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TMI Blog2018 (4) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds of appeal address a common issue and therefore, they are discussed together below. The 2nd ground of appeal The learned CIT-(A) has erred in confirming an addition of Rs. 7,16,98,624/- and Rs. 45,17,013/- being undisclosed income (bogus purchases) and undisclosed income declared by Mr. Anil Vanani, respectively. The addition is unjust, unfair, contrary to the facts of the case and not as per applicable provisions of the law. The 3rd ground of appeal Without prejudice, the appellant submits that declared additional income be reduced by the income already included as per the rate of G.P. since disclosed in the return and assessment. 4. Briefly stated, the facts of the case are that the AO completed the assessment u/s 143(3) on 30.09.2009 assessing the income at Rs. 18,98,59,230/-. Subsequently, the Deputy Director of Income Tax (Inv.), Unit-VII(1) & (2), Mumbai (hereinafter 'DDIT') carried out a survey u/s 133A in the business premises of certain entities who were involved in providing accommodation entries through their various concerns floated for the purpose of providing bogus purchase/sale bills to various entities who were interested in taking such bills for a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e since been realized in the succeeding accounting year. All the money realized through RBI only. (e) Since the firm is in the business of exports of polished diamonds, 95.64% of the total turnover of the firm for the assessment years 2006-07 was exports, 86% for assessment year 2007-08 respectively. Also 86% of the total turnover of the firm during the current accounting year (01.04.2008 to 31.03 2009) i.e. until date hereof also is exports. Therefore, your honour, on the above facts there is not apparent ground for holding that the purchases are not genuine. Without prejudice to the above facts and with a view to avoid the protracted litigation with the department in respect of the genuineness of their purchase, the firm has agreed to offer the gross profit percentage of purchases for the AY 2006-07, 2007-08 and the running A.Y 2009-10. The firm is agreed offer an additional income of the firm according to the above GP percentage of for the respective assessment years. The same has been worked out for the same as under - A.Y. Amount of purchases (Rs.) G.P. Additional income (Rs.) 2006-07 7,16,98,624 6.30% 45,17,013 2007-08 22,11,65,706 6.63% 1,46,63,286 2009- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of some investment a number of times. But, the bogus purchase has a simple effect of increasing the appellant's expense, thereby reducing his income by the amount of bogus purchase. This was also known to the appellant at the time of confession of additional income. It is not out of place here to mention that such confession was given by the appellant in the presence of his tax advisor, who being a professional Chartered Account, had correctly advised the appellant to come clean on these transactions. Therefore, I see no justification in bringing to tax only the profit element, and ignoring the investment portion. Accordingly, the action of the Ld. AO in bringing to tax the amount of purchase from these firms alongwith the profit thereon is upheld." 6. Before us, the Ld. counsel of the assessee files a Paper Book (P/B) and submits that during the course of survey, the statement on oath of Shri Gautam B. Jain was recorded on 20.10.2008. From the statement of Shri Jain, it is clear beyond doubt that the name of the assessee-firm was not referred to as the one to whom accommodation bills were issued. The assessee-firm had purchased rough and polished diamonds from M/s Mihir Diamonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the AO in order to give the assessee an opportunity to cross-examine Shri Gautam Jain which was demanded by the assessee in the course of proceedings. In the remand report, the AO has not commented upon the examination-in-chief recorded by the AO and thereafter, the cross-examination of Shri Gautam Jain by Shri Anil B. Vanani, partner of the asssessee-firm. It is stated by him that the examination-in-chief and cross-examination of Shri Gautam Jain on 8.2.2012 clinches the issue in as much as Shri Gautam Jain has accepted that the transactions of purchase of rough diamonds/polished diamonds by the assessee-firm from his various concerns were genuine for which he had produced the stock registers, sales register, account confirmation, Bank statement, audited accounts and returns of income. The aforesaid facts have been admitted once again in the cross- examination by Shri Gautam Jain. Finally it is stated by him that identical addition made by the AO in AY 2009-10 was deleted by the Ld. CIT(A). Considering the above, the Ld. counsel submits that the addition made by the AO in respect of the alleged bogus purchases may be deleted. 7. On the other hand, the Ld. DR supports th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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