TaxTMI 
TaxTMI 
2026 (6) TMI 1337
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....d in estimating the addition in respect of bogus purchases @ 6% of such purchases as against disallowance made by the Assessing Officer @100% of such purchases amounting to Rs.23,46,69,528/- ignoring that these purchases are sham transactions fabricated through bogus paper concerns of Gautam Jain Group entities which were engaged in providing accommodation entries?" (ii) "Whether on the facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in estimating the addition in respect of bogus purchases @ 6% of such purchases by relying on the decision of Hon'ble Gujarat High Court in the case of Mayank Diamonds Pvt. Ltd. [2014 (11) TMI 812] as against the direction of the Hon'ble High Court in that case to make addition at the rate of 5% of the total turnover?" 3. At the outset learned Senior Standing Counsel Mr. Karan Sanghani submitted that the Tribunal while partly allowing the appeal of the respondent assessee has followed the decision in case of Principal Commissioner of Income Tax v. Pankaj K. Choudhary rendered in Tax Appeal No. 617 of 2022 as well as decision in case of Mukesh Mahavirprasad Sen in ITA No.15/SRT/2020 for Assessmen....
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....this judgment, the Tribunal held that in case of Shri Gautam Jain, Bhanwar lal jain, Rajendra Jain and Dharmichand jain groups of cases, as they involved in providing accommodation entries of bogus purchases, therefore 6% addition on account of bogus purchases are sufficient. The findings of the Tribunal are reproduced below: "12. We have heard the submission of Id.CIT-DR for the Revenue and the Id Authorised Representative (AR) of the assessee. We have also gone through the various documentary evidences furnished by assessee. The Id. 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 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 g....
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....mmodation 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 Id.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 possible in absence of purchase. Th....
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....d 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 Id CIT(A) while assailing the order of AO on reopening. The Id CIT(A) while considering the ground 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. T....
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.... the assessee. We further find that id 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 Id 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 Id 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. Lid. (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 in the trading of polished diamonds. The Id CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(....