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TMI Blog2024 (1) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. - SHRI ABY T. VARKEY, JM AND SHRI GAGAN GOYAL, AM For the Appellant : Shri Nishit Gandhi/Ms Madhuri Tambe For the Respondent : Shri Ashok Kumar Ambastha (Sr. AR) ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/(NFAC), Delhi dated 14.06.2023 for the assessment year 2013-14. 2. At the outset, the Ld. AR of the assessee, assails the action of the Ld. CIT(A) sustaining the addition on merits, to the tune of Rs. 59,53,440/- u/s 69C of the Income Tax Act, 1961 (hereinafter the Act ). In other words, assessee assails the action of Ld CIT(A) upholding the action of AO, wherein he disallowed the entire purchases of diamonds made from M/s. Mohit Enterprises (alleged concern of Shri Bhanwarlal Jain Group). 3. Brief facts are that the assessee filed its return of income for AY. 2013-14 on 30.11.2012 declaring total loss of Rs. 2,915/-. Later, the case of the assessee was reopened u/s 147 of the Act by issuance of notice u/s 148 of the Act dated 21.03.2018. And since we are adjudicating the merits of the addition made after reopening the assessment, we are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to suppress the true profits to be disclosed to the department. (iv) The onus was upon the assessee to establish the genuineness of purchases made by the assessee. (v) Mere filing of evidences in support of purchases and payment through account payee cheque cannot be conclusive in a case where genuineness of transaction's in doubt. Payment by account payee cheques are not sacrosanct. (vi) If all the evidences point to the fact that no actual goods were supplied by the above parties, then the argument of assessee that it purchased goods in good faith's not tenable. 4. Aforesaid action of the AO was challenged by assessee before the Ld. CIT(A) who was pleased to dismiss the same. Aggrieved, the assessee is before us. 5. We have heard both the parties and perused the records. The assessee has set-up the business as retailer of Gold and Diamonds Jewellery in Sep, 2010 onwards. And thus it is the first year of its business. And the assessee inter-alia has purchased gold and diamonds worth of Rs. 1.9 crores out of which assessee purchased diamonds worth Rs. 59,53,440/- from M/s. Mohit Enterprises, which AO alleges to be bogus, since M/s. Mohit Enterprises was a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce diamonds (Rs.59,53,440 Rs. 6,65,000/-) Rs. 52,88,440/- were sold in the subsequent assessment year i.e AY. 2014-15, wherein assessee has shown gross profit of 17.59%. Therefore, the action of the AO/Ld. CIT(A) to disallow the entire purchases of diamonds when considered with the contemporaneous relevant evidences cannot be countenanced. Since we have noted that purchases of diamonds have been proved by primary evidences (supra), and the payments of purchase of diamonds have been made through banking channel albeit in the next year, which fact is seen from the bank statement, (refer page no. 43-45 of PB) as well as the affidavit filed by proprietor of M/s. Mohit Enterprises (placed at page no. 46 and 47 read with page no. 62 to 66 of PB wherein copy of Indus-Ind Bank statement is found placed). Therefore, the only presumption that can be drawn in the foregoing facts are that assessee has purchased the diamonds from the grey market and has utilized services of M/s. Mohit Enterprises for providing bills and has sold it. In such a scenario, we are of the opinion that only profit embedded in such sale should only be brought to tax. And for that we rely on the decision of the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;Bogus Purchases', it having once come to a categorical finding that such total amount of addition made represented alleged purchases from bogus suppliers? 4. Briefly stated the material facts are as under: The Respondent assessee is engaged in the business of trading in industrial oil and transport services. A return of income was filed by the assessee declaring a total income at Rs. 4,47,970/-. The Sales Tax Department of the Government of Maharashtra provided information to the Assessing Officer (A.O.) giving names, addresses and details of persons, who had provided entries of bogus purchases. The said information also contained details of beneficiaries of such bogus bills. Based upon the information so received, the A.O. issued notice under section 148 of the Act, followed by the statutory notices under section 143(2) and 142(1) of the Act and the order of assessment under section 143(3) r/w section 147 of the Act was passed on 30 th March, 2015 and total income assessed at Rs. 1,46,82,548/-. The A.O. thus made an addition of Rs. 1,42,34,578/- on account of alleged bogus purchases from Hawala dealers/parties. 5. An appeal was preferred by the assessee before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be impossible for the assessee to complete the business transaction and that if the purchase is bogus, the corresponding sale also must be bogus or else the transaction would be impossible to complete and as a necessary corollary, unless the corresponding sale is held to be bogus, the purchase also cannot be held to be bogus, rather it would be a case of purchase from bogus entities/parties. That view has been upheld by the Tribunal in principal while dismissing the appeal of the Revenue. In view of the above, we are of the opinion that the questions of law proposed as (a), (b), and (c) in the appeal cannot be said to be substantial questions of law. Insofar as the question of law framed as (d) is concerned, we find that the Tribunal has not addressed the issue of adopting the gross profit rate of 5% on the alleged Hawala purchase of Rs. 2.45 crores as against the rate of 0.69% declared by the assessee, despite the fact that the CIT (Appeals) had specifically gone into that question in its order dated 18 th August, 2015 and had directed the A.O. to make 5% addition in the gross profit ratio, while deleting the balance addition. We, therefore, deem it appropriate to remand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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