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TMI Blog2024 (2) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstance of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,00,60,757/ - made on account of bogus purchase. ii) On the facts and in the circumstance of the case and in law, the Ld. CIT (A) erred in treating commission @ 0.50% on bogus purchase without appreciating the fact that during the course of assessment proceedings, it was noticed that for last many years the assessee has filed return of income in ITR Form -4 disclosing his business activity as trader in rough and polished diamonds. iii) On the facts and in the circumstance of the case and in law, the Ld. CIT(A) erred in appreciating the fact that the concerns like M/s. Mihir Diamonds, M/s. Krishna Diam and M/s. Karishma Diamonds Pvt. Ltd. from which the assessee made the said purchases amounting to Rs. 2,01,61,565/- were non-existent entities and they were used for providing bogus purchase bills to the assessee. The entire modus operandi of such bogus transactions was accepted in statement u/s. 132(4) of the Act by the respective key persons of Shri Gautam Jain Group in light of the various documents/evidences found and seized from their premises. Therefore, CIT (A) should have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on 22/12/2014 against reopening. The objection of assessee was rejected by the Assessing Officer on 09/02/2015 by way of speaking order. The Assessing Officer after rejecting the objection, issued detailed show cause notice that the assessee has shown purchases of Rs. 46,01,312/- from Mihir Diamonds, Rs. 43,83,884/- from Krishna Diam P. Ltd. and Rs. 1,11,76,369/- from Krishna Diamonds Pvt. Ltd. aggregating to Rs. 2,01,61,565/-. All these concern are Benami firms of Gautam Jain and his associate. The assessee was asked to substantiate aforesaid purchases. The assessee filed his reply dated 25/02/2015. The contents of reply is recorded in para 7 of assessment order. The assessee in its reply submitted that he is a commission agent for rough and polished diamond in Surat and making sale and purchase on behalf of diamond trader against which he has received commission. The transaction with these parties are genuine. The sales and purchase are recorded in his books of account. Such sale and purchase is recoded for the purpose of inventory and no trading is made for such material. The assessee is working in proprietory concern in the name of Sanman Exports. The assessee furnished audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nn.com 185 (Guj). On merit, the ld. CIT(A) granted substantial relief to the assessee by restricting the addition to the extent of 0.50% of the impugned purchases. The ld. CIT(A) held that the purchase bills were produced, stock tally is shown and payments were made by account payee cheque, entire purchases as bogus cannot be doubted when correspondence sales have not been doubted by Assessing Officer and that only profit margin embedded in the impugned purchases should be subjected to disallowance and not the entire purchases. The ld. CIT(A) held that the assessee has earned only commission income on entire business transaction. Aggrieved by the order of ld. CIT(A), the revenue has filed present appeal before this Tribunal. 5. The assessee was served with the notice of appeal and has filed authority letter in the name of Rohit vijayvargia, Chartered Accountant, Partner of RMR & Company. Rohit Vijayvargia also filed an application dated 14/04/2021 that all communication in relation to the proceedings of this appeal be sent at his office address at B-203, Shri Hari Park, Near Center Point Building, Sagrampura, Surat-395002. However, on 21/01/2023 Aasiya Hafeji, C.A. from the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by assessee by filing cogent evidence, no TDS certificate was filed nor any agreement of commission agency was filed. The ld. CIT(A) accepted the contention of assessee that the assessee was a commission agent and restricted the addition to the extent of 0.50% impugned purchases shown from concerns of entry provider. The ld. CIT-DR for the revenue submits that in case of ITO Vs Rajesh Kumar Pamecha in ITA No. 87/Srt/2017, ITO Vs Mukesh Mahavirprasad Sen ITA No. 15/Srt/2020 and other cases, this combination in similar case, has restricted/enhanced the addition of bogus purchases to the extent of 6% of similar purchases. One of such order in Surya Impex in ITA 1378/Ahd/2017 has been confirmed by the Hon'ble Jurisdictional High Court in PCIT Vs Surya Impex (2013) 148 taxmann.com154 (Gujarat) and further SLP before the Hon'ble Supreme Court was rejected. Further in a series of decisions on similar facts and circumstances, 6% of purchases was ultimately upheld by this Tribunal. The ld. CIT-DR for the revenue submits that though he pray to disallow 100% of purchases. In alternative submission, the disallowance may be enhanced to 6% of the impugned purchases. 7. We have consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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