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TMI Blog2022 (9) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... owance was restricted at higher percentage, was restricted to 6%, therefore, taking a consistent view, the disallowance restricted by the ld. CIT(A) is modified and the Assessing Officer is directed to restrict the disallowance of purchases from all five parties to the extent of 6% only. Appeal of the revenue is partly allowed - ITA No. 185/SRT/2019 And ITA No. 202/SRT/2019 - - - Dated:- 15-9-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Mehul Shah, CA For the Department : Shri S.B.G. Mahapatra, Sr.DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This set of cross appeals for the Assessment Year (AY) 2014-15 by the assessee as well as by the revenue, is directed against the order of ld. Commissioner of Income tax (Appeals)-1, Surat [ ld. CIT(A) for short] both dated 16/01/2019. The assessee in his appeal has raised the following grounds of appeal:- 1. On the facts and the circumstances of the learned Commissioner of income Tax (Appeal) erred in confirming certain purchases as in-genuine on the basis of certain documents and statements recorded by DI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surat may be set-aside and that of the Assessing Officer's order may be restored. 3. Brief facts of the case are that the assessee is proprietor of M/s Abhinav Exports, engaged in the business of trading of rough and polished diamonds, gold diamond jewellery and import/export of all kinds of diamonds. The assessee filed his return of income on 27/10/2014 declaring total income of Rs. 9,11,280/-. The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer noted that he has received information from DGIT (Inv.) Mumbai that a racket for providing accommodation entry by Shri Praveen Kumar Jain and Gautam Jain was detected. A search and seizure action was carried out by the Investigation Wing on the said group on 03/10/2013 which resulted in collection of evidence for operating benami concerns which has providing accommodation entry of various sales and purchase including of unsecured loan etc. The modus operandi was admitted in the statement recorded under Section 132(4) of the Income Tax Act, 1961 (in short, the Act) by the key persons. It was revealed that the assessee has also received accommodation entry and is beneficiary of bogus bills fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een Kumar Jain and Gautam Jain was based on evidence. The Assessing Officer on the basis of report of Investigation Wing made the addition of aggregate of purchases from all five parties of Rs. 1.72 crores in the assessment order dated 07/12/2016 passed under Section 143(3) of the Act. 5. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed detailed written submissions. The submission of assessee are recorded in para 7 of impugned order. In the written submission, the assessee in sum and substance submitted that the assessee is engaged in the business of import and trading of rough and polished diamonds, gold and diamond jewellery in Surat. The return of income was accompanied by audited financial statements. During the assessment, the Assessing Officer on verification of data furnished by the assessee, issued a show cause notice dated 07/11/2016. In response to show cause notice, the assessee filed its explanation for each and every transaction alleged by the Assessing Officer. The copy of reply filed before the Assessing Officer was furnished to ld. CIT(A). The assessee stated that copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his stock register. The entire stock was sold. The assessee furnished complete details of the parties from whom the purchases were made. The assessee filed ledger account, invoices of purchases and proof of payment by account payee cheque. Sale of assessee was not rejected. Books of account of assesse was also not rejected by the Assessing Officer. The Assessing Officer made addition on the basis of third party information and the statement of third party recorded by the Investigation Wing. Copy of statement of third party allegedly recorded by the Investigation Wing was not provided to the assessee. The ld. AR submits that once the assessee has furnished complete details of purchases, which was not discussed by the Assessing Officer while making addition of 100% of purchases. The ld. AR for the assessee submits that in absence of rejection of books of account or rejecting the sales of assessee, the addition on account of bogus purchases is not justified. The ld. AR for the assessee submits that the Tribunal in various cases has deleted the addition or restricted the same to the extent that the addition on account of bogus purchases should be limited to the difference between the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown from 5 parties managed by Praveen Kumar Jain or Gautam Jain group. In our view, 100% disallowance in absence of rejection of books of account or without disputing the sales is not justified. 11. We further find that the ld. CIT(A) instead of giving independent finding on the facts of the present case directly relied on the decision in Gagnani Impex (supra). The ld. CIT(A) restricted the disallowance to the extent of 5% by referring and various decisions of Tribunal or Hon ble Jurisdictional High Court. Before us, the ld. AR of the assessee vehemently argued that the purchases shown by assessee are genuine. We find that the assessee on one hand took the plea that he was not allowed cross examination of the parties on the statement of whom the addition was made. On the other hand, the assessee himself claimed to have filed copy of affidavit of said parties in allegedly retracting the statement before the Investigation Wing. In our view, stand of assessee is itself contradictory, once the assessee was able to obtained affidavit of retraction of Shri Praveen Kumar Jain, the assesse could very well produce the said person before the Assessing Officer. 12. Now adverting to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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