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TMI Blog2021 (12) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... n turn arises out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s 147 of the Income Tax Act, 1961 [hereinafter referred as the Act ], dated 23.03.2016. 2. Grounds of appeal raised by the Revenue are as follows: 1. On the facts and circumstances of the case and in law, the CIT(A) has erred in restricting the addition made by the AO on account of disallowance of non-genuine purchases from ₹ 2,49,88,345/- to ₹ 12,49,417/-. 2. Whether, on facts and in law the ld CIT (A) was justified in partly allowing the appeal of the assessee and estimating disallowance at ₹ 12,49,417/- @5 % of ₹ 2,49,88,345/- despite of the fact the AO has made the addition of ₹ 2,49,88,345/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as well as finished goods were not maintained by assessee. The assessee has not made available to the assessing officer, the details of carat wise diamonds manufactured and the quantity details of the same. Hence, it is not established as to how much rough is used for manufacturing diamonds. It is also not verifiable as to how much carat wise diamonds are manufactured. Therefore, assessing officer made addition of ₹ 2,49,88,345/-. 4. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld.CIT(A), who has restricted the addition to 5% of unverifiable purchases, by following the judgment of Hon'ble Gujarat High Court in the case of Mayank Diamond Pvt. Ltd. reported in 2014 (11) TMI 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue are interconnected, which relates to restricting the disallowance of bogus purchases to the extent of 12.5%. The AO made of 100% of purchases shown from the hawala dealers/ entry provider namely Bhanwarlal Jain. We find that the AO while making additions of 100%, of disputed purchases solely relied on the report of the investigation wing Mumbai. No independent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the assessee has merely shown Gross Profit Rate only at 0.78% of turnover, accordingly, the ld. CIT(A) was of the view that disallowance of 12.5% of impugned purchases/bogus purchases would be reasonable to meet the end of justice. 3. We have seen that during the financial year under consideration the assessee has shown total turnover of ₹ 66,09,62,458/-. The assessee has shown Gross Profit @ .78% and net Profit @ .02% (page 11 of paper Book). The assessee while filing the return of income has declared taxable income of ₹ 1,81,840/- only. We are conscious of the facts that dispute before us is only with regard of the disputed purchases of Rs, 4.34 Crore, which was shown to have purchased from the entity manag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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