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TMI Blog2021 (10) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the report of Investigation Wing. Therefore, considering the peculiarity of the facts and circumstances of the case, we are of view that to avoid the possibility of revenue leakage, the disallowance of token amount of ₹ 20,000/- will meet the end of justice. - ITA No.444/SRT/2018 - - - Dated:- 5-10-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Anil K. Shah Advocate For the Revenue : Ms. Anupama Singla Sr. DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Surat under section 143(3) r.w.s147 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a number of companies, firms proprietorship, entities which were managed by dummy partner/director and proprietors of the assessee group. In the action, it was revealed that assessee is one of the beneficiaries who has shown purchase of ₹ 3,50,000/- from Nazar Impex Pvt. Ltd. Nazar Impex Pvt. Ltd was managed by the said group and provided bogus entry to the assessee. Thus, on the basis of such information, the Assessing Officer (AO) has reason to believe that income of assessee to that extent of purchases of ₹ 3.50 Lakhs has escaped assessment. The AO after serving statutory notices under section 143(2) and 142(1) of the Act, proceeded for assessment. During the assessment a show cause notice was issued to the assessee on 10.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee filed detailed written submissions as recorded in para 5 of the impugned order. The assessee stated that the party confirmed the sale to the assessee in a confirmation, the said party is Income Tax Assessee and filed their return of income. Payments were made through account payee cheque. The purchases have been exported in the year or in the next year. Such export sale are accounted in Profit and Loss Account and profit thereon has been disclosed in the return of income. There is no evidence that money paid to the supplier has come back to the assessee. The assessee also relied on some other case laws. The ld.CIT(A) after considering the submission of the assessee, confirmed the action of the AO in holding the 100% disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion may be deleted. 6. In the alternative submission, the ld.AR for the assessee submits that to avid the future litigation, a token disallowance may be sustained. To support his primary submission, the ld.AR relied upon the decision of Tribunal in M/s. Deluxe Diamonds vs. ITO in ITA No.1396/AHD/2017 dated 11.04.2018 and the decision of jurisdictional High Court in PCIT vs. Tejua Rohitkumar Kapadia in Tax Appeal No.691 of 2017. 7. On the other hand, the ld.Sr.DR for the Revenue supported the order of Lower Authorities. The ld.Sr.DR submits that Investigation Wing, Mumbai, has made a full-fledged enquiry after making search for Shri Rajinder Jain Group. In the search as well as in post search investigation, it was established that Raji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e financial year was only ₹ 32 lakhs. The assessee has shown Gross Profit @ 6.3% and Net Profit @ 4.69%, which is in line in the business of diamonds. We find that the impugned purchases are less than 10% of the total transactions of the assessee. Considering he overall facts and circumstances of the case, we are of the view that even in case, the assessee has not fully substantiated purchases, the Revenue Authorities are not entitled to make addition @ 100% of the transaction rather to tax the income component in the said transaction. At the cost of repetition, we may note that the Lower Authorities has not discarded the documentary evidence furnished by assessee. The Lower Authorities basically relied upon the report of Investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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