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2019 (4) TMI 1105 - AT - Income TaxBogus purchases addition u/s 69C - accommodation entries - HELD THAT - CIT(A) after considering the facts of the case had granted relief to the assessee by restricting the additions u/s 69C @ 3% over and above regular profit disclosed by the assessee. Even before us, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or deviate from the findings so recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. - Decided against assessee Adhoc disallowance @ 10% on the Conveyance, Telephone and Travelling charges - HELD THAT - CIT(A) after appreciating the facts of the case had granted partial relief to the assessee by restricting the additions. Since the Assessee could not prove the absence of personal element involved in the expenses claimed, therefore, Ld. CIT(A) had rightly upheld the remaining additions. Even before us, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or deviate from the findings so recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned - Decided against assessee
Issues Involved:
1. Treatment of genuine purchases as accommodation entries. 2. Reduction of addition percentage on alleged purchases. 3. Adhoc disallowance on conveyance, telephone, and travelling charges. Detailed Analysis: Issue 1: Treatment of Genuine Purchases as Accommodation Entries The assessee challenged the order of the CIT(A) for treating genuine purchases of ?4,94,35,647/- as accommodation entries despite providing justification, documentary evidence, and explanations. The CIT(A) upheld the AO's findings based on information from the DGIT (Inv.), Mumbai, which involved search and seizure actions revealing that Bhanwarlal Jain and his associates provided bogus bills for diamond purchases. The CIT(A) noted that the appellant might have inflated purchases by using bogus invoices from non-existent sellers, thus reducing profits. The CIT(A) referenced the Gujarat High Court's decision in Simit P. Seth, which allowed for an estimation of disallowance at 12.5% of disputed purchases. However, considering the specific circumstances and tax rates in the diamond business, the CIT(A) reduced the addition to 3% of the alleged bogus purchases. The Tribunal found the CIT(A)'s findings judicious and well-reasoned, dismissing the assessee's grounds. Issue 2: Reduction of Addition Percentage on Alleged Purchases The assessee contested the CIT(A)'s decision to reduce the AO's addition from 9% to 3% on the alleged purchases. The CIT(A) justified the reduction by considering the lower VAT and customs duty rates in the diamond business compared to other industries, thereby limiting the appellant's intent to save taxes through accommodation entries. The Tribunal upheld the CIT(A)'s decision, noting no new facts or contrary judgments were presented by the assessee to rebut the findings. Issue 3: Adhoc Disallowance on Conveyance, Telephone, and Travelling Charges The assessee challenged the CIT(A)'s confirmation of the AO's adhoc disallowance of 10% on conveyance, telephone, and travelling charges amounting to ?47,753/-. The CIT(A) upheld the disallowance, reasoning that the nature of these expenses inherently involved a personal element, which the assessee failed to disprove with concrete evidence. The Tribunal agreed with the CIT(A)'s findings, emphasizing that the assessee did not present new facts or contrary judgments to challenge the decision. General Ground: The fourth ground raised by the assessee was deemed general in nature and required no specific adjudication. Conclusion: The appeal filed by the assessee was dismissed, with the Tribunal affirming the CIT(A)'s well-reasoned and judicious findings. The Tribunal found no basis to interfere with the CIT(A)'s decisions on the treatment of purchases, reduction of addition percentage, and adhoc disallowance of expenses. The order was pronounced in the open court on 11th February 2019.
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