9911796707
TMI Blog2018 (9) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the consolidated impugned order dated 26.05.2017 passed by learned Commissioner of Income Tax (Appeals)-17, New Delhi, for assessment years 2012-13 and 2013-14 respectively on the grounds, inter alia, that: "1. That the assumption of jurisdiction by the learned A.O. to initiate proceedings u/s 147, is bad on various factual & legal grounds. 2. That the proceedings initiated u/s 147 by the learned A.O. merely on the basis of an information received, without applying his own mind and also without making any verification of such information, are illegal and thus, deserves to be quashed. 3. That on the facts of the case and under the law, the learned CIT(A) has erred in approving the learned A.O.'s action of making an addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, declining the contention raised by the assessee. Then the Assessing Officer (AO) proceeded to conclude that on the basis of investigation conducted by Investigation Wing, it is proved that parties are engaged in the business of providing accommodation entries only and have been issuing bill without any physical stock and this fact has been admitted before the Income Tax Authorities by Sh. Bhanwar Lal Jain. The assessee has not shown the exact sale of diamond jewellery alleged to have been purchased from M/s. Nice Diamond Ltd. Consequently, the AO estimated the Gross Profit (GP) on bogus purchases made from M/s. Nice Diamonds Ltd. @ 25%, as against the declared GP of 18.82% by the assessee, of purchase of Rs. 31,94,022/-, i.e., Rs. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rop of the aforesaid undisputed facts and circumstances, the learned Authorized Representative for the assessee by relying upon the decision rendered by the coordinate bench of Tribunal in ITA No. 4760/Mum/2017 (AY: 2009-10) (in the case of M/s. Natik Gems Vs. Income Tax Officer) contented that at the most, GP rate in the case of jewellery business may be enhanced by 3% of the said bogus purchases. 8. For ready perusal, operative part of the order passed by the coordinate bench of Tribunal in the case of M/s. Naitik Gems (supra), is extracted below: "3.5 There is merit in the arguments of the AO as given above and following such arguments it is held that the A.O. was right in estimating additional profit on unproved/non-genuine purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit calculated (c)2% of M/s.Naitik Gems trading activity and 3% for manufacturing activity or @ 2.5% across the board. It is also stated that the operative profit in case of diamond trading for computation of ALP by the TP wing is consistently in the region of around 1.75% to 3%. It is also brought to my notice that in similar cases of diamond business, some CIT(A)'s have taken a view that 3% of the disputed purchases should be considered as fair additional profit. In view of the above and also since the profit margin is lesser in this sector, adopting 6% as the additional profit by the AO, is not based on correct or footing. Considering the fact that the profit margin in this sector is around 2 to 3 percent and the taxes saved is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the coordinate bench of Tribunal in the case of M/s. Naitik Gems (supra), we are of the considered view that in addition to the gross profit already declared by the assessee in assessment year 2012-13 and 2013-14 further addition of 3% in the GP rate on the bogus purchases is ordered to be made. The AO is directed to restrict the addition of GP to 3% of the disputed purchases over and above the GP rate already declared by the Assessee.
Ground no. 4 of ITA No.5697/Del/2017 (for AY: 2012-13)
11. Ground no. 4 is consequential, hence needs no specific adjudication.
12. In view of what has been discussed above, the present appeals filed by the assessee are partly allowed.
Order is pronounced in the open court on 31st August, 2018. X X X X Extracts X X X X X X X X Extracts X X X X
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