AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1439
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.... 2013-14, in the case of Shri Parag Nareshbhai Mehta, is not maintainable in the eye of law as the tax effect involved in this appeal of the Revenue is Rs. 48,68,030/-, which is below the monetary limit prescribed by Central Board of Direct Tax (in short 'the CBDT') in Circular No. 17/2019, dated 08.08.2019. Therefore, Ld. Counsel contended that said appeal of the Revenue should be dismissed on account of low tax effect. 3. Learned DR for the Revenue has fairly agreed that appeal filed by the Revenue in ITA No. 65/SRT/2019 for AY. 2013-14, is covered by tax effect. 4. We have heard both the parties. We note that CBDT has issued Circular No. 17/2019 dated 08.08.2019, whereby the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been increased as measure for reducing Litigation. The revised monetary limits laid down in para-2 of this Circular are as follows: 1. Before Appellate Tribunal Rs. 50,00,000/- 2. Before High Court Rs. 1,00,00,000/- 3. Before Supreme Court Rs. 2,00,00,000/- 5. In the present case, the tax effect is less than Rs. 50,00,00....
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....in the case of M/s. Mayank Diamond Pvt. Ltd., 11 TMI 812 (Guj.), has restricted the addition at the rate of 5% of bogus purchases. While restricting the addition at the rate of 5% of bogus purchases, the Ld. CIT(A) also relied on the judgment of jurisdictional ITAT, Surat and Ahmedabad. 10. Aggrieved by the order of Ld. CIT(A), the assessee as well as Revenue are in appeal before us. 11. The Ld. Counsel for the assessee states before the Bench that in the case of M/s. Sonu Dharmichand Bafna (in ITA No. 167/SRT/2021 for AY. 2013-14), Vajendra Jagjivandas Thakkar, in ITA No. 168/SRT/2021 for AY. 2013-14 and Mayur Asheshbhai Joshi, in ITA No. 170/SRT/2021 for AY. 2013-14, these all appeals filed by the assessee are barred by limitation by nine hundred seventy seven (977) days. The assessee moved a petition for condonation of delay along with affidavit in case of ITA Nos. 167, 168 & 170/SRT/2021 for AY. 2013-14. The contents of petition of condonation of delay in case of ITA No. 167/SRT/2021 in the case of Sonu Dharmichand Bafna (supra) is as follows: "I have filed an appeal under section 253(1) of the Income Tax Act, 1961 on 01.10.2021 vide ITA No. 167/SRT/2021 against ....
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....ngement could not be made for filing of appeal before Hon'ble ITAT, Surat in time. Copies of my medical papers are herewith. In view of the above facts, it is clear that is the delay in submission of the appeal is due to good and sufficient reasons, therefore, I pray that the delay in filling the appeal should be condoned and the appeal should be treated as filled within the allowed time." 13. The contents to the petition filed by the assessee in the case of Mayur Asheshbhai Joshi, in ITA No. 170/SRT/2021, is reproduced below: "I have filed an appeal under section 253(1) of the Income Tax Act, 1961 on 01.10.2021 vide ITA No. 170/SRT/2021 against the order of the Commissioner (Appeals) relating to A.Y. 2013-14 made on the 29.11.2018. Though this appeal should have been filed in the office of the Tribunal on or before the counting the period of sixty days from the date of communication of the order but it could not be so filed because Shri Vrajendra Jagjivadas Thakkar, who is co-director with me in many private limited companies and who was also a handling legal issues and Income Tax matters. He was under medical treatment due to liver cirrhosis problem criti....
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....vandas Thakkar, who was the main person to handle taxation matter, has been in continuous ill situation for 6 years. Shri Vrajendra Jagjivandas Thakkar, is also co-director in many private limited companies therefore other assessee`s appeals also could not be filed, as he was the main person who was handling income tax matters of the group companies. Since Shri Vrajendra Jagjivandas Thakkar, was under medical treatment due to liver cirrhosis problem critically about 5 to 6 years and for medical treatment he has shifted to Mumbai, hence these appeals could not be filed on time. Before us Ld. Counsel submitted medical reports and medical certificates relating to Shri Vrajendra Jagjivandas Thakkar, which shows that Shri Vrajendra Jagjivandas, had been suffering for liver cirrhosis problem since a long time. We note that reasons given in the respective affidavits filed by these assessees` for condonation of delay, were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing these appeals. We also note that there was no deliberateness or negligence or mala fides on the part of these assessees. Therefore, the delay in filing these appeals des....
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.... purchases. 4. It is therefore prayed that the above addition may please be deleted as learned members of the Tribunal may deem it proper. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal." 21. Succinct facts are that during the course of assessment proceedings, it was noticed by Assessing Officer that the assessee has made transactions with the entities of Gautam Jain Group. The Assessing Officer was in possession of information that a search and seizure action has been carried out by the Investigation Wing, Mumbai on the Gautam Jain Group which was indulged in providing of accommodation entries in the form of unsecured loans, bogus purchases / sales to the interest parties. During the course of search action, it was revealed that the said group is exclusively engaged in the business of issuing non genuine purchase bills and also unsecured loan accommodation entries to various parties. It is thus established from the search and seizure action that alleged concerns of Gautam Jain Group are all paper companies / proprietorships and with no real business activities, operating solely with t....
