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TMI Blog2023 (10) TMI 1497X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 30.12.2018. >2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.458/SRT/2023 for assessment year 2011-12, have been taken into consideration for deciding the above appeals en masse. >3. Grounds of appeal raised by the Revenue in "lead" case in ITA No.458/SRT/2023 for AY.2011-12, are as follows: >"1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the AO of Rs.10,53,02,132/- to 6% of the turnover without appreciating the facts that the assessee had failed to prove the genuineness of the transaction made with M/s Rose Gems Pvt. Ltd. which was identified as a bogus entry provider, completely run by Shri Bhanweralal Jain. >2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in partly deleting the addition without considering that Shri Bhanwerlal Jain h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation Wing, Mumbai in the case of Shri Bhanwarlal Jain and his group based in Mumbai on 03.10.2013. The search faction resulted into collection of evidences and other findings which conclusively proved that the assessee through a web of concerns run and operated by him, is engaged in providing accommodation entries of various nature like bogus unsecured loans, bogus share application and bogus sales (purchases for the beneficiaries) etc. During the course of search various premises which were shown by the assessee group to be the place of operations and registered addresses as per the ITR, MCA website and bank documents were covered. However, it was found that the entities were non-existing at these addresses and no genuine business was being carried out at any of these premises. The search enquiries had revealed that various persons shown to be the director/proprietors of different concerns were non-exist it on the given addresses. During the course of the statements recorded u/s 132(4)/131 of the Act these directors / proprietors admitted that they were merely dummy directors and used to sign different papers for nominal consideration given by Shri Bhanwarlal Jain. They were un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the notice, therefore, it was clear that the assessee had taken accommodation entry in the form of bogus purchase from Rose Gems Pvt. Ltd. In view of the above the Assessing Office had reason to believe that the income of the assessee to the extent of Rs.10,53,02,132/- had escaped assessment within the meaning of Section 147 of the Act. Therefore notice u/s 148 was issued on 26.03.2018 after recording the reasons and getting due approval, which was duly served upon the assessee. In the said notice, the assessee was requested to file its return of income for the assessment year under consideration within 30 days. In response to the same the assessee field its return of income on 17.04.2018. The reason recorded for re-opening was provided to the assessee. Thereafter notice u/s 143(2) was issued to the assessee on 01.08.2018 and the same was served upon the assessee on the same day. Thereafter the assessee filed its objection against the re-opening and the same was disposed off by passing speaking order date 21.08.2018. Thereafter notice u/s 142(1) was issued to the assessee on 15.09.2018 calling certain details. In response to the notice issued to the assessee, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 100% of bogus purchased should be upheld. >10. Shri Suchek Anchalia, Learned Counsel for the assessee, pleads that Assessing Officer has made @ 100% disallowance of bogus purchases, which were made by assessee from M/s. Rose Gems Pvt. Ltd. to the tune of Rs.10,43,02,122/-, however, NFAC/Ld.CIT(A) has restricted the addition @ 6% of the turnover. The Ld. Counsel also stated that whether 6% addition sustained by the NFAC/Ld.CIT(A) is on total "turnover" of the assessee or it is on bogus purchases made by the assessee from M/s Rose Gems Pvt. Ltd. to the tune of Rs.10,53,02,132/- is not clear. Therefore Ld. Counsel contended that the matter may be set aside to the file of NFAC/Ld.CIT(A) for adjudication on this issue whether estimated addition sustained by NFAC/Ld.CIT(A) @ 6% is on total "turnover" of the assessee or on bogus purchases made by the assessee. Alternatively, the Ld. Counsel submitted that assessee has submitted bills, vouchers, stock details, balance sheet and profit and loss account, before the Assessing Officer, hence, assessee has proved the genuineness of bogus purchases, therefore, no addition should be made in the hands of assessee. >11. We have heard the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modation entry is sufficient as held by Hon'ble jurisdictional High Court in various cases. To support his submissions, the ld.CIT-DR relied upon the decision; * Pushpak Bullion (P) Ltd Vs DCIT [2017] 85 taxmann.com 84(Gujarat High Court), * Peass Industrial Engineers (P) Ltd Vs DCIT [2016] 73 taxmann.com 185 (Gujarat High Court), * ITO Vs Purushttom Dass Bangur [1997} 90 Taxman 541 (SC) and * Mayank Diamond Private Limited (2014) (11) TMI 812 (Gujarat High Court). * AGR Investment Vs Additional Commissioner 197 Taxman 177 (Delhi) and * Chuharmal Vs CIT [1998] 38 Taxman 190 (SC). >14. On the other hand, the ld.AR of the assessee submits that he has challenged the validity of reopening as well as restricting the addition to the extent of 12.50% of the alleged bogus purchases. The ld.AR of the assessee submits during the assessment, the AO has not made any independent investigation. The AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommoda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... >6 >CIT in Vs. Mohmed Juned Dadani 355 ITR 172 (Gujarat) >7 >Micro Inks Pvt. Ltd. Vs. ACIT [2017] 79 taxmann.com 153 (Gujarat) >8 >Shakti Karnawat Vs. ITO - 2(3)(8), Surat ITA 1504/Ahd/2017 and 1381 /Ahd/2017 >9 >Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) >10 >PCIT, Surat 1 Vs. Tejua Rohit kumar Kapadia [2018] 94 taxmann.com 325 (SC) >11 >The PCIT-17 vs. M/s Mohommad Haji Adam & Co. ITA NO. 1004 OF 2016(Bombay High Court) >12 >Pankaj Kanwarlal Jain HUF Vs. ITO 2(3)(8) Surat ITA.No.269/SRT/2017 >16. In the rejoinder submissions the ld. CIT-DR for the revenue submits that that rigour of the rules of evidence contained in the Evidence Act is not applicable before the tax authorities. It was submitted that the ratio of various case laws relied by the ld. AR for the assessee is not applicable on the facts of the present cases. The ratio of decision of Hon'ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly applicable on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon'ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee's appeal is dismissed. >19. Ground No. 2 in assessee's appeal and the grounds of appeal raised by the revenue are interconnected, which relates to restricting the disallowance of bogus purchases to the extent of 12.5%. The AO made of 100% of purchases shown from the hawala dealers/ entry provider namely Bhanwarlal Jain. We find that the AO while making additions of 100%, of disputed purchases sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02% (page 11 of paper Book). The assessee while filing the return of income has declared taxable income of Rs.1,81,840/- only. We are conscious of the facts that dispute before us is only with regard of the disputed purchases of Rs, 4.34 Crore, which was shown to have purchased from the entity managed by Bhanwarlal Jain Group. During the search action on Bhanwarlal Jain no stock of goods/ material was found to the investigation party. Bhanwarlal Jain while filing return of income has offered commission income (entry provider). Before us, the ld CIT-DR for the revenue vehemently submitted that the ratio of decision of Hon'ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly 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 transa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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