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TMI Blog2020 (4) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... i Saktijit Dey, Judicial Member And Shri G. Manjunatha, Accountant Member For the Assessee : None For the Revenue : Smt. Jyothilakshmi Nayak, DR ORDER PER G.MANJUNATHA, ACCOUNTANT MEMBER: These three appeals filed by the assessee are directed against separate, but identical orders of the Ld. Commissioner of Income tax (A)-10, Mumbai, all dated 28/09/2018 and they pertains to AY 2008- 09, 2011-12 2014-15. Since, the facts are identical and issues are common, for the sake convenience, these appeals were heard together and are disposed -off by this consolidated order. 2. The assessee has more or less filed common grounds of appeal for all AY s. Therefore, for the sake of brevity, grounds of appeal filed for AY 2008-09 are reproduced as under:- 1. The ld. AO and CIT(A) erred in making an addition of ₹ 57,81,073/- to the total income of the assessee (8% of profit margin embedded to nonverifiable purchase transactions) by treating genuine purchase transactions whose payment is done through account payee cheques in good faith amounting of ₹ 7,22,63,416/- as accommodation entries of non-verifiable purchase from various concerns during the year. 2. Assumption of jurisdiction by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Process (BAP) scheme recommended a net profit of 2% for trading activity and 3% for manufacturing activity and 2.5% across the board for diamond industry and also by relied upon certain judicial precedents, including the decision of ITAT, Mumbai bench in the case of Renisha Impex Pvt.Ltd. in ITA No. 4464/Mum/2016 and ITA No. 4453/Mum/2016 has uphled additions made by the ld. AO towards 8% profit on alleged non genuine purchases. The relevant findings of the Ld.CIT(A) are as under: 7.3.33 The next contention of the appellant is that addition made by the AO @8% of purchase value is excessive as the global margin of diamond industries is in the range of 1 to 4% and same was accepted by department of commerce. The appellant has placed reliance on judicial precedents and the recommendations of the task group formed under Department of Commerce for diamonds sector in this regard. I have considered the submission of the appellant. It is well known that if purchases are made from open market without insisting from the genuine bills, the suppliers may be willing to sell those products at a much lower rate as compared to the rat at which they may charge in case the dealer has to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on the basis of revenue generation and results of scrutiny assessments, searches and surveys made during the year. 2. The above instruction is issued under section 119(1) of the Income tax Act, 1961 and would be applicable for assessments made during Financial Year 2008-09. 7.3.34 The above recommendations are for computation of income under BAP (Benign Assessment Procedure) i.e. when the assessee opts for BAP and further the above instruction are applicable for assessments made during Financial Year 2008-09. Further, it would not be applicable where there is information regarding escapement of income. However, the persuasive value of the aforesaid instruction cannot be ignored. In the aforesaid instruction it has also been stated that the acceptance of profit at 6% or above as for a particular assessment year will not be a precedent for that assessee or for any other assessee. However, the persuasive value of the aforesaid instruction cannot be ignored. 7.3.35 It is also observed that the Hon ble ITAT, Mumbai in the decision dated 16.08.2017 in ITA No.3760/Mum/2016 in the case of ITO 5(3)(1), Mumbai vs M/s. Ratnalaya Diamonds Pvt.Ltd. has upheld an addition @6% fo the purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO @8% of the purchase amount is upheld . 6. None appeared for the assessee. We have heard the Ld. DR, perused the material available on record and gone through orders of the authorities below. We find that the Ld. AO has made additions towards alleged non genuine bogus purchase from certain parties, on the basis of information gathered during the course of search and survey in the cases of Shri. Bhawarlal Jian and his associates and also, on the basis of information received from investigation wing, as per which certain parties were involved in providing accommodation entries of bogus purchase bills to various parties and the assessee being one of the beneficiary of accommodation entry of such bogus purchase bills issued by suspicious dealers/entry providers. The Ld. AO has extensively discussed the issue in light of modus operandi used by the entry providers, their statement recorded during the course of search and also inputs gathered during the course of assessment proceedings and came to the conclusion that although, the assesee has filed necessary basic evidence in support of purchases, but failed to file further evidences to prove the purchase to the satisfaction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from certain parties are non genuine, which are not supported by necessary evidences. The Ld.CIT(A), further taking note of the fact of diamond industry and its margins and also, taken support from the recommendation of the task force group for diamond industry set up by the Government of India, Ministry of Commerce and Industry, which after considering the BAP scheme recommended a net profit of ranging to 2% to 3% depending upon the nature of the business has uphled additions made by the Ld. AO towards 8% profit on alleged non genuine purchases. Further, although, both authorities have adopted 8% profit on alleged purchase, but no one could support their stand with evidences, except reliance upon the report of task force set up by the Govt. of India, Ministry of Commerce and Industry. But, fact remains that the task force has recommended 2% to 3% profit depending upon nature of trade, whereas the AO as well as the ld. CIT(A) has estimated 8% profit. On the other hand, the coordinate bench of ITAT, in the case of Renisha Impex Pvt.Ltd. in ITA No. 4464/Mum/2016 and ITA No. 4453/Mum/2016 has considered an identical issue and directed the AO to estimate 6% profit on alleged non-genu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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