TaxTMI 
TaxTMI 
2025 (5) TMI 2234
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....nv.), Mumbai that the assesses was involved in taking entries of non-genuine purchases. Therefore, a search and seizure action has been carried out in the case of Shri Bhanwarlal Jain and his group concern on 03.10.2013. During the course of search, it was revealed that these group concerns were merely providing accommodation entries through various benami concerns operated and managed by Shri Bhanwarlal Jain and his son and these concerns are indulged into fraudulent transactions of issuing accommodation /hawala entries which purportedly shows transaction of purchase and sale of materials and bogus unsecured loans and advances. It is alleged that the assessee was one of the beneficiary of bogus purchases through bogus bills and conducting various non genuine transactions from the following parties. Sr. No. Name of the hawala entries Amount 1 Man Diamond 7308204 2 Milan & Co. 3347800 3 Laxmin Diamond 2514313 4 Navkar India 3553650 5 Mahalaxmi Gems Pvt. Ltd. 5394195 6 Manas Gems Pvt. Ltd. 3242172 7 Mohit Enterprises 15082200 Total 40442534 3. During the course of scrutiny, assessee was a....
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....i Bhanwarlal Jain Group was found merely giving accommodation entries without there being any physical stock of diamonds to back the sales. The assessee company has made bogus purchases with the above said entities. Therefore, after careful examinations of the facts and circumstances of the case, I find the levying of penalty by the AO in this case in order as per law. Hence, ground no. 1 to 3 is dismissed. 5. Thus aggrieved by the order of Ld. CIT (A) the present appeal has been filed and following ground has been raised by the appellant / assessee. 1. The Hon'ble CIT(Appeal) has erred in law and facts in sustaining the penalty us 271(1) (c) for AY 2009-10, though the firm was not in existence in FY 2008-09 and there were no transactions on the basis of which the penalty was imposed. 2. The Hon'ble CIT(Appeal) erred in law and in facts in levying penalty u/s 271(1)(c) of Income Tax Act, 1961 for AY 2009-10, ignoring the fact that the additions were made for AY 2013-14 on mere estimations and presumptions. The Hon'ble CIT (A) has erred in ignoring the decisions of Hon'ble ITAT on levy of penalty u/s 271(1)(c). 3. The Hon'bl....
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....hased cut and polished diamonds from (1) M/s. Aadi Impex (2) M/s. Kalash Enterprises and (3) M/s. Daksh Diamonds which aggregates to Rs. 2,47,45,023/-- The ld. A.O. held the same to be bogus purchase on the premise that the assessee has received accommodation entries from the above mentioned entities which are sought to be managed and controlled by Bhanwarlal Jain & Famil and Rajendra Jain Group concerns. The assessee contended that the purchases and sales are duly recorded in purchase and sales register that form part of the books of accounts of the assessee and the quantitative details of the cut and polished diamonds are reflected in the tax audit report which the assessee is bound to u/s. 44AB of the Act. The assessee further stated that it is said to have filed the relevant documents such as copy of invoices, ledger extracts, payment documents, bank account statement, PAN/VAT registration details of above parties, etc. for the purpose of substantiating its claim. The submission of the assessee was found to be not tenable to the ld. A.O., thereby holding the same to be bogus purchases. The ld. A.O. added 100% of the alleged purchase made from the above party. 10 T....
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....d proposition. In the present case in hand, it is observed that the A.O. has made addition @ 2.58% + 3% on VAT which was restricted by the ld. CIT (A) to 2.58% of gross profit on the bogus purchases made by the assessee with the hawala parties. This clearly indicates that the addition in assessee's case was made on estimated basis. 9. We are of view that the penalty u/s. 271(1)(c) of the Act cannot be levied where the addition is made on estimated basis. From the above observation and by respectfully following the above decisions, we hereby delete the penalty levied by the A.O. and find no justification in the order of the ld. CIT(A)". 12. As the facts of this appeal are identical to the above said decision, we hereby hold that the penalty u/s. 271(1)(c) of the Act cannot be levied where the addition has been ITA No. 3 565/Mu m/2023 (A.Y. 2011-12) KP Sanghvi & Sons LLP vs. Asst. CIT made on estimate basis on the gross profit on alleged bogus purchase. We, therefore, direct the ld. A.O. to delete the impugned penalty levied u/s. 271(1)(c) of the Act. 13. In the result, the appeal filed by the assessee is allowed". 7. On the other hand Ld. DR su....
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.... the basis of search action upon Bhanwarlal Jain group was of the opinion that the assessee was beneficiary of accommodation entries of bogus purchases provided by Bhanwarlal Jain group. During the course of scrutiny the assessee supplied all necessary documents showing the genuineness of the purchases and the documents find mentioned in para 4.3 of the assessment order. The AO was of the view that the genuineness of the purchase parties are doubted but the genuineness of the purchases on a whole cannot be doubted in this case, therefore only the profit margin embedded in such a transaction could be taxed. He further observed that this is a fairly accepted principle and the same would apply in the case of the assessee. The AO after analyzing the entire material was of the opinion that the profit margin embedded in theses transaction is taken at 3% of the value of the purchases made from the 7 parties mentioned in para no. 4 of the assessment order. Accordingly, the said amount is added to the total income of the assessee for the year under consideration and penalty proceedings were initiated. 10. The 100% penalty of Rs. 3,74,900/- was levied vide penalty order dated 29.03,2....