9911796707
TMI Blog2025 (3) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ce - We find that assessee is engaged in the business of diamonds, the assessee in his own reply has accepted that he has shown purchase and sales which is not disputed by the lower authorities. Thus, considering the nature of transaction and keeping in view of the facts that Surat Bench of Tribunal in cases of purchases from entry provider (beneficiary) has estimated addition @ 6.00% of the purchases, therefore, 6.00% of purchase amount Rs. 3,11,75,748/- is added (restricted) to the income.
Additions on the sales - We find that the AOs of various well known entry provider namely Rajendra Sohan Lal Jain and in Sanjay Chaudhary made addition @0.20% of amount of entry and allowed deduction of expenses @25%. On appeal before this Tribunal the addition made by AO were sustained [2021 (12) TMI 867 - ITAT SURAT] and [2021 (12) TMI 1414 - ITAT SURAT] respectively. Thus, considering overall facts and circumstances of the present case and keeping in view of possibility of revenue leakage 0.50% of Rs. 6,20,94,701/-, of sales is restricted/added to the income of assessee. In the result, ground No. 3 is allowed and ground No. 4 & 5 are partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... uments are duly filed before Ld. AO and Ld. CIT(A). b) The entire payments towards purchase and sales of goods had been made/received only through banking channel by way of a/c payee cheques/RTGS. c) The normal profits corresponding to disputed purchase and sales had been offered to tax in P&L a/c and there does not exist any contrary material/evidence to establish the non-genuine purchase and sales; d) The copies of contrary material, statements of 3rd parties and opportunity of cross-examination has not been provided to the appellant. e) The mere non-compliance of noticed u/s 133(6) cannot be a reason to treat the bona fide purchase and sales as non-genuine. 6.0 Without prejudice to grounds no.1 to 5, Ld. CIT(A) ought to have estimated the profit @1.00 % on disputed purchase and sales, since only the real profit embedded on disputed transactions could be brought to tax. 7.0 Without prejudice to grounds No.1 to 5, Ld. AO having held the appellants transactions as accommodative in nature, ought to have estimated the commission income @ 0.05% on accommodation turnover. The appellant craves leave to add, amend, alter and/or withdraw any of the grounds of appeal at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch transactions. The AO recorded that verification unit furnished its report, contents of their report in recorded in tabulated form on page no. 14 to 17 in his order. The AO noted that all eight parties at their given address was either not available or left the addresses. The AO issued notice under section 133(6) to all such parties, out of which six parties sent their reply, such fact is recorded at page No. 26 of assessment order. The AO rejected books of accounts of assessee under section 145(3) of the Act. The AO recorded that the persons who are engaged in providing accommodation generally charged 10 to 30% of commission on each transaction depending upon the nature of transactions. The AO prepared summery of entire sales and purchase of Rs. 31.53 Crore made by assessee at page no. 30 of assessment order and disallowed 10% total turnover. The AO worked out disallowance/ addition of Rs. 3.15 crores while passing assessment order on 24.03.2023. 4. Aggrieved by the addition made in the assessment order, the assessee filed appeal before Ld. CIT(A). Before Ld.CIT(A) assessee filed detailed written submission and also furnished details statement of fact. In the statement of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice dated 22.02.2023 and proposed to reject assessee's books of account and to estimate the income @ 10% of total purchase and sales in turnover of Rs. 31.53 crores. The AO made addition of Rs. 3.15 crores, being 10% of total purchase and sales turnover. The assessee filed his reply on 28.02.2023 in response to show cause notice dated 22.02.2023 along with reply, the assessee furnished complete documentary evidence to justify the genuineness of purchases and sales. The AO made addition on the basis of non-compliance of notice under section 133(6) of the Act by the parties and treated entire sale and purchase as non- genuine. The AO has not pointed out any defect in the books of account of assessee and estimated @ 10% addition of total purchase and sales. 5. The Ld.CIT(A) after considering the submission of assessee upheld the validity of show cause notice under section 148A(b) and validity of notice under section 148 of the Act by taking view that AO was having information that assessee entered into bogus purchase and sales transaction. The assessee has not declared sales and purchase transactions correctly in the return of income and that not comply with show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in excess of net profit disclosed in earlier year @ 0.23% on sales and the industry standard. Thus, estimation of business income on purchase as well as sales @ 10% is unjustified. The transaction of disputed parties in respect of eight parties for purchases were only of Rs. 50,37,413/- and sales of Rs. 9,85,00,210/-. As per AO, he directed Verification Unit to conduct enquiry. As per report of Verification Unit, which is referred at page No.14 to 18 of assessment order, there are 8 total purchase and sales parties, from whom assessee made purchase and sales aggregating of Rs. 10.85 crores, which were not found at their respective addresses, such report of Verification Unit, is the only basis to disbelieve the entire business of assessee. Mere non-availability of a few purchases party and sales parties, at their respective places of business would not disprove genuineness of transaction. When transactions are supported with documentary evidence as furnished by assessee. The assessee submitted before AO to estimate reasonable profit on disputed purchase and sale only, and not on the entire purchase and sale turnover of assessee. As per profit and loss account, total purchase of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f lower authorities, itself. The additional ground of appeal may be admitted and adjudicated accordingly. 