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TMI Blog2024 (4) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the income tax act dated 29/12/2017 passed by the learned that income tax officer Ward 23 (1) (3), Mumbai (the learned AO) is partly allowed. 02. Assessee has raised following grounds of appeal:- "1. The learned CIT (A) erred in upholding the addition/disallowance made by the learned AO even to the extent of Rs. 32,08,953/- (though quantum addition is reduced from Rs. 1,31,65,072/-) of alleged bogus purchases which is contrary to the binding judgment of the jurisdictional Bombay High Court in Mohammad Haji Adam & Co. (Appeal No. 1004 of 2016). 2. On the facts and in the circumstances of the case, the learned CIT (A) erred in upholding the addition/disallowance made by the learned AO even to extent of Rs. 32,08,953/- (though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eged bogus purchases as unexplained expenditure u/s. 69C even though the impugned transactions have been recorded in the duly audited regular books of account of the Appellant and all payments have been made through banking channel. 6. On the facts, the learned CIT (A) completely erred in his observation that "GP is a meagre 12.64%. The results give credence to the suspicions raised by the assessing authority" without understanding the diamond trade fully, where even the Report of the Task group for diamond sector submitted to Department of Commerce, Government of India, suggested that the net profit that could be derived in the diamond in trading activity thereof, the profitability range is 1% to 3% only. With this wrong notion and misun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation entry provider. After considering the explanation of the assessee learned assessing officer made the hon percent of the bogus purchase's addition in the hands of the assessee by applying the provisions of section 69C of the act. Accordingly, the assessment order under section 143 (3) read with section 147 of the income tax act was passed determining the total income of the assessee of Rs. 1,39,48,570/- on 29/12/2017. 04. Assessee aggrieved with the same preferred an appeal before the learned CIT - A. The learned CIT - A noted the decision of the honourable Supreme Court in 281 CTR 241 wherein it was held that when the assessment is made on the basis of the statements recorded from third parties and if those statements were not provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the task group for diamond sector submitted to the Department of commerce, government of India suggested that the net profit that could be derived in the diamond in trading activity the profitability ranges 1% - 3% only. Therefore, the findings of the learned and CIT - A considering the gross profit of 12.64% as meagre profit is devoid of any merit. He submits that the learned CIT - A has adopted Novell method for confirmation of the addition of Rs. 3,208,953. He found that total purchases from Mukti exports are 1174.84 carats which should have the purchase cost at the rate of 11,325 per carat as purchases of Pankaj exports. Thus, the purchases from Mukti exports were determined at Rs. 13,305,063 against the actual purchase of Rs. 10,096 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders have not been challenged further by revenue. 06. The learned departmental representative vehemently supported the order of the learned CIT - A. He submits that in this case the total sales made by the assessee are procured out of alleged bogus suppliers, therefore the learned CIT - A could not have relied upon the gross profit earned by the assessee from regular suppliers. Therefore, the learned CIT - A, the purchases of goods from both the alleged bogus suppliers at the same rate and made the addition made the suppliers purchase price was less than the other suppliers purchase value. Thus, there is no infirmity in the order of the learned CIT - A. 07. We have carefully considered the rival contention and perused the orders of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bogus purchases. We do not agree with the approach of the learned CIT - A because when both the suppliers are allegedly bogus, rates paid to one party cannot be compared with rates paid to another bogus party for the reason that both are tainted transactions. We find that in the present case the decision of the honourable Bombay High Court in [2019] 103 taxmann.com 459 (Bombay) Mohd haji Adam also does not apply for the reason that honourable High Court held that Where there was no discrepancy between purchases shown by assessee and sales declared, no question of law or on form Tribunals order restricting addition made by AO on account of bogus purchase by bringing gross profit rate on purchases at same rate as applied in other genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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