DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, JAIPUR, JAIPUR vs. SUNDER DAS SONKIYA, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA Nos. 453 & 454/JP/2024 fu/kZkj.k o"kZ@Assessment Years : 2012-13 & 2013-14 cuke Deputy Commissioner of Income Sunder Das Sonkiya Vs. Tax, Central Circle-04, Jaipur Flat Sonkia Bhawan, SMS Highway Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AKHPS 7413 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. S. R. Sharma, CA & Sh. R. K. Bhatra, CA jktLo dh vksj ls@ Revenue by : Sh. Anup Singh, Addl.CIT lquokbZ dh rkjh[k@ Date of Hearing : 29/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 09/10/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

These two appeals are filed by revenue, as there were dissatisfied with the findings recorded in the order of the Commissioner of Income Tax (Appeals) Jaipur-5 [ for short CIT(A) ]. Both orders are dated 06/02/2024 and dispute relates to assessment year 2012-13 & 2013-14. The said order of the ld. CIT(A) arise against the order dated 04.09.2019 & 30.03.2022 respectively passed under section 143(3) r.w.s 147 & 147 rws 144B of the Unit respectively.

2. Since the issues involved in these appeals are almost identical on facts and are almost common, except the difference in figure of dispute.

Thus, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order.

3. At the outset, the ld. DR has submitted that the matter in may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount of addition. The ld. AR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of is taken as a lead case.

4. Before moving towards the facts of the case we would like to mention that the revenue has assailed the appeal in on the following grounds;

“(i) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.43,33,606/- without appreciating the fact that assessee has shown bogus purchase of Rs 1,73,34,424/- during the year from a bogus concern.

DCIT vs. Sunder Das Sonkiya (ii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.43,33,606/ without appreciating the fact that during search and post search enquiries Shri Rajendra Jain in his statement had described the modus operandi to their business accepting the fact that they are indulged in issuing of bogus bills on commission basis and this admission makes all the transactions done by them as mere paper transactions; in the statement Shri Rajendra had categorically admitted to have floated a bogus concern; there are concrete evidences that the assessee indulged in bill shopping from bogus concern of Shri Rajender Jain & his associates

(iii) The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellant proceeding.”

5. At the outset of hearing, the Bench observed that there is delay of 03 days in filing of the appeal by the revenue. The ld. DR stated that the appeal is filed online on 09.04.2024 and the order of the ld. CIT(A) was received on 06.02.2024. Due to year end work load and the technical glitches the delay of bringing this appeal in an online mode for three days be condoned in the interest of justice. At the same time ld. AR of the assessee did not oppose to the prayer of ld. DR. Considering the factual aspect we condone the delay of 3 days in filling this appeal in the interest of justice.

6. Succinctly, the fact as culled out from the records is that the assessee is an Individual and is engaged in export of gems & jewellery after purchasing it from local market under the name & style of M/s S Naveen Jewellers. The assesses had filed return of income declaring depreciation. The return was processed u/s 143(1) and no notice u/s 143(2) was issued. Thereafter AO after approval from competent authority- initiated reassessment proceedings by issue of notice u/s 148 on 28-03- 2019 after recording reasons. As the revenue was having the information which was received from Commissioner of Income-tax-1, Jaipur vide his office letter no. 3369 dated 27.02.2014 along with letter of DCIT, Central Circle-4, Surat vide his letter dated 30.11.2015. In the letter, it has been informed that during search and seizure operation u/s 132 by the DGIT (Inv.) - Wing Mumbai on 03.10.3013 in the group cases of Shri Rajendra Jain, Shri Sanjay Choudhary and Shri Dharmichand Jain of Mumbai, it was gathered that this group indulged in providing accommodation entries in the nature of bogus purchase. The DCIT, Central Circle-4, Surat having jurisdiction over the group also informed the name of beneficiary parties on the basis of scrutiny of seized material & statements recorded during the course of search operation, who had obtained bogus purchase bills from the above entry providers. In the list supplied by the DCIT, CC-4, Surat name of the assessee Shri Sunder Das Sonkia (Prop. M/s S. Naveen Jewellers) also find place who had obtained purchase bills amounting to Rs. 1,73,34,424/- from Mis Aadi Impex (Prop. Anoop Jain), M/s Arihant (Partner Shri Rajendra Jain & Manish Jain) and M/s Kriya Impex Pvt. Ltd. (Shri Rajendra Jain & Shri Manish Jain). As the assessee has inflated his purchases by Rs. 1,73,34,424/- by way of introducing nongenuine/unverifiable/bogus purchases in his books of account from the above entry providers it can easily be concluded that the assessee has also reduced his taxable business profit to the extent of Rs. 1,73,34,424.

The above transactions are related to the assessee wherein there is liability to pay taxes as per the Act, which was sufficient information that the assessee reduced his taxable business profit to the extent of Rs. 1,73,34,424. Therefore, there exist escapement of income and proceeding u/s. 148 was initiated.

