M/S. SAI DIAMONDS,MUMBAI vs. ACIT, CIRCLE 19(3), MUMBAI

Briefly stated, the facts of the case are that on receiving information from DGIT (Inv.), Mumbai, the AO came to know that the assessee has taken accommodation entries from a transaction with Rajendra Jain Group amounting to Rs.39,65,372/-. The name of the entry provider was Kalash Enterprises. The AO treated the entire gains of bogus purchases as income of the assessee and added the same. The addition was challenged before the ld. CIT(A) and before the appeal could be decided, the Co-ordinate Bench in assessee’s own case in AY 2012-13, on identical set of facts, adopted 6% as fair estimation of the profit element imbibed in alleged bogus purchases and directed the AO to restrict the disallowance to 6% of the bogus purchase, reduced by the gross profit margin already declared by the assessee in respect of alleged bogus purchases.

However, taking a leaf out of the above findings of the Co- ordinate Bench, the ld. CIT(A) simply directed the AO to restrict the disallowance to 6% of the bogus purchases without giving any relief to the gross profit already declared by the assessee on the alleged bogus purchases.

We find that in the year under consideration, the gross profit shown by the assessee is 3.67%. Therefore, the assessee will get relief to this extent. The AO is directed to restrict the addition to 2.33% of the alleged bogus purchase which will be in line with the decision of the Co-ordinate Bench (supra).

In the result, appeal of the assessee is partly allowed and that of the revenue is dismissed. Order pronounced in the Court on 20th February, 2025 at Mumbai. (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated /02/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs