INCOME TAX OFFICER, WARD- 2(3)(6), SURAT, SURAT vs. SAMPATRAJ KANAKMAL JAIN, SURAT

आदेश / O R D E R Per B.M. Biyani, A.M.:

The captioned three (3) appeals relating to the same assessee have been filed by respective parties as per these details - ITA 215/SRT/2026 filed by Revenue and ITA 272/SRT/2026 filed by Assessee are cross-appeals for AY 2013-14. ITA 216/SRT/2026 is filed by Revenue for AY 2014-15.

“3.1 The addition was made on the ground that certain accommodation entries were made by the assessee. The accommodation entries were stated to have been provided by bogus companies of Bhanvarlala Jain group. The companies named Parvati Exports, Mahalaxmi Gems Pvt. Ltd. and Mayur Exports, from whom the alleged bogus purchases were made by the assessee, were according to the department non-genuine entities, not engaged in the actual business. 3.2 While the Assessing Officer made addition as above, in the appeal preferred by the assessee, the Commissioner of Income Tax (Appeals), passed order dated 20.2.2017 restricting the addition to 12.5% of the purchases amounting to Rs. 54,25,040/-.

3.3 It appears that cross appeals came to be preferred before the Income Tax Appellate Tribunal against the decision of the appellate Commissioner. The Income Tax Officer preferred Appeal No. 1152 of 2017, whereas the assessee preferred Appeal No. 1379 of 2017. 3.4 The Tribunal restricted the addition to 6% of the disputed purchases shown by the assessee. XX 5.3 Considering the facts and relevant aspect, the Income Tax Appellate Tribunal partially allowed the appeal of the assessee to further reduce the disallowance at 6%. In so concluding, the Tribunal observed in paragraph No.21 as under, ".......during the financial year under consideration the assessee has shown total turnover of Rs. 66,09,62,458/-. The assessee has shown Gross Profit @ 78% and net Profit @ 0.02% (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 transaction, but only the income component of the disputed transaction, to 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." 6. The view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court.

6.1 The another weighing aspect is that the Tax Appeal No. 674 of 2022 in Principal Commissioner of Income Tax 1, Surat vs. M/s. Surya Impex which came to be decided by the co-ordinate Bench on 16.1.2023 dealt with the very issue of accommodation entries provided by Bhanwarlal Jain Group. The group involved in the said case is the same group who is saddled with allegations of providing accommodation entry to the assesse. In M/s. Surya Impex (supra) the court held in favour of the assessee. The questions of law involved in the said case were of the same nature and were in the context of similar facts involving the same group. 7. For all the above reasons, substantial questions of law proposed by the appellant in this appeal stands already answered. No question of law much less any substantial questions of law arise in the facts of the present case. No other substantial question of law arises. The appeal is meritless. It is summarily dismissed.” 6. Faced with above situation, we do not find any reason to upset the impugned order passed by Ld. CIT(A). The same is hereby upheld. Consequently, these appeals filed by parties are dismissed.

Order pronounced in open court on 28/10/2026

Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER //True Copy// Surat िदनांक /Dated : 28/10/2026 Patel/Sr. PS Copies to: (1) The appellant HEMA Digitally signed by (2) The respondent HEMA KISHORE JAKKA KISHORE (3) CIT Date: 2026.10.29 (4) CIT(A) JAKKA 17:09:30 +05'30' (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Surat Bench, Surat

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