6.1 Assessee complied with said notice u/s 148 and asked copy of reasons recorded for issue of notice, which was supplied. The assessee filed objections to said notice u/s 148 on 19-07-2019 and AO disposed his objections. The reassessment u/s 143 (3)/147 completed by the AO at an income of Rs. 43,57,610/- by taking total income at 24,000 as per return filed and by disallowing 25% of said purchases of Rs. 1,73,34,424/- added the same as income of the assessee.

“5.2.1 I have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. It is seen that the Assessing Officer has disallowed purchase of Rs. 43,33,606/- being 25% of alleged purchases of Rs. 1,73,34,424/- found to be unverifiable by invoking provisions of section 145 (3) of the Act thereby rejecting books of accounts. The issue regarding unverifiable purchase has been decided by the Hon'ble ITAT, Jaipur and Hon'ble Rajasthan High Court wherein it was held that when purchases are unverifiable, income is to be estimated and for estimation of income of the assessee, application of G.P. is the best course of action based on average G.P. rate on past history. Base upon the same fact and purchase parties' name, similar nature of addition was made in the appellant's own case in earlier years.

5.2.2 In the appellant's own case in AY 2009-10, AO disallowed 25% of purchase and made addition at Rs 52,78,865/- on the similar facts and purchase parties name. The Ld CIT(A) estimated GP rate at 19.25% taking average of past years and restricted the addition up to 21,65,807/-. The Hon'ble ITAT vide order ITANO 1126/JP/2018 dated 15/04/2020, had given following judgment and deleted entire addition: We have considered the rival contentions and perused the material available on record. It is settled legal proposition that once the books of account were rejected, the AO can proceed to reassess the income on the basis of best judgment instead of resorting to making the addition to the books results. Further, for estimating the GP rate, the past results so declared and accepted/attained finality provides a reliable basis for estimating the GP rate. The same is the consistent position of this Bench as referred in decision in case of Bhura Mal Raj Mal Surana (ITA No. 409,407,499 & 622/JP/12 dated 15.12.2017) which has also been relied upon by the Id CIT(A) while passing the impugned order. In the instant case, the Id. CIT(A) has therefore rightly held that after rejection of books of accounts, the past history of the assessee has to be seen for estimating the gross profit rate. At the same time, we find that the basis of estimating the gross profit rate of 19.25% as against declared GP rate 14.99% is not discernable from the order of the Id. CIT(A) where he has only stated that purchases to the tune of Rs 2,11,15,458/- were found bogus/unverifiable which constitute 50% of total purchases. Further, he has not taken into consideration the fact that the assessee has started diamond trading business during the year under consideration wherein he has disclosed gross profit rate of 10%. Given that the assessee has disclosed gross profit rate of 10% in respect of diamond trading which is stated to be pretty robust as per industry standards and in respect of trading of semi precious stone and studded jewellery, he has disclosed a gross profit rate of 20% which is better than the average gross profit rate of last three assessment years, in the facts and circumstances of the present case, we find that even where the books of accounts have been rejected, there is no basis for making trading addition in the hands of the assessee. In this regard, reference can be drawn to the decision of Hon'ble of Rajasthan High Court in case of CIT vs Gotan Lime Khanij Udhyog (2002) 256 ITR 243 In light of aforesaid discussions and respectfully following the decisions referred supra, the addition of Rs 21,65,807/- so confirmed by the Id CIT(A) is hereby directed to be deleted and the ground of appeal so taken by the assessee is allowed.

5.2.3 In the appellant's own case in AY 2010-11, AO disallowed 25% of purchase and made addition at Rs 2,90,10,840/- on the similar facts and purchase parties name. The Ld CIT(A) estimated GP rate at 12% taking average of past years as against the declared G.P. rate of 9.34% and restricted the addition up to 41,23,468/-. The Hon'ble ITAT vide order dated 18/01/2021, had given following judgment and deleted entire addition:

14. After having gone through the decision of the Coordinate Bench in assessee's own case, we found that turnover and trading results of the assessee for the last three years are as under.

Studded jewellery

From the facts, we also noticed that export of assessee up to A.Y. 2008-09 was only of colour stones precious or semi-precious. However, from A.Y. 2009-10, the assessee started shifting to business of diamonds and in that year the export turnover was of colour stones precious or semi-precious and diamonds. However, in the year under consideration i.e. A.Y. 2010-11, the export sale is of mainly diamonds and therefore the export sale jumped to Rs. 15,92,82,240/- and it is a common fact that the profit margin in DCIT vs. Sunder Das Sonkiya diamond is much lesser than in colour stones which ranged between 6% to 7%. Therefore, as per the assessee, the G.P. rate of this year has fallen as compared to earlier years

