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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
This appeal is filed by the assessee for assessment year 2011 – 12 against the order passed by the National faceless appeal Centre (NFAC) (the learned CIT A) dated 13/9/2021 wherein the appeal filed by the assessee against the order dated 5/12/2018 passed by the Asst Commissioner of income tax, Circle – 19 (3) Mumbai (hereinafter referred to as the AO) u/s 13 (3) read with Section 17 of the income tax act, 1961 (the act) was dismissed. The learned assessing officer made an addition of Rs 1,15,38,010/– on account of bogus purchases from
The assessee raised following grounds of appeal
“A) Addition on account of alleged bogus purchases - Rs. 1,15,38,010/
1) The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)] erred on facts and in law in upholding the order passed by the Assistant Commissioner of Income Tax 19(3), Mumbai (AO) making an addition on account of alleged bogus purchases of Rs. 1,15,38,010/-.
2) The learned CIT(A) while upholding the addition of Rs. 1,15,38,010/- on account of alleged bogus purchases further erred in holding that that appellant tried to substantiate his claim with the help of fabricated documents which were themselves a smoke screen to cover up the true nature of the transactions.
3) The learned CIT(A) while upholding the addition of Rs. 1,15,38,010/- on account of alleged bogus purchases further erred in holding that the genuineness of the transaction could not be accepted in the absence of documents without appreciating that the appellant had furnished various evidences in support of their claim of purchases.
5) Without prejudice to the above, the learned CIT(A) erred in not appreciating that the appellant having sold the goods purchased from M/s. Aadi Impex and having produced quantitative records and correlation of the purchases and sales could not have confirmed the entire purchases of Rs. 1,15,38,010/-.
6) If your honours are not inclined to delete the entire addition, the addition may be sustained to a reasonable gross margin of the purchases of Rs. 1,15,38,010/-.”
Brief facts of the case shows that assessee is a partnership firm engaged in the business of trading in Cotton polished diamonds. It filed its return of income for the year on 26/9/2011 declaring a total income of ₹ 6,730,580/–. The case of the assessee was reopened by issue of notice u/s 148 of the income tax act on 16/3/2016. The reason for the reopening of the assessment shows that during the search and survey action carried out by the investigation wing Mumbai in case of Shri Rajendra Jain on 3/10/2013 it was found that he’s an accommodation entry provided and running several Benami concerns operated by him and his engaged in providing accommodation entries. The name of the assessee was found is a beneficiary where the bill amount of Rs 115,38,010/– was found. The assessee was
Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the National faceless appeal Centre confirmed the order of the learned assessing officer.
On appeal before us, the learned authorised representative submitted a paper book containing 69 pages and also relied upon the decision of the honourable Bombay High Court in case of the principal Commissioner of income tax – 17 versus M/s Mohammad Haji Adam and Co income tax appeal number 1004 of 2016 dated 11 February 2019 to state that when sales are undisputed, the addition of total purchase price cannot be made. He submitted that estimate of profits is required to be made.
We have carefully considered the rival contention and perused the orders of the lower authorities. We find that assessee is a company, which is dealing in diamonds and precious stones. During the year it has recorded a sale of Rs. 13,45,31,722/– against the purchases of Rs. 10,65,59,447 and earned a gross profit of Rs 1,05,92,074. The assessee has made a purchase of Rs. 50,41,996/– as per belated 12/05/2010 and Rs. 66,11,394 as per bill dated 1/7/2010 from M/s Adi Impex . The invoices show the quantity of weight in carats of diamonds. The payment is made for such invoices by the account paychecks. At page number 34 onwards of the paper book assessee has submitted the quantitative details of diamond purchased, these diamonds have gone into the sales, the stock register produced before us also confirmed the same. The accounts of the assessee are audited u/s 44AB of the act. Therefore, admittedly in this case sales are not disputed. Honourable Bombay High Court in PCIT versus Messer’s Mohamad Haji Adam and Co (supra) in paragraph number eight is categorically held that when there was no discrepancy between the purchase shown by
With respect to the grounds of appeal numbers 1 – 5, we hold that those grounds do not survive in view of our decision in ground number 6 of the appeal hence those grounds are dismissed.
In the result appeal of the assessee is partly allowed
Order pronounced in the open court on 29.06.2022.