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TMI Blog2022 (3) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee : Shri Suchek Anchaliya CA For the Revenue : Ms Anupma 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)-3, (hereinafter referred as ld.CIT(A) , Surat dated 11.09.2019, for the Assessment Years 2009-10. The assessee raised the following grounds of appeal: (1) On the facts and circumstances of the case and in law, the CIT(A) has erred in not considering that the assumption of jurisdiction by the Ld.Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding u/s 147 have not been fulfilled. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not holding that the learned Assessing Officer erred in not providing an opportunity to cross examination to the appellant while relying on a third party statement as the same was also in violation of principles of natural justice. (3) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in estimating the profit @ of 5% of the purchases of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in response to notice under section 148 vide his reply dated 18.04.2016, stating therein that return of income filed on 31.03.2009 may be treated return in response to notice under section 148 of the Act. The assessee demanded copy of reasons recorded. The copy of reasons recorded were provided to the assessee. The assessee filed his written objection on 06.06.2016. The objection of assessee was rejected by speaking order dated 05.07.2016. The Assessing Officer after serving statutory notices proceeded for reassessment. The assessee was served notice under section 142(1) for calling certain details on 07.09.2016. None appeared on behalf of the assessee. The Assessing Officer in order to verify the genuineness of transaction issued notice under section 133(6) to the parties from, which the assessee has shown purchases. Notice sent through registered post was return back unserved. The Assessing Officer issued details of show cause notice as to why the purchases shown from the parties namely Rose Gems Pvt. Ltd. should not be treated as bogus and added to the incomes of the assessee. The Assessing officer recorded that reply furnished by assessee was considered, however the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the assessee on the basis of third party information, and without making any preliminary investigation, which was vague about the alleged accommodation entry by Bhanwarlal Jain Group. And that there was no specific information about the accommodation entry availed by the assessee. There is no live link between the reasons recorded qua the assessee. We find that the assessee has raised objection against the validity of the reopening before the AO. The objections of the assessee was duly disposed by AO in his order dated 09.02.2015. The assessee raised ground of appeal before ld CIT(A) while assailing the order of AO on reopening. The ld CIT(A) while considering the ground of appeal against the reopening held that the AO has received report from investigation wing Mumbai, which indicate that the assessee is beneficiary of the accommodation entry operators. The accommodation entry provider admitted before investigation wing that he has given such entry to various persons; based on such report the AO has reason to believe that the income of the assessee has escaped assessment and thus the action of AO in reopening is justified. 18.We find that the Hon ble Jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Ahmedabad Tribunal in Bholanath Poly Fab Private Limited (supra) held that in the such cases the addition of bogus purchases was sustained to the extent of 12%, on the observation that the assessee may have made purchases from elsewhere and obtained the bills from impugned supplier to inflate Gross Profit Rate. The ld CIT(A) by considering the overall facts, concluded that the 100% disallowance of purchase is not justified. We also find that the ld.CIT(A) also considered the decision of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in Mayank Diamonds Pvt Ltd (supra) and noted that assessee in that case was also engaged in the trading of polished 21 diamonds. The ld CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(A) the disallowances were maintained. However, the Tribunal gave partial relief to the assessee directing to sustain the addition @12% of such bogus purchases. And on further appeal, the Hon'ble High Court sustained Gross Profit Rate @ 5% being average rate of profit in industry. 20. Now adverting to the facts of the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed and the appeal of the assessee is partly allowed. XXXXXX XXXXXX Manish Chordia (AY 2007-08, 2008-09 2013-14) 28.The assessee in ITA No.1728/AHD/2017 (AY 2007-08) raised the following grounds of appeal: (5) On the facts and circumstances of the case and in law, the CIT(A) has erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. (6) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in disallowing the alleged bogus purchase of ₹ 53,95,133/-, without appreciating the fact that the payment was made through cross account payee cheque and the same goods were subsequently sold and quantity is tallied and the addition was made without providing any opportunity of cross examination, without any corroborative evidence and without providing copy of statements relied upon. (7) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in partly allowing the purchase from M/s Nice Diamond, without appreciating the fact that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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