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TaxTMI 
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2022 (5) TMI 222
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....l appeals the Revenue has raised certain common grounds of appeals, facts in both the years are almost common except variation of amount of additions on account of bogus purchases, therefore with the consent of the parties all the appeal are clubbed together, heard and are decided by consolidate order to avoid the conflicting decision. For appreciation of fact, facts for AY 2009-10 is treated as 'lead' case. The Revenue in its appeal in ITA No.537/SRT/2019 has raised the following grounds of appeal:- "1. Whether on facts and in law the ld. CIT(A) was justified in partly allowing the appeal of the assessee and estimating disallowance at Rs.10,78,941/- being @ 5% of Rs.2,15,78,821/-, despite of the fact the AO has made the addition of Rs.2,15,78,821/-, where the purchases made by the assessee from M/s Mayur Exports of Rs.2,15,78,821/- were proved to be unverifiable and bogus? 2. Whether on the facts and in law the Ld. CIT(A) was justified in partly allowing the appeal of the assessee on the basis of the decision in the case of M/s Mayank Diamonds Pvt. Ltd., ignoring the facts that M/s Mayank Diamonds Pvt.Ltd. was only a trader of diamonds whereas, the assessee was manufacturer an....
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....n response to notice under Section 148, the assesse filed his reply dated 07/04/2016 stated that the return of income filed on 14/09/2009 may be treated as return in response to notice under Section 148 of the Act. The assessee requested for reasons recorded. The reasons recorded were provided to the assessee. The Assessing officer recorded that the assessee was served notice under Section 143(2) of the Act on 23/5/2016 and proceeded for reassessment. During the reassessment proceedings, the Assessing Officer test checked the books of account, bills and vouchers and found that quantity wise and quality wise details of rough and polished diamond was not maintained by the assessee. The Assessing officer took his view that the assessee could not establish as to how rough diamond is used for manufacturing of polished diamonds. It was not verified how much carrot wise diamond was manufactured. The Assessing officer issued show cause notice to the assessee and asked as to why the purchases shown from Mayur Exports of Rs. 2.15 crores should not be treated as non-genuine and added in the income of the assessee. The assessee filed its reply dated 20/12/2016. The contents of reply of the ass....
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....aggrieved by the order of the ld. CIT(A), both the parties i.e. the Revenue and the assessee have filed their respective appeals as well as cross objection before us. The Revenue has also challenged the addition for restricting to the extent of 5% only. On the other the assessee has filed its Cross objection in restricting the addition to the extent of 5% and also challenged the rejection of books of accounts. 6. We have heard the submissions of the learned CIT-DR for the revenue and the learned authorised representative (AR) for the assessee. The learned CIT-DR submits that the grounds of appeal on merit, in Ground No. 1 in assessee's C.O. as well as in Revenue's appeal are interconnected. The learned CIT-DR submits that the Assessing officer while passing the assessment order, made disallowance of bogus purchase made from Mayur Exports. Mayur Exports was managed by Bhanwarlal Jain and his group which were engaged in providing bogus entry of purchases without actual delivery of goods. The assessee is a trader in diamond business and have shown purchases only to inflate the expenses and to reduce the profit. The investigation wing during the search action on Bhanwarlal Jain gather....
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....e Act. We find that no specific submission against rejection of books of account was made by learned AR of the assessee. Thus, the rejection of books of account is affirmed. 9. Now adverting to the interconnected grounds of appeal which relates to restricting the addition to the extent of 5%. The assessee has shown purchases from M/s Mayur Exports which is managed by Bhanwarlal Jain and his group. It is a known fact that Bhanwarlal Jain group and his associates were engaged in providing accommodation entry without actual delivery of goods. We find that the A.O. during the assessment found so many discrepancies in the books of assessee and rejected the books result. As recorded above, the learned AR of the assessee has not challenged such discrepancies nor made any submission that those observations of Assessing Officer are perverse. The limited issue for our consideration is whether the disallowance of alleged bogus purchases/impugned bogus purchases @ 5% are reasonable or justified. The learned CIT-DR vehemently submitted that the disallowance restricted by the learned CIT(A) on the basis of decision in the case of Mayank Diamond (supra) and that the ratio in the decision of Maya....