TaxTMI 
TaxTMI 
2023 (6) TMI 1459
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.... as under: Assessee's Grounds of appeal 1. The learned CIT (A) has erred in law and on facts and in circumstances of the case by partly confirming the disallowance of Rs, 22,63,094/- (Rs. 14, 14,434/- u/s 69C of the Act and Rs. 8,48,660 us 40A(3) of the Act) without considering the submission while the appellant has properly adhered to every notice and directions of Learned AO and has fully co-operated during the whole assessment proceedings. 2. The Learned CIT(A) has erred in law and on facts and in circumstances of the case by confirming the addition made by the AO of Rs. 8,48,660 (being 3 percent of the alleged unexplained expenditure) u/s. 40A(3) of the Act without giving any opportunity to rebut the evidences. 3. The Learned CIT(A) has erred in law and on facts and in circumstances of the case by confirming the addition made by the AO just on the basis of some action carried out at third party premises without putting on record any other evidences to prove that the purchases are bogus, nor even any opportunity was given to the appellant to rebut the evidences AO might have 4. The learned CIT(A) has erred in law and on facts of the case by....
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....formation from the Investigation Wing of the Income-tax Department that assessee obtained accommodation entry of bogus purchases from some of the entities controlled by 'Shri Bhanwarlal Jain' who during the course of search at his premises, admitted to have engaged in issuing bogus bills. The Assessing Officer recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the Act and commenced reassessment proceedings u/s 147 of the Act accordingly. The Assessing Officer in the assessment order dated 11.03.2016 passed u/s 147 of the Act estimated 3% of the invoice amount of said purchase made from M/s Millennium Stars amounting to Rs. 2,82,88,673/-, which was computed at Rs. 8,48,660/- and added accordingly. 3.1 Subsequently, the Ld. Commissioner of Income-tax-5, Mumbai (in short 'the CIT') called for the assessment records and after examination and providing opportunity of being heard to the assessee, passed order u/s 263 of the Act dated 26.03.2018, holding that the assessment order passed by the Assessing Officer u/s 147 of the Act dated 11.03.2016 was erroneous and prejudicial to the interest of the Revenue and directed the Assessing Officer on two g....
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....ion pronounced by the apex court in the case of N.K. Proteins Limited, it has been held that if the transaction is found to be bogus, then the entire amount needs to be added back as unexplained and not just the profit portion or margin. In the above given case based on the enquiries and all the documents on record, it is proved that the assessee has taken bogus purchase entries to suppress its profit for the given year. 4. On further appeal, the Ld. CIT(A) restricted the disallowance of bogus purchases @ 5 % of the purchase value of Rs. 2,82,88,673/- which is computed to Rs. 14,14,434/-. As far as the issue of disallowance u/s 40A(3) of the Act is concerned, same has been sustained by the Ld. CIT(A). 5. Aggrieved, both the assessee and the Revenue are before the Tribunal by way of raising grounds reproduced above. In the grounds raised by the assessee, the assessee is aggrieved on two issues firstly sustaining the disallowance @ 5% on the bogus purchases, secondly, aggrieved for sustaining the disallowance of Rs. 8,48,660/- in terms of section 40A(3) of the Act. The Revenue on the other hand is aggrieved by reducing the addition of bogus purchase to the extent of 5% of the p....
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....on 23.12.2011 (145.72 carats) ; 18.01.2012 (394.22 carats) to M/s Jyo Gems for manufacturing of polished diamonds. Another lot of 555.51 carats was issued to M/s Jogani Diamonds on 20.01.2012. The Ld. Counsel further referred that after receipt of the finished/polished diamonds, same were sold as per the stock register of the polished diamonds, a copy of which is available from page 28 to 29 of the Paper Book. The assessee demonstrated that majority of sales have been exported and therefore, the sales corresponding to the purchases of 'Millennium Stars' have not been doubted by the Department. Therefore, no addition should have been made. 8. The Ld. Departmental Representative (DR) on the other hand submitted that assessee failed to produce said party before the Assessing Officer for verification of the purchase from said party. The Ld. DR further submitted that the assessee even could not give whereabouts of the said party and therefore, disallowance @ 100% of the purchase amount should have been made by the Ld. CIT(A) as against disallowance restricted at the rate of 5% of the purchase amount. 9. We have heard rival submissions of the parties on the issue in dispute and per....
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....e the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs. 3,70,78,125/which comes to Rs. 20,98,621.88 we think it fit to direct the revenue to add Rs. 20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue." 9.1 Thus, the Hon'ble High Court held it appropriate to make addition for the benefit assessee has obtained by way of making purchases in cash from the market and for which a reasonable amount of addition could have been made. In the case of the assessee also the Ld. CIT(A) has made addition on the reasonable estimate basis @ 5 % of bogus purchase, which in our opinion is justified. The ratio i....