9. On the other hand, Ld. Commissioner of Income-Tax-Departmental Representative (Ld. CIT-DR) for the Revenue submits that assessee has raised additional grounds of appeal for the first time before Tribunal and no such legal objection was raised either before AO or before First Appellate Authority and additional grounds of appeal is not pure question of fact and is mix question of fact and law. Such additional ground of appeal may not be admitted. 10. We have considered the rival submissions of the parties on the additional grounds of appeal. We find that Ld. AR of the assessee basically urged that no knew fact to be brought on record for adjudicating additional grounds of appeal. On careful consideration of additional grounds of appeal and the orders of lower authorities, we find that no new fact is required to be brought or record. The facts for adjudication of additional grounds are emanating from the orders of lower authorities. Therefore, additional ground of appeal is admitted for adjudication. 11. In support of additional grounds of appeal, Ld. AR of the assessee afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh. In Shell BV (supra), the AO has not given reasons in order under section 148A(d), however in the present case the AO has clearly explained the detailed reasons for escarpment of income. In other remaining case laws, the Delhi High Court has also restored the matter back to the file of AO. 13. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have also deliberated the case law relied upon by Ld. AR of the assessee. The main contention of ld AR of the assessee is that order under section 148A(d) is not in consonance with the statutory provision and that his reply is not considered before passing such order. We find that neither such objection was raised during assessment proceeding nor such ground of appeal was raised before CIT(A). No doubt that in response to notice under section 148A(b) dated 15.03.2022, the assessee filed reply dated 22.03.2022. In fact, such reply was filed only on 24.03.2022 as reflected in the acknowledgement No.418090311240322. It is a common known fact that in e-proceeding, last six digits in acknowledgement number represent the date of submissions. Thus, the Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no name plates in the said companies. The report of Verification Unit is vague. No such report was provided to the assessee for making his comment. Such report cannot be made basis for making addition unless it is confronted to the assessee. In response to notice under section 133(6), six parties responded and filed their reply, which clearly proved that parties are available on their address. The addition @ 10% of entire sales and purchase are without any basis. The assessee has shown all purchases and sales in his books of account. All the sales and purchase identified by Assessing Officer were through banking channel. The assessee furnished complete details of purchases from Paradise Gems and aggregating Rs. 50,37,413/- and filed confirmation of account, purchase bills, bank statements and ITR. The assessee has shown sales to Namo Diamonds Pvt. Ltd., Binaca Gems Pvt. Ltd., Riddhi Gems, Shamita Trading Pvt. Ltd., Secure Exim Pvt. Ltd. and Komal Exim Pvt. Ltd., total aggregate sales were only of Rs. 10.85 crore. The assessee furnished complete details which consist of sales bill, confirmation of account and bank statement. No adverse finding was given on such evidences. Thus, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2022 in the following manner; Sr No. Name of parties Nature of transaction sales/purchase Amount Rs. 000/- 1 Paradise Gems Pvt Ltd Sales or Purchase 50,27,413/- 2 Namo Diamonds Pvt Ltd Purchase 99,7524/- 3 Paradise Gems Pvt Ltd Sale 50,27,413/- 4 Binaca Gems Pvt Ltd Purchase 2,19,45,138/- 5 Ronak Gems Purchase 9,47,125/- 6 Shamita Trading Pvt Ltd Purchase 22,58,548/- 7 Green Velly Gems Pvt Ltd Sales 50,37,413/- 8 Paradise Gems Pvt Ltd Sales 50,27,413/- 9 Secure Exims Pvt Ltd Sales 2,27,92,967/- 10 Komal Exims Pvt Ltd Sales 2,92,36,908/- Total Rs. 9,82,97,862/- 19. However, at the time of passing assessment order, the AO considered entire sales and purchases for making disallowance, which was not the case of AO at the time of re-opening. On careful perusal of details in the above table, we find that there is duplicate entry at serial number one and three of same amount of same party. We further find that during assessment, the AO has not disputed the sales or purchases. The book profit of assessee was not doubted. The AO simply rejected the books of account without recording any satisfaction as to how the books result is not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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