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TMI Blog2019 (7) TMI 2045X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee after calling for the details and verification of records. The assessee is directed to furnish the necessary information in this regard. Assessee appeal allowed for statistical purpose. - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER For the Assessee : Shri Sunil Hiravat For the Department : Shri Chaitanya Anjaria ORDER PER C.N. PRASAD (JM) 1. These three appeals are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals) 51, Mumbai [hereinafter in short Ld. CIT(A) ] dated 16.03.2018 for the A.Ys. 2008-09, 2009-10 and 2013-14. 2. For the A.Ys. 2008-09 2009-10 the assessee challenged the order of the Ld. CIT(A) in sustaining the reopening of assessment and on merits in estimating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the statement of Bhanwarlal Jain, the Assessing Officer came to the conclusion that the assessee has obtained only accommodation bills and purchased diamonds in gray market. It is also the finding of the Assessing Officer that assessee in his submissions has demonstrated that although the assessee might have got the diamonds from gray market but the bills were obtained from Bhanwarlal Jain concerns at rates which are more or less comparable to gray market. Considering all these aspects the Assessing Officer estimated profit margin embedded in these purchase transactions @5% of the value and the same was disallowed/added. 5. On appeal the Ld. CIT(A) considering the submissions of the assessee and the CBDT Instruction No. 2/08 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt wherein the Hon'ble High Court observed that the Tribunal correctly restricted the addition limited to the extent of bringing the Gross Profit rate on purchases at the same rate of other genuine purchases. While holding so, the Hon'ble High Court observed as under: All these appeals arise out of common Judgment of the Income Tax Appellate Tribunal. The facts in all these appeals being same, we make it from ITXA No. 1004 of 2016. The revenue - appellant has raised following questions for our consideration (a) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in not confirming the addition made by the Assessing Officer on account of bogus purchases shown to have been made throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion were never supplied to the assessee, and therefore, the purchases were bogus. He, therefore, added the entire sum in the hands of the assessee as its additional income. 3 The assessee carried the matter in the appeal before the Commissioner of Appeals who accepted the factum of purchases being bogus. However, he compared the purchases and sales statement of the assessee and observed that the department had accepted the sale, and therefore, there was no reason to reject the purchases, because without purchases there cannot be sales. He, therefore, held that under these circumstances A.O. was not correct in adding the entire amount of purchases as the assessee's income. He, therefore, deleted the addition refreshing it to 10 % of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25 % of the total purchases. The said decision was confirmed by this Court as well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s Indian Woolen Carpet Factory (supra) or M/s Vijay Proteins Ltd. In the present case the Tribunal has categorically observed that the assessee had shown bogus purchases amounting to Rs. 2,92,93,288/- and taxing only 25 % of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious invoices have been debited in the trading account si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- So far as the question regarding addition of Rs. 3,70,78,125/- as gross profit on sales of Rs. 37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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