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TMI Blog2025 (1) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal (for short "the ITAT"), Surat in ITA No.458/SRT/2023 for the Assessment Year 2011-12 proposing the following substantial questions of law: 1. "Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has justified in restricting the addition made by the AO from Rs. 10,53,02,132/- being 100% to 6% of the bogus purchase without appreciating the facts that the assessee had failed to prove the genuineness of the transaction made with the concerns which was identified as bogus entities completely run by Shri Bhanwerlal Jain". 2. "Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has justified in restricting the addition from 100% to 6% made by the AO ignoring the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Mayank Diamonds Pvt Ltd .(2014(11) TMI 812), the Hon'ble High Court has directed to make addition at the rate of 5% of the total turnover". 6. "Whether on the facts and circumstances of the case in law, the Hon'ble tribunal is right in deleting the addition made by the AO without considering the fact that Shri Bhanwerlal Jain has admitted in his statement u/s.132(4) of the given in the course of search and seizure action that, with M/s Rose Gems private Limited was run by him and the same was engaged in the business of providing accommodation entries". 3. The facts are that the assessee is engaged in the trading of diamonds. The assessment under section 143 (3) of the Income Tax Act, 1961 (hereinafter referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 4. Learned advocate for the appellant submitted that the said Jain group was engaged in providing accommodation entries, bogus loan and purchases and such purchases were utilised by the assessee and bogus purchases were made through benami concerns. It was submitted that no stock was found during the search on the said Bhanvarlal Jain group. The assessee had shown extremely low profit of 0.78% of the turnover and a net profit at just 0.02% of the turnover. It was submitted that all the transactions were transactions with the entities, which were controlled by the said Bhanvarlal Jain group. 5. The Assessing Officer noted the contentions of the assessee that the confirmation, purchase bills, bank statements, stock register an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at 6% of the turnover, which is the base at which the AO would compute the income from business. 5.0 As a result, the appeal is Partly Allowed" 6.1 The disallowance at 100% was made in the assessment order for the year under consideration to the tune of Rs.10,53,02,132/-, which was reduced to 6% at Rs. 66,33,087/-. Thereafter, the issue was dealt with by the Appellate Tribunal. The Appellate Tribunal endorsed the view taken by the appellate Commissioner. It was observed that the Assessing Officer failed to consider the evidence furnished by the assessee. 6.2 Considering the aforesaid, the Income Tax Appellate Tribunal partially allowed the appeal of the assessee to further reduce the disallowance to 6%. In so holding, the Tribunal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & 458/SRT/2023/A.Y.2011-12 Magnifique Gems Pvt. Ltd. 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 purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 2 of appeal raised by the assessee is partly allowed and the grounds of appeal raised by revenue are dismissed." 7. To us, view taken and the conclusion arrived at by the Appellant Tribunal are based on material before it and after analysing the facts and figures available before it, when the Tribunal thought it fit to reduce the disallowance to 6% from 100%, the Tribunal had before it the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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