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TMI Blog2018 (10) TMI 1741X X X X Extracts X X X X X X X X Extracts X X X X ..... robability Assessees have also submitted that its gross profit including that of purchases considered by the lower authorities as bogus, came to 8.91% to 20.88% for the impugned assessment years. Even if we accept the contention of the Revenue that 25% mark up was justified based on the judgment of Gujarat High Court in the case of Sanjay Oil Cake Industries [ 2008 (3) TMI 323 - GUJARAT HIGH COURT ] , what could at the best be added is only the shortfall between declared gross profit and the estimated gross profit of 25%, and such shortfall fell within the range of 5 to 6%. In such circumstances, in order to give a quietus to the matter, we are inclined to follow the decision of M/s. Ralf Jems Pvt. Ltd [ 2017 (12) TMI 746 - ITAT MUMBAI ] Addition that are to be made is fixed at 6%, of what is considered as value of the alleged bogus purchases and nothing more. We direct the ld. Assessing Officer to recalculate the addition accordingly. Alleged commission, in the first place, assessees had not claimed any commission payment. Estimate of 5,000/- per bill was based on pure surmises. Such additions are therefore deleted. X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,72,320/- from one M/s. Marvin Enterprises during the previous year relevant to assessment year 2009-2010. 3. Ld. Assessing Officer was of the opinion that Investigation done by the Department clearly indicated the above purchases to be bogus. Assessees were put on notice. Reply of the assessees were that the purchases were supported by proper invoices and delivery of the items recorded in its stock register. As per the assessees, they had received the material and effected sales therefrom. Assessee also pointed out that the payments were effected through bank and suppliers had both GST and TIN. Thus, as per the assessees, purchases were not bogus, but true and genuine. 4. Ld. Assessing Officer thereupon required the assessee to produce the intermediaries through whom the purchases were effected. Assessees thereupon intimated that intermediaries were not traceable due to lapse of time. Ld. Assessing Officer then issued show cause notices to the assessees, requiring it to explain why 25% of the unverifiable purchases should not be considered as unexplained income of the assessee. Assessees replied that the gross profit earned by them from their trading never exceeded 3% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities submitted that gross profit returned by the assessees for the impugned assessment years varied between 8.91% to 20.88%. According to him, even if 25% markup was presumed on the alleged unverified purchases, addition should be restricted to difference between gross profit rate declared by the assessee and adopted percentage of 25. In support of the above, ld. Authorised Representative placed reliance on the following table. VBC Jewellery Asst. Year Unverified purchases Gross profit (declared) Deemed sale (with markup of 25%) Further addition (%) Addition to be made as per Jaipur ITAT decision (Rs.) Addition made by Assessing Officer (Rs.) 2007-07 3,90,780 20.47% 5,21,040 5.00% 26,052 97,695 2008-09 6,52,300 18.91% 8,69,733 5.00% 43,487 1,63,075 2009-10 19,58,551 21.16% 26,11,401 5.00% 1,30,570 4,89,638 2011-12 23,42,050 20.88% 31,22,733 5.00% 1,56,137 5,85,513 3,56,245 13,35,920 VBC Jewellers Asst. Year Unverified purchases Gross profit (declared) Deemed sale (with markup of 25%) Further addition (%) Addition to be made as per Jaipur ITAT decision (Rs.) Addition made by Assessing Officer (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly established that accommodation entries were provided by M/s Bhanwarlal Jain Group through M/s. Mohit Enterprises, M/s. Maan Diamonds, M/s.Rajan Diamonds and M/s. Marvin Enterprises to many concerns including the assessees. 10. We have considered the rival contentions and perused the orders of the authorities below. Purchases made by the assessees, from M/s. Mohit Enterprises, M/s. Maan Diamonds, M/s.Rajan Diamonds and M/s. Marvin Enterprises were considered as bogus, based on Investigation done by the Department on a group headed by one Shri. Bhanwarlal Jain pursuant to a search conducted in their premises on 03.10.2014. What we find is that Revenue had relied on oath statements taken from number of persons connected to the concerns run by Shri. Bhanwarlal Jain for coming to a conclusion that the concerns run by Shri. Bhanwarlal Jain and family, were providing accommodation entries in the nature of bogus purchases. We also find that these statements and the investigation reports relied on by the ld. Assessing Officer, were never put to the assessees, during the course of assessment proceedings. Ld. Assessing Officer had relied on such statements and reports for resorting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition''. Assessees have also submitted that its gross profit including that of purchases considered by the lower authorities as bogus, came to 8.91% to 20.88% for the impugned assessment years. Even if we accept the contention of the Revenue that 25% mark up was justified based on the judgment of Gujarat High Court in the case of Sanjay Oil Cake Industries (supra), what could at the best be added is only the shortfall between declared gross profit and the estimated gross profit of 25%, and such shortfall fell within the range of 5 to 6%. In such circumstances, in order to give a quietus to the matter, we are inclined to follow the decision of Mumbai Bench in the case of M/s. Ralf Jems Pvt. Ltd (supra). Addition that are to be made is fixed at 6%, of what is considered as value of the alleged bogus purchases and nothing more. We direct the ld. Assessing Officer to recalculate the addition accordingly. 11. Viz-à-viz, alleged commission, in the first place, assessees had not claimed any commission payment. Estimate of ₹ 5,000/- per bill was based on pure surmises. Such additions are therefore deleted. 12. In the result, the appeals of the assessees are partly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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