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TMI Blog2019 (1) TMI 1922X X X X Extracts X X X X X X X X Extracts X X X X ..... issues are common and connected and the appeals were heard together, these have been consolidated and disposed of by this common order. 4. Brief facts of the case are as under: The assessee is a Partnership Firm, engaged in the business of 'trading in diamonds'. The return of income for the year under appeal was filed on 15-09-2012, declaring total income of Rs. 71,60,981/-. The return was processed u/s 143(1) of the Act. The case was selected for scrutiny by CASS and notice u/s 143(2) dated 06-08-2013 was issued and served on the assessee. Notice u/s 142(1) of the Act was issued on 28-11- 2014. The assessment u/s 143(3) of the Act was finalized on 27~03-2':-15, assessing the total income at Rs. 1.90,56,840/-. 5. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14,86,98,269/-. 6. In response to the notices issued, the assessee vide letter dated 17-03-2015, contended that the purchases made from these parties were genuine and all these purchases were entered in their books of accounts and payments have been made through cheques. AO considered the submissions and stating that though the assessee could able to produce the stock register entry, cheque payments, no other document such as delivery challan were produced which leads to prove that the purchases shown to have been made from these parties are bogus and the only inevitable conclusion drawn is that the assessee might have made these purchases from grey markets. By saying so, after taking into account the comparative position of trading resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trade, the task force group for diamond industy constituted by the Government of India, Ministry of Commerce and Industry, after considering the BAP scheme, recommended presumptive tax for net profit calculated @2% of trading activity and @3% for manufacturing activity or @ 2.5% across the board. It is also ascertained that the operating profit in case of diamond trading for computation of ALP by the TP wing is consistently in the region of around 1.75% to 3%. 6.16 During the present proceedings, AR brought to nr> notice by furnishing copies of the relevant r ;sessment orders, that the AO has adopted in appellant's own case profit element embedded @ 3% in the subsequent assessments finalised for A.Y.2011-12, 2014-15 on the similar se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opted 3% as the profit margin on the total purchases in the subsequent scrutiny assessment passed for the A.Y. 2011-12 and 2014-15 on the total purchases for those years and also some of the parties are common for this year, if the same percentage is adopted for this year it will take care the additional profit margin gained from the non- genuine transactions entered with the dummy concerns of Shri Bhanwarlal Jain group. Appellant also submitted that the GP for the year is 5.17% and NP is 0.77%, if the percentage for this year is adopted @3% over and above the percentage already admitted, that will meets the end of justice. In view of the above, AO is directed to restrict the addition @3% on the purchases of Rs. 14,86,98,269/- made from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Diamond (I) Pvt. Ltd. assessee before us submitted that he is into 100% exports of trading of cut and polish diamonds. The Task Group for Diamond Sector submitted to Department of Commerce also suggests that the profit margin in trading of goods is in the range of 1% to 3%. In the circumstance we direct the Assessing Officer to estimate the profit element from the purchases treated as non-genuine at the rate of 2% uniformly for all the Assessment Years 2007-08, 2008-09, 2010-11, 2011-12 and 2013-14. 12. We further note in the present case the ld. CIT(A) on similar reasoning has directed 3% disallowance. The A.O. himself has made similar disallowance in the subsequent years. In our considered opinion, there is no infirmity in the same. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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