INCOME TAX OFFICER-12(2)(1), MUMBAI, MUMBAI vs. ELEGLANCE JEWELLERY PRIVATE LIMITED, MUMBAI

However, with regard to the quantum of addition, the Ld. Commissioner concurred with the submission of the Assessee that the Ld. AO has not disputed the sales made by it and since there can be no sales without purchase, only the profit element embedded in the purchases may be added back.

The Ld. Commissioner, therefore, by considering that the order of the Task Force constituted by the Ministry of Commerce and Industry, estimating the gross profit margin in the trade ranging from 1 – 3%, affirmed the addition to the extent of 3% of the alleged bogus purchases, just and fair to plug the leakage of revenue on account of bogus purchases having been made by the Assessee. And accordingly, addition to the extent of Rs. 82,510/- being 3% of the bogus purchase has been affirmed by the Ld. commissioner and rest of amount of Rs. 26,67,832/- has been deleted. 6. Thus, both the parties being aggrieved have preferred their respective appeals, challenging the order of the Commissioner. The Ld. DR mainly focused that the Ld. Commissioner erred in restricting the addition to 3% of bogus purchases, as against 100% of bogus purchases added by Ld. AO, without appreciating the fact that Assessee is one of the beneficiary of bogus purchases from Aadi & Sparsh, the concerns of Rajendra Jain/ Sanjay Choudhry / Dharmi Chand Jain group, Indore in providing accommodation entries in the name of bogus purchases and bogus loans to various beneficiaries. 7. This court observes that the Assessee before the authorities below with regard to the purchases made from the aforesaid parties, has filed the following documents. Aadi Impex

And therefore, the Assessee by producing above documents has duly discharged its prima facie onus cast u/s 68 of the Act. This court, further, observe that Hon’ble co-ordinate bench of the tribunal at Mumbai in the case of Chandra Exports vs. ITO (ITA No.4444/Mum/2018) decided on 28th Feb, 2019 has also considered the identical purchases made from Aadi & Sparsh and ultimately deleted the addition restricted by the Ld. commissioner to the extent of 3% of purchases.

From the aforesaid analyzations, it goes to show that the Assessee has been able to establish its prima facie onus and also claimed before the authorities below that persons who made the statements qua accommodation entry, in fact have retracted their statements subsequently. 10. Further the judgment as relied on by the Revenue, in the case of Drisha Impex (P) Ltd. Vs. Principal Commissioner of Income Tax (2025) 177 taxmann.com 808(SC), wherein, the Hon’ble Apex court affirmed the judgment of the Hon’ble High Court, in fact, dealt with a case, where no proof of any documentary evidence was filed and there was no correlation between the purchase and sales. And the Assessee expressed its inability to furnish purchase confirmations and addresses of suppliers and therefore, it was held that the Assessing Officer was justified in making the addition to income of the Assessee on account of disallowance of peak purchases made from the parties and therefore said case is factually dissimilar to the instant case, as in this case, the Assessee, has duly produced all the relevant documents referred to above and therefore discharged its onus cast, under the relevant provisions of law. 11. Thus, this court on the aforesaid reasons, though inclined not to sustain the addition but for substantial justice and ends of litigation and to preserve the leakage of revenue, if any, as the Assessee also agreed to, affirming the order of the Ld. Commissioner in restricting the addition to the tune of 3% of the purchases as the same. Thus, the impugned order is upheld. 12. Coming to the Cross Objection filed by the Assessee, the Ld. Counsel, at the outset, for the ends of litigation submitted that in this case if the order of the Ld. Commissioner is upheld, then he will not press the CO. Thus, in view of the judgment in Revenue’s appeal the cross objection stands dismissed.

In the result, the Revenue’s appeal and the Assessee’s cross- objections stands dismissed. Order pronounced in the open court on 28/11/2025. NARENDER KUMAR CHOUDHRY (न्यातयक सदस्य/JUDICIAL MEMBER)

अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त / CIT 4. विभागीय प्रविवनवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,