TaxTMI 
TaxTMI 
2025 (2) TMI 1431
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.... composite order for the sake of brevity. Assessee's grounds are being adjudicated first as below: ITA No. 6799/Mum/2024 for AY 2009-10 ITA No. 6800/Mum/2024 for AY 2011-12 2. In the ground no.1, the assessee has contended that the Ld. CIT(A) erred in confirming issue of notice under section 148 on non-existent entity and resultant order passed u/s 143(3) r.w.s 147 on non-existent entity i.e. 'Perry Impex' is also bad in law and require to be quashed. 3. It is contented that the assessee firm was taken over by M/S Perry Impex P.Ltd from 30.09.2010. Therefore, the notice u/s 148 and also assessment order u/s 143(3) were wrongly issued in the name of the firm which had ceased to exist. The ld.CIT(A) pointed out that it was admitted before him that the assessee never brought the above fact to the knowledge of the AO. On the contrary, it kept submitting details as called for during the entire proceeding. Further, PAN of the assessee remained active despite the assertion that got dissolved and merged with Perry Impex in 2010 itself. Moreover, the ld.AR did not vehemently press the ground before us. In view of above facts, this ground of appeal being devoid of any merit, is d....
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....ring the order to be bad in law liable to be quashed. 7. Facts of the case are that the assessee is engaged in the business of manufacturing and trading of diamonds. The AO received information from DGIT(Inv.), Mumbai that a search and survey operation was carried out in the group cases of Shri Bhawarlal Jain group on 03.10.2013 wherein it was found that this group indulged in providing accommodation entries in the nature of bogus sales, unsecured loans etc through its various entries. It was found that the assessee had made following purchase from entities of Shri Bhawarlal Jain and Group, which indulged in providing bogus entities for purchase of diamond to various persons: Name of the party AY 2009-10 AY 2011-12 TOTAL NAZAR IMPEX 1,74,99,924/- - 1,74,99,924/- IMPEX GEMS - 1,63,37,002/- - MINAL GEMS - 51,46,899/- - TOTAL - 2,14,83,901/- 1,74,99,924/- 8. The case was reopened u/s 147 by issue of notice u/s 148 of the Act. After considering the facts of the case, submissions filed by the assessee and details gathered from various enquiries, the AO was of the opinion that the transactions in respect of the material sh....
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.... 5% of purchases applied by the AO. This addition is clear of profit disclosed by the appellant during the year. Some important observations and findings are reproduced below: "4.2.3 It is clear from scrutiny of invoices that though the selling invoice included the complete details of items, but the purchase invoices were very silent on the type of item, only polished & cut diamond was mentioned against the description......... The main point derived from the above discussion made about purchase invoices and 4 C's factor of diamond is that no trades were executed between the appellant and the abovementioned parties. If genuine transaction had taken place, the sellers would have been aware of the product being sold to the appellant. But here in the present case, the seller was not even aware of the type, quality, clarity, cut, colour of the diamond and that is the reason they did not mention these price determining factors in the invoices. They simply added carat weight and prices. 4.2.4 In view of the above, the purchase made by the appellant from the alleged Rajendra Jain group cannot be treated as genuine. The A.O. did not doubt the sale component and a....
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....Mum/2017) had decided the identical issue wherein accommodation entry from Jain group for diamond purchase was an issue. The Hon'ble ITAT Mumbai 'H' Bench in the case of M/s. Choron Diamond (I) Pvt. Ltd. vide ITA No.4449/Mum/2016 (A.Y.2007-08), ITA No.6798/Mum/2016 (A.Y.2008-09) and ITA No.6800/Mum/2016 (A.Y.2011-12) had occasion to deal with an identical issue wherein on the basis of information received from the Investigation Wing of the department that the appellant company has utilized accommodation entry for purchase of diamonds by entities operated and managed by Mr.Bhawarlal Jain, Mr.Rajendra Jainand Mr.Surendra Jain u/s. The Jain Brother has admitted in the statement of oath taken u/s. 132(4) that they have provided accommodation entries for purchase of diamonds. All the above decisions by the Hon'ble Tribunals including the jurisdictional Tribunal i.e. ITAT, Mumbai have dealt with an absolutely identical issue where the issue of accommodation entry for purchase of diamonds from Mr. Bhavarlal Jain, Mr. Rajendra Jain and Mr. Surendra Jain have been the subject matter of appeal. In those cases, the A.O. has treated the diamond trading equivalent to other trading busi....
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....es. This addition is clear of profit disclosed by the appellant during the year. Thus, the ground of appeal is partly allowed." 10.1 We have duly considered all the relevant facts of the case, do not find any infirmity in the conclusion drawn by the ld.CIT(A) that the impugned transactions are not genuine purchases rather being accommodation entries only. As regards adoption of 3% of the said transaction over and above the disclosed profit also, we find that the nature of business of the assessee comprises of both manufacturing and trading of diamond. The ld.CIT(A) has adopted 3% for both the years. The report of the Task Force for diamond sector submitted to Department of Commerce suggests that net profit in diamond manufacturing is in the range of 1.5% to 4.5 % and in diamond trading, in the range of 1% to 3%. In catena of orders of jurisdictional Tribunals, it has been consistently restricted the addition to 2% to 3% as the profit embedded in such accommodation entry purchases. The co-ordinate bench in ITA No. 1551 and 1552/Mum/2020 dated 12.07.2022 in the case of Star Brillian and also in ITA 3125 & 3127/Mum/2022 dated 20.04 2023 in Ankit Diamonds, in similar cases have cons....