M/S SIMONI GEMS,MUMBAI vs. DY. CIT CC 2 (1), MUMBAI

This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals) -48, Mumbai [in short ‘the CIT(A)’] dated 27/06/2019 for the assessment year 2011-12.

Shri Rasesh Shah appearing on behalf of the assessee submitted that the assessee is a trader/exporter of diamonds. The assessment in the case of assessee for assessment year 2011-12 was reopened on the ground that the assessee has obtained accommodation entries amounting to Rs.79,19,339/- from M/s. Prime Star. To prove genuineness of purchases, the assessee furnished various documents including affidavit from M/s. Prime Star confirming the transactions. The Assessing Officer and CIT(A) disbelieved the same. The Assessing Officer made addition of Rs.6,33,547/- by estimating G.P @ 8% on alleged bogus purchases. The CIT(A) has upheld the same. The ld. Authorized Representative of the assessee further contended that additions of similar reasons were made in assessment years 2007-08 to 2010-11 and in the subsequent assessment years i.e. AY 2012-13 to 2014-15. The matter travelled to the Tribunal. The Tribunal in to 752/Mum/2018 for assessment years 2007-08 to 2010-11, 2012-13 and 2013-14 decided on 13/03/2019, after examining the facts and placing reliance on the decision of Tribunal in the case of M/s. Sejal Exports (India) vs DCIT in ITA No.3854/Mum/2017 decided on 04/7/2018 deleted the entire addition made on account of non-genuine purchases. The facts in the impugned assessment year are identical.

On the contrary, Shri Sushil Kumar Mishra representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. Departmental Representative submitted that the assessee had obtained accommodation entries from M/s. Prime Star, belonging to Bhanwarlal Jain group a leading entry provider of Mumbai. During search and seizure action on Bhanwarlal Jain group it was found that he is operating ‘benami’ firms for the sole purpose of providing accommodation entries. The name of assessee had figured in the data compiled during search and seizure action. The assessee is one of the beneficiaries of bogus entries. However, the ld. Departmental Representative fairly admitted that additions for similar reasons made in assessee’s case in the preceding and succeeding assessment years were deleted by the Tribunal.

Both sides heard, orders of authorities below examined. Reassessment proceedings were initiated in the case of assessee on the ground that the assessee has allegedly obtained accommodation entries from M/s. Prime Star a firm belonging to Bhanwarlal Jain group. During assessment proceedings the assessee had furnished documentary evidence to prove genuineness of purchases, including confirmation from M/s. Prime Star. On identical set of facts additions were made in the hands of assessee being one of the beneficiary of accommodation entries provided by Bhanwarlal Jain group of firms in preceding assessment years starting from assessment year 2007-08 to 2010-11 and succeeding assessment years i.e. AY 2012- 13 to 2014-15. The additions were confirmed by the CIT(A). The assessee carried the issue in appeal before the Tribunal. The Tribunal deleted the entire addition vide order dated 13/3/2019 (supra).

Both sides are unanimous in stating that the facts in the impugned assessment year are identical to the facts in appeals decided by the Tribunal in assessee’s own case in to 752/Mum/2018 (supra). I find no reason to take a different view. Following the decision of Co-ordinate Bench in assessee’s own case, the addition on account of bogus purchases is deleted and appeal of the assessee is allowed.