuine and verifiable with reference to the documents - purchase bills, stock register, bank statement showing payment to, these concerns. The Ld Counsel has strongly objected that until and unless, an opportunity of cross-examination is granted, such adverse material cannot be used against the assessee. This is important to ....
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....t provided an opportunity to cross-examine the Directors of these companies about affidavits filed by them. This is also an admitted fact that copy of any other clinching or concrete evidence proving the allegation was not provided to the assessee to defend his case. No opportunity of cross-examination was ever allowed to the assessee. This has been held by the Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise Kolkata in Civil Appeal No.248 of 2006 that in absence of cross-examination of parties, the assessment proceedings to be quashed. Further, the Hon'ble Gujarat High Court in the case of Praful Chunilal Patel vs. M.J. Makwana [236 1TR 832 (Guj)]and JCIT &Ors Vs. George Willimson (Assam) Ltd. [258 ITR 126 (Guj)] has held that statement of third party cannot be relied upon without having any corroborative evidence. Similarly, Hon'ble Supreme Court in the case of Kishanchand Chellaram V/s. CIT 125 ITR 713 (SC) has held that adverse inference cannot be drawn against the assessee from the statement of third parties. Based on this factual position, ld Counsel prays the Bench that entire addition should be deleted. 10. Befor....
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....ade by the AO in the impugned assessment order. 6 retraction statement in the form of affidavit done by Shri Pramod Kumar Ranka, Director of Marine Gems Pvt. Ltd./, and Mr. Narendra Kumar Jain, director of Parshwanath Gems Pvt. Ltd., stating the fact that the statement recorded u/s 131(1A) and 132(4) were signed by them under pressure from the income tax department whatever stated by them in those statements is not true and declare the same as void the AO has stated that retraction statement is an afterthought and self-serving document and cannot be accepted on its face value. the AO has made remarks in absolute summary manner and has disregarded the retraction statement and all the supporting evidence submitted by the assessee and has made the impugned addition on account of bogus purchases without brining any clinching evidence on record to prove that the purchases are bogus purely on the basis of statement which are thereafter duly retracted by the parties. 7 it was submitted before the AO to provide cogent material and evidences gathered during search carried out on Shri Gautam Jain and his group concerns other than information received from DGIT (Inv), Mumbai the A....
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....se were submitted the AO in his impugned order just stated two lines that the cases are totally distinguishable from the facts of the judgment cited. the judicial pronouncement submitted before the AO are absolutely relevant which even a man of ordinary prudence would agree to and such casual approach of the AO in disregarding all the relevant judicial pronouncements is not proper. We have gone through the above comprehensive submission of ld Counsel and noted that assessing officer has neither brought any clinching evidence on record that the purchases to the extent ofRs. 6,49,99,999/-was 'bogus purchases' nor established that actually such purchases were not made at all. As far as statements of directors of entities are concerned, the assessee has filed copies of their Affidavits dated 30.10.2013, duly retracting their earlier statements recorded by the ADIT (Inv.) u/s 132(4) of the Act. Copies of these affidavits have been filed before ld CIT(A) during appellate proceedings also, wherein they have denied any allegation of accommodation entries and claimed to have done genuine business activities. Fact remains that AO has not cross-examined these persons about the av....
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....et would definitely yield certain benefits to the assessee which could be estimated @5% by making a conventional estimation. Following the binding precedent of Hon'ble Gujarat High Court in the case of Mayank Diamonds Pvt. Ltd (supra), when the entire carats of diamonds purchased from M/s. Marine Gems Pvt. Ltd. and M/s. Parshwanath Gems Pvt. Ltd. have been sold during the year, entire purchases cannot be disallowed and addition for profit embedded in such doubtful or unverifiable purchases should only be taxed. So, the action of the AO making disallowance of entire purchases from said party by treating the same as bogus is not sustainable, hence rejected. Considering the facts of this case, taking a holistic view, I sustain the addition @5% of impugned purchases of Rs. 6,49,99,999/- which worked out to Rs. 32,50,000/- in view of the decision of jurisdictional High Court in the case of M/s. Mayank Diamonds (supra). The ratio of Hon'ble Gujarat High Court is binding and facts of the present case are also quite similar to M/s. Mayank Diamond case, therefore I uphold the addition to the extent of Rs. 32,50,000/- and grant a relief of Rs. 6,17,49,999/- (Rs. 6,49,99,999 - Rs. 32,....