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TMI Blog2022 (7) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... in short, the ld. CIT(A) for the Assessment year (AY) 2007-08 to 2012-13 by different assessee (s). In all the appeals, the facts are almost common, the revenue as well as the assessee has raised common grounds of appeal in different years, except variation of disallowance of disputed purchase. The addition in all the appeals were made on account of bogus purchases shown from Bhanwar Lal Jain and his group, who were declared as entry provider by the Income Tax Department. Therefore, with the consent of parties, all the appeals were clubbed and heard together and are decided by the consolidated order to avoid the conflicting decision. 2. For appreciation of fact, the fact in case of Anil G Kumawat for AY 2007-08 is treated as lead case. The assessee in his appeal in ITA No. 1383/Ahd/2017 has raised following grounds of appeal: "1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) 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. 2. On the facts and in the circumstances of the case and in law, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort, the Act). Notice under section 148 of the Act was issued on 29/03/2014 and served on the assessee. 5. The case was reopened on the basis of information received from DGIT (Investigation) Mumbai. In the information received from Investigation Wing, Mumbai it was informed that a search and seizure action was carried out by Investigation wing-Mumbai on Bhanwarlal Jain Group on 03.10.2013, which resulted in collection of evidence that Bhanwarlal Jain, his son Rajesh were operating 70 benami concerns in the name of their employees and staff for providing bogus accommodation entries of unsecured loans, sale and purchase of different kinds of material. The statement of Bhanwarlal Jain was recorded under section 132(4) of the Act, wherein he had admitted that his family members are managing various entities which are providing accommodation entries. During the course of search, blank cheque book signed by dummy partners/directors proprietor of entities were found and seized. It was informed that assessee is one of the beneficiaries of bogus purchase form three following entities managed by Bhanwarlal Jain Group. The assessee has shown following purchased from the business entity mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice. In the reply, the assessee submitted that he is not aware that in which capacity Bhanwarlal Jain is connected with the parties. The assessee is a commission agent. There is no purchase and sale in assessee's. the bills were issued in the name of assessee for sales of goods by the principal but the goods were sold at the same price and the assessee charged commission which was credited to the profit and loss account. TDS was deducted on the commission by principal. There is no corroborative evidence to prove that the assessee has taken accommodation entry from such concerns. The assessee also filed copy of audited accounts, profits and loss account, balance sheet, copy of contract note of purchase/ sales of goods, debit and credit note of alleged commission and the statement of commission received. The assessee demanded copy of the statement of Bhanwarlal Jain, cross examination of Bhanwarlal Jain. 9. The reply of the assessee was not accepted by Assessing Officer. The Assessing Officer without making specific reference of various evidences filed by the assessee, solely relied upon the information received from DGIT (Investigation) Mumbai and recorded that search an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any defect to discard such evidences. The assessee also produced day to day stock register of purchase and sale. There is nil opening and closing stock. This means, the purchase made during the year are sold during the year itself. If sales are treated as genuine and impugned purchases are treated as bogus then the stock will go into negative to the extent of impugned purchases. The day to day stock register shows the receipts and issue of diamonds and stock in hand along with the name of party to whom purchase and sales is made. The Assessing Officer while making addition relied on the statement of Bhanwarlal Jain and report of investigation wing. No comments on the purchase bills, copy of bank statement and day to day registers was made. No deficiency or irregularity in the stock or sale is pointed out. The ld. CIT(A) further observed that from the statement of Bhanwarlal Jain and from modus operandi recorded by the investigation wing, Mumbai has created sufficient suspicion regarding the purchase made by the assessee. It is also observed that the said suppliers are assessed with Central Circle, Mumbai, wherein they are being treated as entry providers and assessed accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 can only be invoked where the reopening is byound four years from the end of relevant assessment year and prior assessment is completed under section 143(3). In this case there was no assessment order under section 143(3) the assessing officer invoked first proviso to reopen the case, thus, reopening is based on incorrect satisfaction. The assessment was reopened to verify the purchases. Therefore, the re-opening is invalid and all subsequent action is liable to be set aside. 15. On the other hand, the learned Commissioner of income-tax departmental representative (ld. CIT-DR) for the revenue submits that the AO received credible information about the accommodation entry provided by Bhanwarlal Jain Group. The assessee is one of the beneficiaries, who had availed accommodation entries from such hawala trader. Whether, the assessee made purchases or sale all the transactions are bogus. The assessee has shown bogus transaction with the entity managed by Bhanwar Lal Jain Group. The assessee has not disputed the fact that the assessee has not made purchases from the entity, which was owned by entry provider. At the time of recording reasons, the mere suspicious about the accomm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified in re-opening assessment. Further similar view was taken by Hon'ble Jurisdictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon'ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well-known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. The other objection raised by the ld AR of the assessee that no permissions as required under section 151 was obtained by the assessing officer. We find that the ld AR for the assessee raised this objection for the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ShilpiJewellers Pvt. Ltd. vs. Union