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TMI Blog2024 (8) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... NFAC failed to appreciate that: (a) There was no material whatsoever with A.O to show that Appellant had actually incurred any expenditure on purchases outside his books of account; (b) The purchases were made in regular/normal course of his business; (c) Proper quantitative details of purchases were maintained by the Appellant; (d) Confirmation of M/s. Krishna Diam confirming the purchases made from them was also furnished by the Appellant to A.O.; (e) Copy of income tax return filed by M/s. Krishna Diam for the A.Y. 2011-10 was filed before the A.O. (f) The amounts have been paid to the purchasers through account payee cheques through proper banking channel. (g) The sales out of alleged non genuine purchases from M/s. Krishna Diam were accepted by the A.O. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition under section 69 C of the Act was called for. 2.4 without prejudice to the above, and in alternative it is submitted that the addition of entire purchase of Rs. 66, 30,039/- was not called for. 3. the appellant craves leave to refer to and rely upon all or any of the above grounds of appeal and add to, dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .16 Please state the approximate quantity and value of stock as on date? Ans As on date the quantity and value of stock is NIL. Q.37 please state how and where the goods (diamonds) are received? Ans. Sir it is received in my office 5B/1108 A1167/68B Santok Diamond Office No.204.2nd Floor, Somnath Mahadev Ni Sheri, Gajar Falia, Hari Pura, and Surat by my employees. Q.38 Please provide the names, contact number and addresses of your employees who are responsible for taking the delivery of diamonds which are imported by you and also delivery which is taken locally? Ans. Sir I have few employees working for me, I cannot provide these details. Q.39. Please provide the documents like delivery challan, transportation slip, air cargo import insurance papers and any other supporting for goods free documents please give me some time to produce the same. Ans. Sir I cannot provide these documents please give me some time to produce the same. Q.40. Please provide your import export license fee verification? Ans. Sir I do not have it with me here the license is in Mumbai I request you to provide me 2 days time to produce the same Q.41 what are the certificates which accompany ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in my books of A/c. Once the diamonds are received they are taken away by these brokers at whose direction these imports were made. For doing these activities, I get a commission. As a result of above, stock of diamonds is reflected in my books without any physical stock being there. Thereafter, at a certain commission I issue bogus sale bills of such diamonds which are appearing in my books as stock in the names of other interested parties/concerns, which is again arranged by these brokers. For this, I get commission. I also give bogus sale bills when there is no stock available in my books. by arranging bogus purchase bills from the local market from various concerns through various brokers. For this type of transaction, I get profit of differential commission received and paid by me. Also, in case some person requires entry for unsecured loan, I give the entry by giving them cheque and in return I receive cash for the same. But most of the times it so happens that I have to pay this cash back to some parties to get cheque entry in my bocks again so as to maintain the balance in bank accounts. Normally, there is no surplus cash which remains available with me at any point of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect and I again confirm that the business in all my concerns namely M/s. Karishma Diamond Pvt. Parshwanath Gems Pvt Ltd., M/s. Krishna Diam, and xxxxxxx all paper concerns with no actual business of any kind. Also, all the xxxxxxx are nothing but bogus bills issued to interested xxxxxx and advances to interested parties are nothing but xxxxxxx given against cash. THE ABOVE STATEMENT IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF. THE ABOVE STATEMENT HAS BEEN GIVEN BY ME VOLUNTARILY, WITHOUT ANY THREAT, COERCION OR UNDUE INFLUENCE. I HAVE READ THE ABOVE STATEMENT AND I CONFIRM THAT IT HAS BEEN RECORDED CORRECTLY. Sd/- Sd/- Vibhor Badoni Gautam B. Jain (ADIT (Inv.)/Unit-VIII (1), Mumbai) (Deponent) From the statement of Shri Gautam Bhanwarlal Jain dated 6/10/2013 and 11/10/2013, the following facts emerge:- 1. Shri Gautam Jain was the partner of M/s. Krishna Diam, from whom the assessee has allegedly purchased diamonds worth Rs. 66, 30,039/-. 2. The quantity and stock of the firm M/s. Krishna Diam was NIL at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses a suspicion with regard to genuineness of business activity of these 70 concerns. b) Books of accounts not maintained at the respective registered offices: The registered offices and residential premises of the said 70 concerns and the dummy directors, partners and proprietors along with the residential premise of Gautam Jain, Rajesh Gautam Jain and Manish Bhanwarlal Jain in Surat and Surat were covered during the Search action. However, the team of the Income Tax Authorities did not find any books of accounts of the said 70 benami concerns at any of the premises. c) Books found at a secret undisclosed back office:- During search 2 back offices of the assessee at 16, Mohan Building, JSS Road, Girgaum and Plot No. 233, Ground Floor, Navkar House, Vitthal Bhai Patel Road, Girgaum (Near Parathana Samaj, VP Road), Surat -04 were discovered where the books of accounts of all the 70 concerns controlled and managed by the Bhanwarlal Jain & family were found. 5.12 The concerns are used for giving accommodation entries. During the course of search evidences were found, persons were examined on Oath which established that Gautam Jain and Family have been using 70 benami concerns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accommodation entries for a commission to various parties who normally purchase diamonds in cash from undisclosed parties and need bills to show purchases against sales in their account. (v) Payments are made by cheque against bogus purchases. (vi) They also provide accommodation entries of unsecured loans against cash. 5.15 Findings of the search action on Gautam Jain & Others: * The Directors/proprietors of all these concerns admitted on oath that the concerns are nothing but paper companies with no genuine business. * It was established that the concerns import rough diamonds in their hands at the behest of a third person/interested parties. * The diamonds once cleared from Customs are immediately taken away by the interested parties (third party). * These group concerns are thus left with no physical stock; however, the stock is reflected in their books against which bogus bills of sale are issued to interest parties. * Accommodation entries (unsecured loans) are also given to other interested parties against cash from time to time. 5.16 As a result of the search and seizure action, it is established that the covered concerns run and operated by Shri Gauta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of assessment, Assessing Officer noted that certain purchases made by assessee were bogus - He thus added said amount to assessee's taxable income - Tribunal noted that there was no discrepancy between purchases shown by assessee and sales declared - Accordingly, Tribunal restricted addition limited to extent of bringing gross profit rate on purchases at same rate as applied in other genuine purchases - Whether, on facts, no substantial question of law arose from Tribunal's order - Held, yes [Paras 8 and 9] * [2022] 141 taxmann.com 245 (Bombay) Principal Commissioner of Income-tax v. Batliboi Environmental Engineering Ltd. I. Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchases) - Assessment year 2011-12 - Assessing Officer treated purchases made by assessee as bogus purchases and disallowed in totality - Commissioner (Appeals) directed Assessing Officer to disallow 12.5 per cent of bogus purchases and to add 12.5 per cent of amount of purchases to income of assessee - Tribunal upheld view of Commissioner (Appeals) - Revenue contended before High Court that bogus purchases ought to have been disallowed in totality - It was noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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