PIYSHRI DIAMONDS,MUMBAI vs. ITO 19 (2)(5), MUMBAI

M/s. Piyushri Diamonds Assessment Year 2008-09 29/IT-322/ITO-19(2)(5)/2017-18 dated 01/06/2018 on following grounds of appeal: - “1) On the facts & circumstances and in law the learned CIT(A) - 29, Mumbai [CIT(A)] erred in confirming the total addition of Rs.2,02,102/- at 3% of the alleged accommodation entries of purchases of Rs.67,36,750/- from M/s. Kothari & Co which was merely on the basis of suspicion, surmises or conjecture. (2) On the facts and circumstances and in law and in the interest of justice, the learned CIT(A) failed to appreciate that the allegation was based upon a statement of Mr. Bhawarlal Jain allegedly admitted during the search and survey action that he was indulged in to accommodation business. (3) On the facts and circumstances Your Appellant prays that the alleged addition @ 3% on the alleged purchases of Rs. 67,36,750/- may be deleted.” 2.1 Facts on record would reveal that the assessee being resident firm stated to be engaged in trading & export of diamonds was assessed u/s 143(3) r.w.s 147 of Income Tax Act, 1961 on 16/12/2015 wherein the assessee was saddled with estimated additions of Rs.5.38 Lacs on account of non-genuine purchases. Pursuant to receipt of certain information from DGIT (Investigation) during search operations on Bhanwarlal Jain Group, it transpired the assessee made purchases of Rs.67.36 Lacs from one of the group entities namely M/s Kothari & Co. The group was stated to be engaged in providing accommodation entries without carrying out any real business activities. Consequently, as per due process of law, the case was reopened vide issuance of notice u/s 148 on 23/03/2015 followed by statutory notices u/s 143(2) & 142(1), wherein the assessee was directed to substantiate the purchases. 2.2 Although the assessee defended the purchases, however, relying upon information gathered during search operations, learned AO estimated the additions against these purchases @8%. The learned first appellate M/s. Piyushri Diamonds Assessment Year 2008-09 authority, keeping in mind the applicable VAT rate on diamonds, reduced the estimation to 3%. Still aggrieved, the assessee is under appeal before us. It appears that the revenue has not appealed any further.

We have heard and considered the rival submissions.

Upon due consideration, we find the learned AO estimated the additions at 8% which was reduced to 3% keeping in view the assessee’s nature of business and VAT rate applicable on diamonds. We find the estimation to be quite fair & reasonable and do not find any reason to interfere in the impugned order.

The appeal stands dismissed.