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TMI Blog2018 (5) TMI 2039X X X X Extracts X X X X X X X X Extracts X X X X ..... to reconcile the purchases with sales, the argument of the assessing officer that the accommodation bills have been taken by the assessee only to reduce the profits would fail. As noticed earlier, the disallowance of purchases would give a G.P ratio of 68.55%, which is unheard of in the diamond trade. This factual position also does not support the argument of the AO. Under these set of facts, we are of the view that the ld CIT(A) was not justified in confirming the disallowance of entire amount of purchases. There is no doubt that the responsibility to prove the purchases claim is placed upon the assessee. In the instant case, the assessee has not produced the supplier before the AO. AO also could not serve notice u/s 133(6) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence the said ground is dismissed as not pressed. The remaining grounds relate to the addition of ₹ 35.28 lakhs relating to alleged bogus purchases. 3. The assessee is a partnership firm and is engaged in the business of manufacture and export of diamond studded jewellery. The assessing officer received information that one Shri Praveen Kumar Jain and his group of companies were engaged in providing only accommodation bills without actually supplying materials. It was noticed that the assessee has purchased diamonds from a concern named M/s Mohit International belonging to Praveen Kumar Jain group. Hence the AO re-opened the assessment. 4. During the course of assessment proceedings, the AO issued notice u/s 133(6) of the Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax return copy of Shri Nilesh Parmar, proprietor of the above said concern, his retraction statement. The assessee submitted that the AO was not correct in observing that it did not maintain stock register. The assessee submitted that it has maintained stock register and the auditor has only reported that he has not examined the same. The Ld CIT(A) refused to accept the additional evidences and also did not accept other contentions of the assessee. Accordingly he confirmed the addition. 7. The Ld A.R submitted that the assessee has discharged the initial burden of proof placed upon it to prove the genuineness of purchases. He submitted that the assessee has furnished invoice copies, payment details, quantity details etc. to prove th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A), but the same has not been admitted by him. He further submitted that Shri Nilesh Parmar has retracted from his statement. 9. On the contrary, the Ld D.R strongly placed reliance on the order passed by Ld CIT(A). 10. We have heard rival contentions and perused the record. The assessee is engaged in the business of manufacture of diamond jewellery. We notice that the assessee has reconciled the purchases and sales, i.e. the assessee has shown that the diamonds purchased from M/s Mohit International has been consumed and the jewellery has been exported to Hong Kong. The Ld A.R also took us through the reconciliation statement furnished before the tax authorities. For instance, the assessee was having opening stock of 23.56 carats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are of the view that the ld CIT(A) was not justified in confirming the disallowance of entire amount of purchases. 12. There is no doubt that the responsibility to prove the purchases claim is placed upon the assessee. In the instant case, the assessee has not produced the supplier before the AO. The assessing officer also could not serve notice u/s 133(6) of the Act to the supplier. The proprietor of M/s Mohit International, Shri Nilesh Parmar has admitted that he has only provided accommodation entries, but the said statement was later retracted by him. All these facts show that there is a possibility that the assessee might have sourced the diamonds from some other source also. In that event, there is a possibility that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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