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TMI Blog2021 (2) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 3. The revenue has raised the following grounds: - "1 Whether on the facts and circumstances of the case and in law, the Id. CIT(A) justified in restricting the disallowance to 4% of the alleged purchases of Rs. 3,50,49,136/- against the addition of Rs. 3,50,49,136/- made by the AO on account of Unexplained investment u/s 69C of the IT Act. 1961. ignoring the fact that credible information was received from the office of Director General of Income Tax (Investigation), Mumbai in respect of Search & Seizure action u/s 132 of the IT Act. 1961 conducted on Shri Jain Group? 2. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) justified in restricting the disallowance to 4% of the alleged purchases of Rs. 3,50,49,136/-. ignoring the fact that, during the assessment proceedings, the assessee could not substantiate the transactions made with the concerns of Shri Jain Group? 3. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of AO be restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 4. The assessee has raised the following cross-objection. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely proving that Shri Rajendra Jain Group, Sanjay Choudhary Group & Dharmichand Jain Group through a web of concerns run, operated and controlled by the group are engaged in providing accommodation entries in the nature of accommodation bills for purchase without supplying goods. Shri Rajendra Jain Group, Sanjay Choudhary Group & Dharmichand Jain Group in their statement recorded u/s 132(4) / 131 has admitted that they are providing only accommodation bills and not carrying out any genuine business activity through all the concerns controlled and managed by Rajendra Jain. The search 86 seizure action revealed that the assessee Shri Vikas Jayantilal Solanki, PAN AAEPS4197A, has taken accommodation entries for the purchase from the following concerns of the Rajendra Jain Group. Name of the bogus concern Director/Partner of the bogus concern PAN of the beneficiary Name of the beneficiary Amount Maniprabha AAEPS4197A Vikas Jayantilal Solanki 1,77,92,384 Kangan AADCK2552R AAEPS4197A Vikas Jayantilal Solanki 90,49,759 Dharam AAFFD2692C AAEPS4197A Vikas Jayantilal Solanki 82,06,993 Total 3,50,49,136 6. The assessee submitted the reply dated 29.03.2017. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation entries and on behalf of actual importer of diamonds. I also confirm that these imports are settled in cash through Hawala transaction or by squaring of related concerns of foreign party in India. Q.31. Do you issue bills/accommodation entries for a commission to various parties, who purchase diamonds in cash from undisclosed parties and need bills to show purchase against sales in their accounts? Ans. Yes. My concerns are providing bills/accommodations entries for commission to few parties for their purchase account: Q.32 Do you providing cheque/loan against cash from builders/persons dealing in real estate. Ans. Yes, I confirm that my concerns are providing cheque/loan entries to only two builders/persons dealing in real estate against cash & they are: (a) Vivek A. Shah, Mumbai Q.33 Whether you are importing diamond on behalf of actual importer who does‟t want to show import in their books of account. Ans. Yes, I confirm that my concerns are importing on behalf of actual importer and they actually take physical delivery of imported diamond without showing imports in their books of accounts. Sr. No. Name of the exporter Name of the importer Name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome other person. We (through our companies and various concerns) are merely doing the paper transactions instead of carrying out any real business of diamond trading. This is called Chopdeka Dhandha in common parlance, because books of accounts are called "chopda‟' in Marwari language. We actually do business of maintaining 'books of accounts' only and do not do any actual trading of physical commodity i.e. diamonds. In this process, we actually earn commission on IMPORT OF GOODS which is our income and I incur expenses such as foreign exchange fluctuation gain / loss and other requisite expenditure. The commission on import of goods is very nominal and ranging between 0.05% to 0.10% on imports. The commission income has been shown as Gross Profit in my books and offered for taxation in the returns of income filed by my concerns from time to time. The step by step processes of transactions are as follows: - Actual importers of rough diamonds approach us to import part of their diamonds through us (group companies/ concerns). These consignments are sent on credit by the suppliers in the names of our group concerns at the instance of the actual importer. On recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods through angadia. We receive interest on such loan which we return it back in cash after deducting our commission @ 6.5% per annum on loan amount. I further state that I received Sale Considerations immediately in some instances whereas, payment for import was 10 be mace after availing longer period of credit. Therefore, I always have 5uine surplus funds which are known as circulating capital that I have used for giving above loans and advances to my family members and close friends from our group companies. We also export diamonds at the request of actual importers. These parties arrange actual stock of diamonds for export through us. We receive export proceeds on behalf of these Importers. Thereafter on receipt of export proceeds, we make import remittance at the instruction of importers. In this case export realisation is always arranged by the actual importers and thereafter we make import remittance. Sir, here I want to state that I have given loans and advances to my family members. I have given these loans and advances against which I have not received any cash groom them. Even some of them are squared up within short period of time. Details these loans and advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was doing genuine business with the assessee and also produced the necessary documents in support of the claim. However, the assessee is claiming the purchases as genuine and also furnished the necessary documents. The CIT(A) relied upon the statement of Shri Dharmchand S. Jain proprietor of above mentioned three entities got recorded on 03.10.2013 which was retracted on 08.10.2013 and 15.01.2014 in connection with the M/s. Maniprabha Impex Pvt. Ltd., M/s. Kangan Jewels Pvt. Ltd. and M/s. Dharam Impex. The assessee produced the ITR which lies at page no. 45 of the paper book, copy of purchase invoices which lies at page no. 46 to 53 of the paper book, Account confirmation which lies at page no. 54 to 57 of the paper book, Bank statement of Maniprabha Impex Pvt. Ltd. which lies at page no. 58 to 71 of the paper book and Affidavit executed by Dharmchand S. Jain in which he specifically made the statement of oath that all the transactions are genuine. The affidavit speaks about the information of invoices number, bank statement, payment through cheques etc. Undoubtedly, these documents have also been furnished separately mentioned above. Accordingly, in connection with the M/s. Kanga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplying goods. Shri Rajendra Jain Group, Sanjay Choudhary Group & Dharmichand Jain Group in their statement recorded u/s 132(4) / 131 has admitted that they are providing only accommodation bills and not carrying out any genuine business activity through all the concerns controlled and managed by Rajendra Jain. The search & seizure action revealed that the assessee Shri Vikas Jayantilal Solanki, PAN AAEPS4197A, has taken accommodation entries for the purchase from the following concerns of the Rajendra Jain Group. Name of the bogus concern Director/Partner of the bogus concern PAN of the beneficiary Name of the beneficiary Amount Maniprabha AAEPS4197A Vikas Jayantilal Solanki 1,77,92,384 Kangan AADCK2552R AAEPS4197A Vikas Jayantilal Solanki 90,49,759 Dharam AAFFD2692C AAEPS4197A Vikas Jayantilal Solanki 82,06,993 Total 3,50,49,136 12. After recording the said statement and necessary documents produced before the AO, the AO relied upon the statement of the said person i.e. Shri Dharmchand S. Jain which was recorded on 05.10.2013. However, the same was retracted. The documents relied upon by parties were not considered. The documents related to M/s. Mani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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