9911796707
TMI Blog2024 (3) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... e as of other genuine purchases. Thus keeping in view the nature of business of the assessee i.e. manufacturing, trading in diamond, the Ld. CIT(A) should have sustained the addition to the extent of difference of gross profit declared in regular trading and non-genuine trading transactions. In this case assessee has declared 7.89% and in non-genuine it was declared at 7.64%. The difference is 0.25%. Accordingly, we direct the Assessing Officer to disallow only 0.25% of the disputed purchases under section 68 of the Act. Appeal filed by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries without there being transportation of any goods. In the reassessment proceedings, the assessee was asked to prove the genuineness of the purchases made from various dealers as referred in Assessment Order. In response assessee filed its submissions vide letter dated 28.11.2019 and submitted that the purchases made are genuine. 4. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of materials and the assessee might have made purchases in the gray market. Accordingly, Assessing Officer treated the said purchases made for an amount of ₹.3,42,65,843/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to law. 7. Ld. Counsel for the assessee reiterated the submissions made before the Ld.CIT(A). Further, Ld. Counsel for the assessee submitted that assessee is in the business of Diamonds and the profit percentage in the diamond manufacturing business ranges from 1.5% to 4.5%. Ld. AR relying on the order of the Hon'ble Bombay High Court in the case of Pr.CIT v. M/s. Mohommad Haji Adam and Company in ITA. No. 1004 of 2016 dated 11.02.2019 reported in 2019-TIOL-High Court-Mum-IT submitted that the addition in respect of bogus purchases is to be limited to the extent of bringing the gross profit rate on such purchases at the same rate as of other genuine purchases. Ld.AR of the assessee submitted that as per the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them. 10. The Hon'ble Bombay High Court in the case of Pr. CIT v. M/s. Mohommad Haji Adam and Company (supra) held as under: - "8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs.3,70,78,125/- which comes to Rs.20,98,621.88 we think it fit to direct the revenue to add Rs.20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue." 9. In these circumstances, no question of law, therefore, arises. All Income Tax Appeals are dismissed, accordingly. No order as to costs." 11. Further, we observe in assessee's own case for the A.Y. 2007-08 the Coordinate Bench in ITA No. 4235/MUM/2018 dated 11.06.2019 following the decision of the Hon'ble Bombay High Court in the case of Pr. CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation done by the department leads to a doubt in respect of the genuineness of the transactions / purchases, it is incumbent on the assessee to produce the parties along with the necessary documents to establish the genuineness. In the instant case, there is uncontroverted evidence regarding the bogus nature of the purchases from an source i.e. the Wing of the Income Tax and the evidences include admission from the so- called sellers that they have been issuing bogus bills. Therefore, respectfully following the Hon'ble ITAT In the own case for AY 2007-08 in ITA No.4235/MUM/2018 , the addition on account of the non-genuine purchases is restricted to the profit element embedded in such nongenuine purchases. The AO is accordingly directe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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