TaxTMI 
TaxTMI 
2024 (3) TMI 1461
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....nder the Act for initiating reassessment proceeding have not been fulfilled. 3. On the facts and circumstances of the case and law, the CIT (A) erred in treating/confirming the assessee as diamond trader, without appreciating the fact that the assessee is only a commission agent and the purchase and sale was made on behalf of other parties. 4. On the facts and circumstances of the case and law, the CIT (A) erred in confirming the addition of Rs. 116,49,88,059 on alleged bogus purchase by treating the purchase on behalf of others as assessee purchase and treated the same as accommodation entry. 5. On the facts and circumstances of the case and law, the CIT (A) erred in confirming the addition of alleged commission expenses of Rs. 232,99,761, without considering the fact of the case. 6. On the facts and circumstances of the case and law, the CIT (A) erred in confirming the rejection the books of account u/s 145(3) of the Act, without considering the facts of the case. 7. On the facts and circumstances of the case and law, the CIT (A) erred in making the addition of alleged purchase without giving opportunity of cross examination with the parties. 8. On the facts....
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....nd on perusal of the same, it was observed by him that these parties, despite showing huge sales/ purchase, have shown very less profit margin. Also, the assessee could not prove the genuinity of the transactions made with the above parties. In view of this, the Assessing Officer had made addition of Rs. 1,16,49,88,059/- on account of bogus accommodation entries. 4. The Assessing Officer further held that in the practice of providing accommodation entries, on an average 2% commission is being paid which has not been accounted for by the assessee, in his books of accounts. In view of this, the Assessing Officer rejected the books of accounts by invoking the provisions of section 145(3) of the Act and made addition of Rs. 2,32,99,761/- on account of unaccounted cash paid in obtaining the alleged accommodation entries. 5. Aggrieved by the additions made by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the addition made by the Assessing Officer. The assessee did not appear before ld. CIT (A) and did not file any documents and details, therefore, the ld. CIT (A) has reiterated the findings of the Assessing Officer a....
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.... provide opportunity of cross-examination, as the assessee has obtained the material from the same assessee/person. The Ld. CIT-DR stated that assessee is not a commission agent because entire sales were routed through cheque in his bank account. Therefore, all transactions were owned by the assessee, as all the transactions were routed through assessee`s bank account. Had the assessee been a commission agent, then all purchase and sale entries would not have been routed through profit and loss account and only commission would be reflected in the assessee`s bank account? Therefore, addition made by the Assessing Officer may be affirmed. The Ld. CIT-DR for the Revenue submitted that Assessing Officer has also added commission in the hands of the assessee, as the commission is also an income in these type of bogus purchases, addition to the regular own business of the assessee, hence commission income should also be added. The Ld. CIT-DR also stated that no books of accounts were submitted by the assessee, during the assessment proceedings. Therefore, addition made by the Assessing Officer may be affirmed. 11. We have heard both the parties and perused the materials available on re....
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....eld that Assessing Officer was justified in reopening the case of the assessee for the year under consideration u/s 147 of the Act and was having reason to believe that income had escaped assessment. The assessee has placed reliance on many cases which are on their own footings and distinguishable on facts and issues. Hence, this ground of assessee`s appeal is hereby rejected. 13. On merit, the assessee`s case is covered by the judgment of Coordinate Bench of ITAT Surat in the case of Pankaj K. Choudhary, vide ITA No. 1152/AHD/2017 (AY 2007-08), order dated 27.09.2021 wherein 6% of bogus purchases were added as a reasonable profit in the hands of assessee. The findings of the Co-ordinate Bench are as follows: "12. We have heard the submission of ld. CIT-DR for the Revenue and the ld. Authorised Representative (AR) of the assessee. We have also gone through the various documentary evidences furnished by assessee. The ld. CIT-DR for the Revenue supported the order of AO. The ld. CIT-DR submits that Investigation Wing, Mumbai made a search on Bhanwarlal Jain Group. During the search and after search, the Investigation Wing made a thorough investigation and concluded that Bhanw....
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....nvestigation. The AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommodation entry obtained by assessee was received by AO. There is no live link between the reasons recorded qua the assessee. Therefore, the re-opening is invalid and all subsequent action is liable to be set aside. 15. On 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 Win....
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....s and have gone through the 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 all the assessee(s) consisting of computation of income and audit report. We have also gone through the documentary evidences furnished in all cases. Ground No. 1 in assessee's appeal relates to the validity of reopening. 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 AO. The objections of the assessee was duly disposed by AO in his order dated 09.02.2015. 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 th....
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....ndependent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld. CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by the AO. The ld. CIT (A) on further examination of the facts and various legal submissions find that Ahmedabad Tribunal in Bholanath Poly Fab Private Limited (supra) held that in the such cases the addition of bogus purchases was sustained to the extent of 12%, on the observation that the assessee may have made purchases from elsewhere and obtained the bills from impugned supplier to inflate Gross Profit Rate. The ld. CIT (A) by considering the overall facts, concluded that the 100% disallowance of purchase is not justified. We also find that the ld. CIT (A) also considered the decision of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in Mayank Diamonds Pvt Ltd (supra) and noted that assessee in that case was also engaged....