TaxTMI 
TaxTMI 
2024 (4) TMI 1226
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...., have been taken into consideration for deciding the above appeals en masse. 3. The ground of appeal raised by the Revenue, (in lead case) in ITA No.43/SRT/2024 are as follows: "i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the entire addition made by the Assessing Officer of Rs.173,89,14,095/- on account of 100% bogus purchase and allowing the appeal of the assessee ignoring the facts that these purchases are sham transactions fabricated through bogus paper concerns of Shri Bhanwarlal Jain & others which were engaged in providing accommodation entries? ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee in restricting the addition made of 100% of the bogus purchases to 6% of the bogus purchases without appreciating the finding of search that in his own oath statement recorded u/s 132(4) of the Act during the course of search operation, Shri Bhanwarlal Jain categorically admitted that he is into providing accommodation entries through his bogus concerns and assessee is one of the beneficiaries of the same. iii) On the facts and circumstances of the....
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..... In view of the decision of the Hon'ble ITAT in the case of Vijay Proteins Ltd, as reported in 55 TTJ 76, 25% of such bogus purchases amounting to Rs.43,47,28,524/- was disallowed and added back to the total income in re-assessment order u/s 143(3) r.ws. 147 dated 15.12.2018 for A.Y 2011-12. 5. Further, proceedings u/s 263 were initiated in assessee`s case and the worthy PCIT, Surat-1, has observed that "the impugned assessment order u/s 143(3) r.w.s. 147 of the Act dated 15.12.2018 is found erroneous in so far as it is prejudicial to the interest of Revenue, as instead of disallowing entire bogus purchase from Bhanwarlal Jain Group amounting to Rs.1,73,89,14,095/-, only 25% of such purchase amounting to Rs.43,47,28,524/- was disallowed". The worthy Ld. PCIT had passed the order on 19.03.2021 and set aside the assessment order u/s 143(3) r.w.s.147 of the Act dated 15.12.2018 for assessment year 2011-12 with the direction to frame the assessment de novo after examining the issue of transactions made with Bhanwarlal Jain group and also directed to give reasonable opportunity of being heard to the assessee before finalizing the assessment order. 6. Accordingly, notice u/s 142(1) of....
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....nd when required, I also guide my sons Rajesh B. Jain in conducting the business activities of these concerns." Shri Bhanwarlal Jain further in response to Q.No.6 stated about business activities carried out by him and his concerns stating that I look after the purchases, sales and payments to and from various vendors. As stated above, I am looking after overall business activities of these concerns. My elder son, Shri Rajesh B.Jain is also looking after these concerns. I speak to the various vendors both in abroad and in India over the phone for both imports and export as well as local sales of rough diamond is from 30 days to 360 days. Payments to the suppliers are also made from COD basis to 360 days, Occasionally, there can be some instances where we might have imported polished diamonds or some time polished diamonds these diamonds are sold in a local market or exported to different buyers through known sources. Goods sold in local market are between COD basis to 180 days and in some case above 360 days also. After the payment are received from the parties if the date of imported goods is not due than we use these funds to finance to various parties in India on interest charge....
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....03 against which Special Leave Petition Vide CC No.769/2017 preferred by N.K. Proteins Group (including that of applicant assessee) before Hon'ble Supreme Court has been dismissed. In this case, Hon'ble Gujarat High Court has held that when the entire purchases have been found to be bogus, then confirming disallowance on percentage basis goes against the principle of Section 68 & 69C of the I.T. Act. The Hon'ble Gujarat High Court has held that 100% of bogus purchase is liable to be disallowed. The decision of the Hon'ble Gujarat High Court is the law of land and binding to all cases of Gujarat State. Hence, the purchase totaling to Rs.1,73,89,14,095/- were treated by AO, as non-genuine. Accordingly an amount of Rs.1,73,89,14,095/- was disallowed and added back to the total income of the assessee. 10. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before NFAC/Ld. CIT(A) who has restricted the addition to 6% of bogus purchases, observing as follows: "9.1 In view of the above discussion and decision of the Hon'ble ITAT in appellant's own case for AYs 2008-09 and 2009-10 and decisions of the Hon'ble jurisdictional High Court in the case of Su....
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....said purchases has been made, thus, the assessee practically furnished all possible evidences in support of his claim for purchases. Moreover all the payment are made by bank account. The AO has made no comments about these documentary evidences. On the aforesaid observation, the ld.CIT(A) concluded that assessment order suffer from incomplete investigation, lack of marshalling of all relevant facts and procedural loop holes. Similarly, the ld. CIT(A) also observed that there is no denying circumstances under which statement were made by Bhanwarlal Jain and the elaborate modus-operandi unearthed by Investigation Wing, Mumbai, which has created sufficient suspicion regarding the purchase made by the assessee. The said parties are assessed with Central Circle, Mumbai where they are treated as "entry provider" and assessed accordingly. 10. The ld.CIT(A) after referring the decision of Tribunal in Bholanath Poly Fab Private Limited in ITA No.137/AHD/2009 dated 26.07.2011 wherein the addition was sustained to the extent of 12%. The ld CIT(A) by following the observation of order of Tribunal in Bholanath Poly fab Pvt. Ltd.(supra), the ld.CIT(A) held that the assessee may have made pur....
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....search, the Investigation Wing made a thorough investigation and concluded that Bhanwarlal Jain Group and his associates including his sons were indulging in managing about 70 benami concerns. The benami concerns were engaged in providing accommodation entries. The assessee is one of the beneficiaries of such accommodation entries. In the transaction of accommodation entries, the documentary evidences are created in such a way, so that the bogus transaction is looks like genuine transaction. In bogus transaction, the fabricated evidences are always maintained perfectly. The assessee has obtained accommodation entry only to inflate the expenses and to reduce 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 th....
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..../Ahd/2017 and 1381 /Ahd/2017 9 Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) 10 PCIT, Surat 1 Vs. TejuaRohitkumar Kapadia [2018] 94 taxmann.com 325 (SC) 11 The PCIT-17 vs. M/s Mohommad Haji Adam & Co. ITA NO. 1004 OF 2016(Bombay High Court) 12 Pankaj Kanwarlal Jain HUF Vs. ITO 2(3)(8) ITA.No.269/SRT/2017 Surat 15. An account of additions of bogus purchases, the ld.AR submits that in the original assessment, the assessee filed its complete details of purchases to prove the genuineness of expenses. The AO accepted the same in the assessment order passed under section 143(3) on 10.03.2009. During re-assessment, the assessee again furnished complete details about the genuineness of purchases. The assessee filed confirmation purchases invoices, accounts of the parties, bank statement of assessee showing transaction to the banking channel. The AO has not made any comment on the documentary evidence furnished by assessee. The AO solely relied upon the statement of third party and the report of Investigation Wing. The report of wing and the statement of Bhanwarlal Jain were not provided to the assessee. The AO has not disputed the sales of assessee. No sale is po....
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.... 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 provider admitted before investigation wing that he has given such entry to various persons; based on such report the AO has reason to believe that the income of the assessee has escaped assessment and thus the action of AO in reopening is justified. 18. We find that the Hon'ble Jurisdictional 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....
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....gaged in the trading of polished diamonds. The ld CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(A) the disallowances were maintained. However, the Tribunal gave partial relief to the assessee directing to sustain the addition @12% of such bogus purchases. And on further appeal, the Hon'ble High Court sustained Gross Profit Rate @ 5% being average rate of profit in industry. 20. Now adverting to the facts of the present case, the ld.CIT(A) held that in some other similar cases; though he had sustained 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 filin....