9911796707
TMI Blog2022 (10) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not the plea that this notice under section 143(2) was not at all issued by the assessing officer. The assessee want favourable order only from the bench without asserting such contention. In our view, the assessee has raised objection only for the sake of technical reasons, which we reject. Estimation of income - bogus purchases - Disallowance restricted to the extent of 5% - As per AO entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider - HELD THAT:- It is matter of common knowledge that PK Jain was well known bogus entry provider, who has provided entry of several thousand crores of rupees. During the search action on PK Jain no stock of any goods was found by search team. In the statement he admitted that he is mere entry provider. The assessee has not disputed that he has not transacted with the entity of PK Jain. CIT(A) restricted the addition to the extent of 5% of aggregate of purchases shown from the entity of PK Jain. Disallowance to the extent of 5% is on lower side particularly when the assessee has shown negligible net profit. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income qua assessment year 2007-08 on 06.11.2007 declaring income of Rs. 1,25,638/-. The case of assessee was re-opened on 28.03.2014 on the basis of information received from Investigation Wing, Mumbai that a search seizure action was carried out by DIT(Inv.) Mumbai in case of Praveen Kumar Jain Group Others on 03.10.2013. In the search action, evidence was collected about the detection of accommodation entry of Rs. 8897 crores. In the search action, it was found that the Praveen Kumar Jain (PK Jain) was indulging in providing bogus sales and purchases without actual delivery of goods. It was found that assessee was one of the beneficiary of bogus purchases of several parties managed by Praveen Kumar Jain Group amounting to Rs. 5.269 crores, out of which purchases of Rs. 2.131 Crore from New Planet Trading Private Limited, Rs. 84.20 lacks from Natasha Enterprises and Rs. 2.295 Crore from Kunal Gems. On the basis of such information, the Assessing Officer has reason to believe that income of assessee escaped from assessment to the extent of Rs. 5.296 crores within the meaning of Section 147 of the Act. The Assessing Officer after recording the reasons of re-opening, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made, it should be made on estimate/ad-hoc basis. The assessee in the business of trading of diamond and gross margin are only of 0.15% to 0.50% in the business. The assessee has also shown profit @ 0.40% which is reflected in the books of account and in line of business of diamond and no adverse view is called for. On the service of notice under section 143(2), the assessee contended that there is no proof of service of notice. The signature of Assessing Officer on the notice under section 143(2) does not match with the assessment order and no seal of office is affixed. 5. On the submission of assessee, the Ld. CIT(A) called for remand report of Assessing Officer. The Assessing Officer furnished remand report dated 22.06.2017, in the remand report, the Assessing Officer stated that notice under section 143(2) was issued on 06.01.2015, which is wrongly mentioned dated as 06.01.2014. Notice under section 143(2) was duly served through Speed Post, the same is mentioned in the order-sheet dated 06.01.2015. The Assessing Officer also furnished the case record before Ld. CIT(A). On the remand report, the assessee filed his rejoinder vide letter dated 22.02.2019. In the rejoinder/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal before the Tribunal. 7. We have heard the submission of learned Commissioner of Income Tax-Departmental Representative (Ld. CIT-DR) for the Revenue and Ld. Authorized Representative (AR) for the assessee and have gone through the orders of lower authorities carefully. The ld. CIT-DR for the Revenue submits that assessee is a beneficiary of bogus purchase as the assessee has obtained bogus entries from the entities managed by PK Jain Group, who was well known hawala operator and was indulging in providing accommodation entry without actual delivery of goods. The Investigation Wing of Mumbai made a full-fledged enquiry and came to the conclusion on the basis of search material and the statement of PK Kumar Jain recorded under section 132, that they were not doing actual or real business except accommodating entries. The assessee is a beneficiary of such bogus accommodation entry of purchases. Before Assessing Officer, the assessee failed to discharge his onus in proving the genuineness of such purchases. The Ld. CIT(A) granted substantial relief to assessee only on the basis of other case law. Each and every case has to be judged on the basis of its fact, in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was not rejected. The ld. AR for the assessee submits that he has furnished the net profit as well as gross profit ratio for the assessment years 2007-08 to 2010-11 respectively. The assessee has filed sufficient evidence to prove the genuineness of the purchase, however, the lower authorities have not given finding on such evidences. The gross profit and net profit ratio for the year under consideration is considerably on the higher side. Though assessee has shown gross profit @.40% and net profit shown 0.03% respectively, which is higher than the subsequent assessment year. The turnover of the assessee was about Rs. 70 crores during the year. The assessee has already shown a good net profit for this financial year, thus, no disallowances on account of bogus purchases was warranted. The ld. AR for the assessee prayed for dismissal of the appeal filed by the Revenue. To support his various submission, the ld. AR for the assessee relied upon the following case law: Kishanchand Chellaram vs. CIT 125 IDTR 713 (SC) Andaman Timber Industries Vs Commissioner of Central Excise (2015) 281 CTR 241 (SC) Mehta Parikh Co. 30 ITR 181 (SC) CIT vs. Odeon Builder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or it was obtained by him by way of other means. On the submission of addition on merit, the Ld. CIT-DR submits that he is making prayer to enhance the addition @ 100%. However, in his without prejudice submission of Ld. CIT-DR submits that in a number of similar bogus purchases, the combination of this bench has already enhanced the addition or restricted the addition @ 6% of the similar purchases and dismissed all technical objection. The legal/technical objection raised by the assessee is misconceived. 11. We have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various case law relied by Ld. AR for the assessee. Though, the ld. AR for the assessee has filed numerous case laws on the merit of the addition, however, at the time of making his submissions he hardly referred and relied only 3 to 4 case laws, that too in support his submissions on the validity of notice under section 143(2). 12. Before adverting to merit of the case, let us examine the validity of notice under section 143(2). We find that there is no dispute that the case of assessee was re-opened under section 147 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not the plea that this notice under section 143(2) was not at all issued by the assessing officer. The assessee want favourable order only from the bench without asserting such contention. In our view, the assessee has raised objection only for the sake of technical reasons, which we reject. 13. Now adverting to the merit of the case. We are conscious of the fact that the assessee has not challenged the order of ld. CIT(A) in restricting the addition to the extent of 5%. We find that the assessing officer made addition of 100% of the purchases shown from the entity managed by PK Jain and his group. No details were filed by assessee before assessing officer in response to various notices. Though the assessee appeared before assessing officer and filed objection against the reopening, but no details of purchases were furnished. Thus, the assessing officer on the basis of information available with him made addition of entire purchases from all three parties aggregating of Rs. 5.269 Crore. Before, ld. CIT(A) the assessee filed certain details as we have recorded above. On the submissions of the assessee, a remand report was called by ld. CIT(A). We find that the ld. CIT(A) restri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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