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TMI Blog2025 (1) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... GUJARAT HIGH COURT] No substantial questions of law. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE D.N. RAY Appearance: For the Appellant(s) No. 1: Karan G Sanghani (7945). For the Respondent: None. ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned Senior Standing Counsel Mr. Karan G. Sanghani for the appellant. 2. Since issues involved in both these Tax appeals are identical, they have been heard together and would be disposed of by this common order. 3. For the sake of convenience, facts are recorded from Tax Appeal No.1196 of 2024. 4. This Tax Appeal is filed under Section 260A of the Income Tax Act, 1961 (for short the Act ) arising out of the Judgment and Order dated 19.09.2022 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra Jain Group, it was found that the said group was engaged in the business of issuing nongenuine and purchase accommodation bills, unsecured entries to loans various parties and the assessee was found to have made transaction with the entities of the said group. 9. The assessment proceedings was completed under section 143 (3) of the Act on 19.12.2016, assessing total income at Rs. 7,13,55,565/- after making addition of Rs. 7,10,69,545/- on account of bogus purchase. 10. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT (Appeals) Surat, who vide order dated 23.07.2019, partly allowed the appeal of the assessee, relying on the decision of Income Tax Appellate Tribunal in the case of Gangani Impex (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed earlier not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine/bogus and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss the ground raised by the assessee challenging the validity of reassessment. 19. In the result, appeals filed by assessees (ITA Nos. 889 to 893/AHD/2017 and ITA Nos. 761 to 762/SRT/2018) are dismissed, whereas the appeal filed by the Revenue (ITA No.916 to 920/AHD/2017 and ITA Nos. 753 to 754/SRT/2018) are partly allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 0.78% . 5.1 The final view was expressed in para 10.10, Following the above judicial pronouncements and views taken by Ld. CIT(A) AOS in a few identical cases. In a couple of identical cases, where the GP shown by the appellants is more than 5%, I have confirmed the disallowance of the impugned purchases to the extent of 5% of the impugned purchases. However in the instant case the appellant is showing measly G.P. of only 0.78% on turnover. In view of this I am of the considered opinion that disallowance of 12.5% of the impugned purchases would be reasonable and would meet the ends of justice. Hence, the disallowance is restricted to 12.5% of the impugned purchases for the assessment year in appeal. 5.2 The disallowance at 100% was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly applicable on the facts of the present case. We find that in Mayank Diamonds the Hon'ble High Court restricted the additions to 5% of GP. We have seen that in Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, considering overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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