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....424/- which were Shri Gautarn Jain & group concerns without actually getting the material. Thus, the bill issued by the said group concern is nothing but accommodation entry. Hence, the accommodation entry received from totaling to the tune of Rs. 28,68,83,424/- was treated as bogus purchases and added to the total income of the assessee. 23. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has restricted the addition at the rate of 5% of the bogus purchases, observing as follows: "7.4.4 It is further seen that the Honourable Gujarat High Court in the cases decided subsequent to N K Proteins Ltd (supra) has not followed it, viz in the cases of Jagdish H. Patel, TA No. 411 of 2017 dtd 01/08/2017 (8% disallowance) and TEJUA ROHITKUMAR KAPADIA, Surat in TA No. 691/2017 dated 18-092017 (0% disallowance). It is further seen that the Hon., Supreme Court has confirmed the decision of Hon Guj HC in Tejua R. Kapadia in SLP (C) Diary No(s). 12670/2018 dtd: 04-05-2018. This goes to show that the decision of Gujarat High Court in the case of N K Proteins (Industries) Ltd (supra) is specific to the facts of that ca....
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.... a different issue altogether. Therefore, Ld. DR prayed the Bench that disallowance should be restricted at the rate of 100% of bogus purchases. 26. On the other hand, Shri P. M. Jagasheth, Ld. Counsel for the assessee pleaded that assessee has submitted each and every documents to substantiate its case. The transactions were through banking channel and the assessee has submitted ledger account, bills and vouchers, and the assessee also maintains stock details, therefore there should be no addition in the hands of the assessee. The Ld. Counsel further stated that some of the assessees may be engaged in bogus purchases, however these assessees under consideration, never took the bogus entries. These all assessees are engaged in genuine business. The Ld. Counsel also stated that assessees` sales were accepted, therefore corresponding purchases should be accepted as genuine, as there is no sale without purchase. The Ld. Counsel also contended that there is different facts and circumstances in each case, and just because these assessees have done the transactions with Gautam Jain Group, does not mean that entire transactions of these assessees are bogus. Therefore, Ld. Counsel conte....
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....e the ultimate profit. No stocks of diamonds were found at the time of search on Bhanwarlal Jain Group. The assessee has shown a very meagre gross profit (GP) @ 0.78% and not net profit (NP) at 0.02%. The ld. CIT(A) restricted the addition to the extent of 12.5% which is on the lower side. The ld. CIT-DR for the revenue prayed that disallowance made by the AO may be upheld or in alternative submitted that it may restricted at least @ 25%, keeping in view that the NP declared by the assessee is extremely on lower side. 13. On the validity of reopening, the ld.CIT-DR for the revenue submits that the AO received credible information about the accommodation entry provided by Bhanwarlal Jain Group. The assessee is one of the beneficiaries, who had availed accommodation entries from such hawala trader. At the time of recording reasons, the mere suspicious about the accommodation entry is sufficient as held by Hon'ble jurisdictional High Court in various cases. To support his submissions, the ld.CIT-DR relied upon the decision; Pushpak Bullion (P) Ltd Vs DCIT [2017] 85 taxmann.com 84(Gujarat High Court), Peass Industrial Engineers (P) Ltd Vs DCIT....
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....ire purchases shown by assessee are genuine. In without prejudice and alternative submissions, the Ld. AR for the assessee submits that in alternative submission, the disallowance may be sustained on reasonable basis. To support his various submission, the ld.AR for the assessee is relied upon case laws: 1 M/s Andaman Timber industries Vs Commissioner 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. Ltd. Vs ITO 1(1)(1), Surat I.T.A. No. 776 &1180/AHD/2017 4 The PCIT-5 vs. M/s. Shodiman Investments Pvt. Ltd. TTA NO. 1297 OF 2015 (Bombay High Court) 5 Shilpi Jewellers Pvt. Ltd. vs. Union of India & Ors. WRIT PETITION NO. 3540 OF 2018 (Bombay High Court) 6 CIT in Vs. Mohmed Juned Dadani 355 ITR 172 (Gujarat) 7 Micro Inks Pvt. Ltd. Vs. ACIT [2017] 79 taxmann.com 153 (Gujarat) 8 Shakti Karnawat Vs. ITO - 2(3)(8), Surat ITA 1504/Ahd/2017 and 1381/Ahd/2017 9 Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) 10 PCIT, Surat 1 Vs. Tejua Rohit kumar Kapadia [2018] 94 taxmann.com 325 (SC) ....
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....ictional High Court in Peass Industrial Engineers (P) Ltd Vs DCIT (supra) while considering the validity of similar notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries, held that where after scrutiny assessment the assessing officer received information from the investigation wing that well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified in re-opening assessment. Further similar view was taken by Hon'ble Jurisdictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon'ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received info....
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....resent case, the ld.CIT(A) held that in some other similar cases; though he had sustain 5% of Gross Profit Rate, considering the fact that where Gross Profit shown by those assessee's are more than 5%. However, in the present case, the assessee has merely shown Gross Profit Rate only at 0.78% of turnover, accordingly, the ld. CIT(A) was of the view that disallowance of 12.5% of impugned purchases/bogus purchases would be reasonable to meet the end of justice. 21. We have seen that during the financial year under consideration the assessee has shown total turnover of Rs. 66,09,62,458/-. The assessee has shown Gross Profit @ .78% and net Profit @ .02% (page 11 of paper Book). The assessee while filing the return of income has declared taxable income of Rs. 1,81,840/- only. We are conscious of the facts that dispute before us is only with regard of the disputed purchases of Rs, 4.34 Crore, which was shown to have purchased from the entity managed by Bhanwarlal Jain Group. During the search action on Bhanwarlal Jain no stock of goods/ material was found to the investigation party. Bhanwarlal Jain while filing return of income has offered commission income (entry provider). Bef....