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Income Tax Appellate Tribunal, “B”
Before: SHRI C. N. PRASAD, JM & SHRI S. RIFAUR RAHMAN, AM
The Dy. Commissioner of M/s B. Vijaykumar & Co. Income Tax, Central The Plaza, 11th Floor, Circle 3(3), Mumbai बिधम/ 55 Gamdevi, Mumbai-400 Room No. 1913, 19TH Vs. 007 Floor, Air India Bldg, Nariman Point, Mumbai-400 021 स्थायीलेखासं./जीआइआरसं./ PAN No. AAAFB0816F (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by Shri Shashi Tulsiyan, AR : प्रत्यथीकीओरसे/Respondentby : Shri Rahul Raman, DR सुनवाईकीतारीख/ : 20.10.2020 Date of Hearing घोषणाकीतारीख / : 04.11.2020 Date of Pronouncement आदेश / O R D E R PER S. RIFAUR RAHMAN (ACCOUNTANTMEMBER): The present appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-51, in short ‘Ld. CIT(A)’, Mumbai, dated 27.02.19 for AY 2012-13 & 2013-14 respectively.
2 & 2314/Mum/2019 M/s B. Vijaykumar & Co 2. Since the issues raised in both the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed of by this consolidated order.
The brief facts of the case are that assessee is engaged in the business of diamond trading and real estate. On information from Sales Tax Department, a search and seizure action was taken in the offices and residential premises of assessee and its group concern and it was alleged that assessee and its group concern are indulged in bogus purchases. Accordingly, assessment was reopened and AO made addition @ 9% on account of bogus purchases by relying on various judgments.
Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee, restricted the addition @ 6% as against 9% as was done by the AO by relying on the previous decision in assessee’s own case for Assessment Year 2007-08. Accordingly, Ld. CIT(A) partly allowed the appeal of the assessee.
3 & 2314/Mum/2019 M/s B. Vijaykumar & Co 5. Now before us, the assessee is in appeal challenging the order of Ld. CIT(A) in confirming the addition @ 6% on account of alleged bogus purchases. 6. At the outset, Ld. AR appearing on behalf of the assessee submitted before us that this ground is squarely covered by the order of Coordinate Bench of Hon’ble ITAT in ITA 2833/Mum/2017 for AY 2007-08 in assessee’s own case, wherein Hon’ble ITAT has restricted the bogus purchase @ 3%.
7. On the other hand, Ld. DR relied on the orders passed by revenue authorities, however he conceded that this ground is covered by the order of ITAT.
Considered the rival submission and material placed on record. We notice from the records that the identical ground raised in the present appeal has already been decided by the Coordinate Bench of ITAT in for AY 2007-08 in assessee’s own case on merits. For the sake of clarity, which is reproduced below:-
We have considered the issue and gone through the facts and circumstances of the case. Before us, the assessee has filed copy of Tribunal order in assessee’s 4 & 2314/Mum/2019 M/s B. Vijaykumar & Co sister concern in the case of B. Vijaykumar Jewellers vs. DCIT in ITA No. 2835/Mum/2017 vide dated 22.08.2017, wherein Tribunal has accepted the restriction of 3% net profit on the alleged bogus purchase and for this Tribunal observed in Para 5 as under: - “5. I notice that the assessee could not conclusively prove that the diamonds were purchased only from the concerns stated above, since the assessee did not produce those parties before the AO. Hence one of the possible views is that the assessee could have purchased the diamonds from some other person and could have obtained only the bills from the above said concerns. There is also a possibility; in that case, the assessee could have purchased goods at a price lower than the apparent consideration. The task of the tax officials was to determine the profit element embedded in the said purchase. The AO has estimated the same at 8% and the Ld CIT(A) has estimated the same at 6%. According to Ld A.R, these diamonds have been exported and hence there will not be much variation in the price as the prices of diamonds would depend upon the quality. There is merit in this submission also. The Ld A.R, in the alternative, submitted that the profit 5 I.T.A. No. 2313 & 2314/Mum/2019 M/s B. Vijaykumar & Co element may be estimated at a reasonable rate. I have noticed earlier that the assessee has declared transactional margin of 5.61% on the sales. Hence, considering these aspects, I am of the view that the profit estimated by Ld CIT(A) at 6% is on the higher side. Accordingly I modify the order passed by Ld CIT(A) and direct the AO to sustain the addition to 3% of the value of alleged bogus purchases and in my view, the same would meet the ends of justice. I order accordingly.”
6 Hence, respectfully following the Tribunal decision in assessee’s sister concern (supra), we direct the AO to restrict the net profit at 3% of the bogus purchases.
In the result, the appeal of the assessee is partly allowed.
Therefore, respectfully following the above decision of Coordinate Bench in assessee’s own case which is applicable mutatis mutandis in the present case, we are inclined to restrict the disallowance @ 3%. Therefore, we direct the AO to restrict the disallowance @ 3% of the bogus purchases. Accordingly, we partly allowed.