TaxTMI 
TaxTMI 
2022 (3) TMI 1338
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....the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in estimating the profit @ 12.50% on alleged bogus purchase, without appreciating the fact that the payment was made through cross account payee cheque and the same goods were subsequently sold and quantity is tallied and the addition was made without providing any opportunity of cross examination, without any corroborative evidence and without providing copy of statements relied upon. 3. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal." 2. The revenue in its cross appeal in ITA No. 1165/AHD/2017 (AY 2009-10) has raised the following grounds of appeal. "1. On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in deleting the additions of Rs. 8,10,56,469/- on account of bogus purchase. 2. On the facts and in the circumstances of the case and in Law, Ld. CIT(A) has erred in estimating income @ 12.5% of bogus purchases without appreciating the fact that during the course of assessment proceedings, it was noticed that concerns like, M/s. Rose Gems Pvt. Ltd. was non-existent entity and it was used for providing bogus pur....
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....essee of Rs. 8.10 Crore has escaped from assessment and that he was satisfied that it is a fit case for reopening under section 147 of the Act. Notice under section 148 dated 27.03.2014 was served on the assessee by way of affixation. The assessee in response to notice under section 148, the assessee filed his reply vide his letter dated 12.12.2014 raising objection against reopening. The objections of the assessee was rejected in detailed and speaking order dated 09.02.2015 by the assessing officer. 5. During the course of assessment, the Assessing Officer has noted that the assessee has shown purchase from the entities managed by Bhanwarlal Jain Group. Bhanwarlal Jain Group is engaged in providing accommodation entry by various bogus concern. The assessee has shown bogus purchase of Rs. 25,000/- from various companies/ firms and proprietorship concern which were managed by Sh. Bhanwarlal Jain Group. The Assessing Officer issued a show cause notice narrating fact that DGIT (Investigation), Mumbai, informed that there was a search action under section 132 of the Act on the group of Shri Bhanwarlal Jain on 03.10.2013, which resulted in collection of evidences and other findings, wh....
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....tement showing corresponding sales, ITR acknowledgement of parties and bank statement. The assessee prayed for copy of statement if any, recorded Assessing Officer of any of the supplier and corroborative evidence to prove that assessee obtained accommodation entry, cross examination of Sh. Bhawarlal Jain and other director, partner or proprietor those concerns. 7. The reply of the assessee was not accepted by Assessing Officer. The Assessing Officer without making specific reference of various evidences filed by the assessee, solely relied upon the information received from DGIT(Investigation) Mumbai and recorded that search and seizure action was carried on Bhawarlal Jain Group on 3rd Oct, 2013 which resulted in collection of evidences, which conclusive prove that Bhawarlal Jain Group was managing 70 benami concern. The Assessing Officer noted that Bhawarlal Jain was providing bogus entry of unsecure loan and bogus purchase without actual delivery of goods. From the premises of Bhawarlal Jain Group, it was conclusive proved from those facts that their group were indulging in providing accommodation entry without actual delivery of goods. The Assessing Officer by relying upon rep....
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....ort of investigation wing. No comments on the purchase bills, copy of bank statement and day to day registers was made. No deficiency or irregularity in the stock or sale is pointed out. The ld. CIT(A) further observed that from the statement of Bhawarlal Jain and from modus operandi recorded by the investigation wing, Mumbai has created sufficient suspicion regarding the purchase made by the assessee. It is also observed that the said suppliers are assessed with Central Circle, Mumbai, wherein they are being treated as entry providers and assessed accordingly. The ld. CIT(A) by referring the decision of Tribunal in Bholanath Polyfab Pvt. Ltd. in ITA No. 137/AHD/2009 dated 26.07.2011 wherein assessee held that in case of similar type of bogus purchases disallowance of 100% of purchase is not justified and only a reasonable percentage of purchases to avoid the possibility revenue leakage, may be made. The ld. CIT(A) further referring the decision of jurisdictional High Court in case of M/s Mayank Diamond Pvt. Ltd. reported in 2014 (11) TMI 812 (Gujarat) wherein average rate of gross profit in industry was considered at 5%, and disallowance of suspicious purposes was upheld in the sa....
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....he order of the lower authorities. We have also deliberated on each and every case laws relied by both the parties. We have also examined the financial statement of the assessee, consisting of computation of income and audit report. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of third party information, and without making any preliminary investigation, which was vague about the alleged accommodation entry by Bhanwarlal Jain Group. And that there was no specific information about the accommodation entry availed by the assessee. There is no live link between the reasons recorded qua the assessee. We find that the assessee has raised objection against the validity of the reopening before the Assessing officer, the objections of the assessee was duly disposed in a speaking order. The assessee raised ground of appeal before ld CIT(A) while assailing the order of AO on reopening. The ld CIT(A) while considering the ground of appeal against the reopening held that the AO has received report from investigation wing Mumbai, which indicate that the assessee is beneficiary of the accommodation entry operators. The accommodation entry....
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....PAN and addresses of parties, purchase invoice, stock register, day to day register and sales register. No comment was made by Assessing Officer on the documentary evidence furnished by assessee. The sales of assessee was not disputed. The books of accounts of assessee was not rejected. The Assessing Officer made estimation without rejecting books of accounts. The ld. CIT(A) restricted to addition to the extent of 12.5% of the total purchase shown from 16 parties. The entire purchase of assessee is genuine. The ld. AR prayed for deleting the entire addition. In the alternative submission, the ld. AR of the assessee would submit that to avoid protracted litigation some token disallowance may be made. The ld. AR prayed for deleting the entire addition. In the alternative submission, the ld. AR of the assessee would submit that to avoid protracted litigation some token disallowance may be made. To support his various submission, the ld.AR for the assessee is relied upon case laws: 1 M/s Andaman Timber industries VsCommissioner of Central Excise, CIVIL APPEAL NO. 4228 OF 2006 (Supreme Court) 2 CIT vs. Indrajit Singh Suri [2013] 33 taxmann.com 281 (Gujarat) 3 Albers Diamonds Pvt. ....