2021 (5) TMI 762

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..... rred to as ld. AO). 2. The first issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the profit element embedded in respect of alleged bogus purchases at 3% as against 9% made by the ld. AO in the facts and circumstances of the instant case. 3. We have heard rival submissions and perused the materials available on record. We find that assessee is a company engaged in the business of trading in diamonds. The return of income for the A.Y.2012-13 has been filed on 29/09/2012 declaring total income of Rs. 6,97,570/-. We find that the ld AO had observed that assessee had made purchases from Mahalaxmi Gems Pvt. Ltd., to the tune of Rs. 2,34,83,754/- and from Lucky Exports to the tune of Rs. 2,59,51,89 .....

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..... osed by the assessee is only 0.01%. In the backdrop of these observations, the ld AO proceeded to estimate the profit element embedded in the alleged bogus purchase transaction at 9% and made addition thereon. 3.1. We find that before the ld. CIT(A), the assessee brought evidences on record to prove that one party had indeed responded to the notice issued u/s.133(6) of the Act before the ld. AO. It was also pointed out that the Bhanwarlal Jain Group had not mentioned the name of the assessee to be a beneficiary of accommodation entry in its statements recorded u/s.132(4) of the Act. It was also pointed out that the statement of key person given in Bhanwarlal Jain Group u/s.132(4) of the Act had been subsequently retracted by him. It was al .....

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..... onveyance expenses of Rs. 1,23,662/-, telephone expenses of Rs. 2,16,834/- and travelling expenses of Rs. 1,37,030/-. We find that the ld. AO in the assessment proceedings had observed that most of the expenses claimed are not verifiable and that the personal element of expenses cannot be ruled out. Accordingly, he proceeded to estimate 10% of the expenses towards personal element and unverifiable nature and made disallowance thereon in the assessment, which was confirmed by the ld. CIT(A) in the first appeal. We find that the ld. CIT(A) had observed that assessee could not prove with any concrete evidence that there was no personal element involved. Even before us, the assessee was not able to justify the same and infact, no arguments were .....

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