of India &Ors. WRIT PETITION NO. 3540 OF 2018 (Bombay High Court) 6 CIT in Vs. Mohmed Juned Dadani 355 ITR 172 (Gujarat) 7 Micro Inks Pvt. Ltd. Vs. ACIT [2017] 79 taxmann.com 153 (Gujarat) 8 Shakti Karnawat Vs. ITO - 2(3)(8), Surat ITA 1504/Ahd/2017 and 1381 /Ahd/2017 9 Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) 10 PCIT, Surat 1 Vs. Tejua Rohitkumar Kapadia [2018] 94 taxmann.com 325 (SC) 11 The PCIT-17 vs. M/s Mohommad Haji Adam & Co. ITA NO. 1004 OF 2016(Bombay High Court) 12 Pankaj Kanwarlal Jain HUF Vs. ITO 2(3)(8) Surat ITA.No.269/SRT/2017 19. On the other hand, ld. CIT-DR for the revenue supported the order of Assessing Officer. The ld. CIT-DR for revenue submits that investigation wing of the department has made full-fledged investigation during the search action on Bhanwarlal Jain and its group. The investigation wing investigated about the beneficiary of accommodation entry provided by Bhanwarlal Jain. The assessee is one of the beneficiaries of such purchases/accommodation entry. No stock of any goods/diamonds was found at the premises of Bhanwarlal Jain. The entire purchases shown by assessee from Bhanwarlal J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted purchases shown from such hawala dealers only the profit element embedded in such transaction, to avoid the possibility of revenue leakage, is to be disallowed, and not the substantial part of the transaction. No doubt the assessee has shown extremely low G.P yet the disallowance at rate of 12.5% is on higher side. This combination in similar cases, wherein the purchases are shown from Bhanwarlal Jain, have restricted or enhanced the addition to the extent of 6% of impugned or disputed purchases. Therefore, taking the consistent the disallowance of purchases in the present case is also restricted to 6% of the disputed purchases. In the result, the grounds of appeal raised by assessee are partly allowed and the ground No. 1& 2 of the appeal of the revenue is dismissed. 22. In the result, appeal of the assessee is partly allowed and the appeal of the revenue is dismissed. 23. In ITA No. 1520/Ahd/2017 for A.Y. 2008-09 by Revenue has raised following grounds of appeal (Anil G Kumavat): "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 nongenuine purchases from Rs. 20,08,55,410/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed with similar direction as contained in para-21 (supra). 26. In the result, the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed. Appeal in case of Mohit P Kawadia for AY 2008-09 & 2009-10. 27. The assessee in his appeals in ITA No. 245 & 246/Srt/2017 for A.Y. 2008- 09 & 2009-10 has raised following common grounds of appeal; "1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) 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. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in treating the appellant as diamond trader, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd G.P. estimated. 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the addition made on account of bogus purchases despite of the fact that issue has been settled in favour of the Revenue vide decision of the Hon'ble Apex Court in the case of N.K. Proteins Ltd dated 16.01.2017 in SLP No. 769 of 2017 ?. 4. On the facts and circumstances of the case and in law, It is therefore, prayed that the order of the Ld.CIT(A) Surat may be set aside to that extent and that of the AO's may be restored to that extent. 30. We find that the assessee as well as revenue has raised similar grounds of appeal as raised in appeal except variation of figure of disallowance as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed with similar direction as contained in para-21 (supra). 31. In the result, the appeals of the assessee for both years (AY 2008-09 & 2009-10) are part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT (A) erred in treating the appellant as diamond trader, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties and the addition was made without providing any opportunity of cross examination, without any corroborative evidence and without providing copy of statements relied upon. 3. On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in estimating the profit @ 12.50% on alleged bogus purchase, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties. 4. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal. 36. We find that the assessee has raised similar grounds of appeal as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly with similar direction as contained in para-21 (supra). 37. In the result, the appeals of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case and in law the Ld. CIT (A) erred in estimating the profit @ 12.50% on alleged bogus purchase, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties. 4. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal. 40. We find that the assessee as well as revenue has raised similar grounds of appeal as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thereby partly allowed the appeal of assessee and dismissed the appeal of revenue. Thus, considering the principal of consistency, the appeal of the assessee for all three years is partly and the appeal of revenue in Ay 2007-08 is dismissed with similar direction as contained in para-21 (supra). 41. In the result, the appeals of the assessee for AYs 2007-08 to 2009-10 is partly allowed and appeal of revenue for AY 2007-08 is dismissed. Appeal in case of Manohar Lal Choradia in AY 2008-09 42. The revenue in it's appeal in ITA No. 225/Srt/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal. 44. We find that the assessee as well as revenue has raised similar grounds of appeal as raised in appeal except variation of figure of disallowance as raised in case of Anil G Kumawat in appeal for AY 2007-08, wherein we have restricted the addition of similar bogus/ impugned purchase to the extent of 6% of the disputed purchases. Thus, considering the principal of consistency, the appeal of the assessee is partly allowed and the appeal of the revenue is dismissed with similar direction as contained in para-21 (supra). 45. In the result, the appeal of the assessee for AY 2008-09 is are partly allowed and the appeal of the revenue is dismissed. Appeal in case of Virendra Kumar Lodha ( Ay 2007-08) 46. The assessee in his appeal in ITA No. 1380/Ahd/2017 for A.Y 2007-08 has raised following grounds of appeal; "1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) 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. 2. On the facts and in the circumstances of the case and in law, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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