D MANISH & CO,MUMBAI vs. ACIT 19(1), PAREL
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH
MUMBAI
BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER
&
EC-3100, E-Tower Bharat
Diamond Bourse
Bandra Kurla Complex
Bandra East
Mumbai – 400 051
PAN/GIR No.AAAFD2847A
(Appellant)
..
(Respondent)
D
Manish
And Company
EC-3100,
E-Tower
Bharat
Diamond
Bourse
Bandra Kurla Complex
Bandra East
Mumbai – 400 051
Vs. DCIT 19 (1) Mumbai
PAN/GIR No.AAAFD2847A
(Appellant)
..
(Respondent)
Assessee by Shri Rahul Sarda
Revenue by Shri Umashankar Prasad,
CIT DR
Date of Hearing
02/12/2025
Date of Pronouncement
23/12/2025
D Manish And Company
2
आदेश / O R D E R
PER AMIT SHUKLA (J.M):
These cross appeals have been filed by the Revenue as well as by the assessee against the order dated 23 July 2025
passed by the learned Commissioner of Income Tax (Appeals),
National Faceless Appeal Centre, Delhi, arising out of the assessment framed under section 143(3) read with section 147 of the Income Tax Act, 1961, for the assessment year
2012–13. Since both the appeals emanate from the same impugned order and involve common facts and interlinked issues, they were heard together and are being disposed of by this consolidated order for the sake of convenience and completeness.
2. The dispute in the present appeals essentially revolves around the addition made on account of alleged bogus purchases. The Assessing Officer had disallowed the entire amount of purchases aggregating to ₹8,47,61,242 by treating the same as unexplained expenditure under section 69C of the Act. The learned CIT(A), while not accepting the assessee’s contention in entirety, restricted the disallowance to the extent of ten percent of the said purchases by applying an estimated gross profit rate. The Revenue is aggrieved by the restriction of the addition, whereas the assessee is aggrieved by the sustenance of any addition at all.
3. The assessee is engaged in the business of purchase of cut and polished diamonds and export thereof. It filed its return of income for the year under consideration on 18
D Manish And Company
3
August 2012 declaring a total income of ₹50,55,219. Subsequently, the assessment was reopened by issuance of notice under section 148 dated 13 March 2019 on the basis of information received from the Investigation Wing pursuant to a search and seizure action carried out on 3 October 2013 in the case of the Bhanwarlal Jain Group, who were allegedly involved in providing accommodation entries in the form of bogus purchase bills. On the basis of the said information, it was alleged that the assessee had obtained bogus purchase bills from certain parties during the relevant year.
The details of the alleged purchases from the said parties, along with the corresponding amounts, were set out in the assessment order and are required to be reproduced verbatim. The same are, therefore, left blank here to be incorporated in the final order. Sr. No. Name of Seller Amount (Rs.)
Prime Star 56,28,500 2. Mohit Enterprises 2,09,95,772
Mayur Exports 2,09,46,654 4. Jewel Diam 79,54,245 5. Millenium Stars 2,01,32,835 6. Daksh Diamonds 91,03,236
Total
8,47,61,242
In the assessment order, the Assessing Officer has largely reproduced the information received from the Investigation Wing and the statements recorded during the course of search proceedings in the case of third parties. However, despite the assessee having filed detailed replies D Manish And Company
4
and voluminous documentary evidence in support of the purchases, the Assessing Officer did not undertake any independent enquiry, nor did he point out any specific defect in the books of account, stock records or documentary evidence furnished. Without dealing with the assessee’s explanations in a meaningful manner, he proceeded to treat the entire purchases of ₹8,47,61,242 as unexplained expenditure under section 69C.
6. In appeal, the learned
CIT(A) considered the submissions of the assessee and took note of judicial precedents, including the decision of the Tribunal in Leelaben
Kantilal Parekh and the judgment of the Hon’ble Bombay
High Court in Paramshakti Distributors Pvt. Ltd. Following the said decisions, the learned CIT(A) held that where the purchases are not fully verifiable, only the profit element embedded therein can be brought to tax, and accordingly restricted the addition to ten percent of the disputed purchases.
7. We have carefully considered the rival submissions and perused the material available on record. It is evident that during the course of assessment proceedings, the assessee had furnished exhaustive documentary evidence in support of the purchases. These included copies of purchase invoices issued by the impugned parties, quantitative details of purchases and sales, stock register for the relevant financial year, bank statements evidencing payment through banking channels, export invoices, shipping bills and export realization documents, confirmations of accounts from the D Manish And Company
5
suppliers and affidavits from each of the parties affirming the sale and delivery of diamonds to the assessee along with invoice wise details of quantities and amounts. These documents were placed on record and form part of the paper book.
Copy of details of Purchases from Mayur Exports, Jewel
Diam, Mohit Enterprises, Daksh Diamonds, Millenium
Stars, Prime Star and payments details made to the aforesaid parties along with subsequent export sale details.
Copy of Purchase Invoice from Mayur Exports, Jewel
Diam, Mohit Enterprises, Daksh Diamonds, Millenium
Stars, Prime Star and its subsequent export sales invoices, Shipping Bills and export supporting documents.
Copy of Stock Register (FY 2011-12)
Bank statements showing payment made towards the purchases from Mayur Exports, Jewel Diam, Mohit
Enterprises, Daksh Diamonds, Millenium Stars, Prime
Star
Copy of Confirmation of Accounts from Mayur Exports,
Jewel
Diam,
Mohit
Enterprises,
Daksh
Diamonds,
Millenium Stars, Prime Star
Copy of Affidavits from Mayur Exports, Jewel Diam, Mohit
Enterprises, Daksh Diamonds, Millenium Stars, Prime
Star
It was also specifically pointed out that in the assessee’s own case for assessment year 2010–11, on identical facts involving the same nature of allegations, the Tribunal had restricted the addition to three percent of the alleged purchases. Similarly, for assessment year 2013–14, the D Manish And Company
6
learned CIT(A) had adopted a comparable approach. Despite these submissions, the Assessing
Officer neither distinguished the earlier orders nor brought on record any fresh material to justify a departure from the settled position.
A perusal of the assessment order clearly shows that the Assessing Officer has not rejected the books of account under section 145. The stock register has been accepted. The quantitative tally of purchases and corresponding export sales has not been disputed. The payments for the purchases have been made through banking channels and no evidence has been brought on record to show that the payments were returned to the assessee in cash or otherwise. Once the consumption of goods is accepted and the resultant sales, particularly export sales, are also accepted, the logical corollary is that the purchases cannot be treated as entirely non-existent.
The affidavits filed by the suppliers confirming the sale and delivery of goods to the assessee have also not been controverted by the Assessing Officer. No cross examination has been carried out, nor has any material been placed on record to discredit the contents of the affidavits. In the absence of any rebuttal, such affidavits carry evidentiary value and cannot be brushed aside merely on the basis of third party information.
The learned Departmental Representative relied upon the judgment of the Hon’ble Bombay High Court in the case of D Manish And Company
7
Mumbai; Dated 23/12/2025
KARUNA, sr.ps
Copy of the Order forwarded to :
BY ORDER,
(Asstt.