TaxTMI 
TaxTMI 
2025 (3) TMI 1679
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....appreciation of facts, assessee's appeal in ITA No.610/SRT/2023 for AY 2008-09 as "lead" case whereas the Revenue has raised following cross-appeal in ITA No.626/SRT/2023. 2. The grounds of appeal raised by the assessee are as under: "1 On the facts and circumstances of the case s well as the law on the subject, the learned the Assessing Officer has erred in re-opening the assessment/s 147 of the Act and issuing notice u/s 148 of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in assumption of jurisdiction by the Le.AO is bad in law as the condition laid down under the Act for initiating re-assessment proceedings have not been fulfilled. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the restricting the addition of Rs. 2,26,84,915/- i.e. 12.5% out of Rs. 18,14,79,322/- as unexplained expenditure u/s 69C on account of alleged bogus purchase by treating accommoda....
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....ner/director of M/s Navkar Diamond, M/s Little Diam, M/s Rare Diamond Pvt. Ltd. and M/s Millennium Stars has admitted in their statements u/s 132(4) of the given in the course of search and seizure action that they have engaged in the business of providing accommodation entries in the guise of purchases/sales. 4. On the basis of the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 5. It is therefore prayed that the order of the Ld. CIT(A) may kindly be set aside and that of the Assessing Officer be restored. 6. The appellant craves leave to add, alter, amend and/or withdraw any grounds of appeal either before or during the course of hearing of the appeal." 4. Facts of the case in brief are that assessee is a partnership firm engaged in the business of import, export and trading of cut, polished and rough diamond. The appellant filed its return of income for AY 2008-09 on 17.07.2008 declaring total income of Rs. 1,05,570/.-. Subsequently, return was processed u/s 143(1) of the Act and no assessment order u/s 143(3) was perused. Information was received from the Director of Income-tax....
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....e CIT(A). The CIT(A) decided the issue at para-5.2 to 5.9 of the appellate order and held that there was no force in the plea of assessee that reopening was bad in law. He held that AO had specific credible and tangible material before him on the basis of which, he formed a reasonable belief that income chargeable to tax had escaped assessment. He also observed that it is settled law that at the stage of reopening, the material available before AO should be such that a prima facie view can be formed that income chargeable to tax as escaped assessment. No final or conclusive finding as to escapement of income is necessary at that stage. In view of the circumstances of the case and prevailing position of law, applicable on such facts, he upheld the action of AO regarding reopening assessment u/s 147 of the Act. 4.2 As regards merits of the addition, the Ld.CIT(A) has given the decision at para-8 to 8.4 of the appellate order. He found that though AO has rejected the purchases though he has not rejected the sales affected by the appellant. He has referred to decisions in case of PCIT vs. Surya Impex (2023) 148 taxmann.com 154 (Guj) where the Hon'ble High Court upheld the addition @....
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....sed by assessee was dismissed. In the present case, the Ld. AR of the assessee did not argue on the ground of reopening. Therefore, following the decision of this co-ordinate Bench of this Tribunal, in the case of M/s Surya Impex (supra), ground No.1 raised by assessee is dismissed. 7.1 Regarding ground No.2 relating to addition on account of alleged bogus purchase, the Tribunal discussed the issue at para-16 to 20 of its order (supra) and observed that AO added 100% of the bogus purchases which was restricted @ 12.15% by the CIT(A). The ITAT found that the disallowance made by the AO was on the higher side and since the profit margin in the industry is 5% to 7%, disallowance of purchase was restricted to 6% of disputed bogus purchases. Aggrieved by the order of the Tribunal, the Revenue filed appeal before Hon'ble jurisdictional High Court and Hon'ble High Court held that where AO received report from Investigation Wing that assessee-firm received accommodation entries in the form of bogus purchases from a group and made 100% addition with respect to said bogus purchases, however, while dealing with the case of the said group and other parties involved in providing such accommo....