The purchases made have been exported as it is and there is bill to bill tally of purchase and export. Photo copies of purchase bills have also been placed on record by the assessee. Therefore, according to us, in view of difference in the circumstances, the results of this year ie. A.Y. 2010-11 cannot be compared to the results of earlier year as the complete nature of business is changed from this year In view of the above facts, the allegation of reducing profit by obtaining non-genuine bogus purchase bills is wrong and not sustainable. There is increase in total gross profit and thus results can be held as progressive and therefore, in such circumstances no additions are called for. We have also considered the decision of the Coordinate Bench of Surat ITAT in case of Brij Kishore Radhey Shyam Sonkhiya Vs. DCIT (ITA No.(s) 364-369/SKT/2018 order date 02-08-2019 wherein exactly on similar facts the Coordinate Bench had held that "no addition can be called for on the facts of the case. Therefore, even the Coordinate Bench of Jaipur ITAT in assessee's case having similar facts, deleted the entire addition confirmed by the Id. CIT(A). Therefore, keeping in view the above facts and circumstances and discussion, we are also of the view that the additions confirmed by the Id. CIT(A) by applying G.P. rate of 12% as against the declared G.P. rate of 9.34% is uncalled for and bad in law and deserves to be deleted and hence the same is directed to be deleted.

5.2.4 In the appellant's own case in AY 2011-12, AO disallowed 25% of purchase and made addition at Rs 1,05,91,560/- on the similar facts and purchase parties name. The Ld CIT(A) vide order dated 29/11/2019 following the above ITAT decision in appellant's own case had estimated GP rate at 12% taking average of past years as against the declared G.P. rate of 11.18% and restricted the addition up to 5,72,667/-. Neither the department nor the appellant had filed further appeal on this decision of CIT(A).

The decision para is as under:-

As per the same, the average G.P. rate comes to 12.59% which has come down to 11.18% in A.Y. 2011-12. The assessee contended that in A.Y. 2008-09 & 2009-10 he was exporting mainly coloured gem stones while in this year export is of diamonds only wherein G.P. margin is much lesser as is commonly known in trade than that in coloured gem stones. It is thus contended that past year declared G.P. rates of A.Y. 2008-09 & 2009-10 are not comparable with the G.P. rate declared in this year and same is comparable from A.Y. 2010-11 and G.P. rate declared for this year is better than A.Y. 2010-11. The assessee filed details of purchases and exports of this year in support of contention which was found DCIT vs. Sunder Das Sonkiya factually correct. Looking to these facts and also keeping in mind that certain purchases remained unverifiable, provisions of section 145 (3) of the I. T. Act, 1961 are hereby applicable as the books of accounts are not reliable, Therefore, the Assessing Officer is directed to apply GP rate of 12% on total turnover of Rs. 7,03,93,153/- which results in addition of Rs. 5,72,667/- (12% of Rs. 7,03,93,153 declared and accepted income by the AO of Rs. 78.74,511). Accordingly, appellant gets relief of Rs. 1,00,18,893/-.

5.2.5 In the case GP chart of last 3 years and the current years are as under:- A.Y Gross Profit Turnover GP rate 2009-10 7614260 50805544 14.99% 2010-11 14510400 1555282240 9.34% 2011-12 7874511 70393153 11.18% 2012-13 5090274 39005078 13.05% Average GP rate of last 3 years - 11.83% Average GP rate of last 2 years (same business as held by ITAT) (- 10.26)%

5.2.6 In the year under consideration, the facts of the case and name of purchase parties are also same. Further the appellant had declared G.P. rate of 13.05% which is much higher as compared to A .Y.2( & 2011-12 where in the nature of trade of assessee is similar as that of the year.

In A.Y. 2009-10 as held by ITAT the business of assessee was mixed i.e. export of colour stone, diamonds and studded jewellery while in A.Y. 2010-11 & A. Y * 0.2 deg is mainly of diamond and in this assessment year under consideration is that of exports of diamonds only. The results declared by the assessee of this year are thus higher from earlier years. Hence following the judgement of hon'ble ITAT in the appellant's own case and considering the higher GP rate from earlier years, the addition made by the AO of Rs 43,33,606/- is hereby deleted. Thus, grounds of appeal on this issue are hereby allowed.” though low as per the circular of DBDT, the case falls in the exception so ld.

DR submitted that the case be heard on merits of the issue instead of dismissing on low tax effect.

8.1 On the merits of the case ld. DR submitted a print out of the mint wherein it was new item that “US tourist duped in Jaipur: Jewellery shop owner sells Rs. 300 ornaments for Rs. 6 Cr. By showing such instance he has submitted that the assessee is trying to inflate bogus purchases to reduce the profit margin. With that back ground he submitted that the case of the assessee was reopened based on the search conducted at Mumbai in case of Rajendra Jain group on 03.10.2013 wherein it has been found that the assessee is beneficiary of the bogus purchase made from the concerned of Sh. Rajendra Jain and his group. The ld. AO disallowed 20% of the purchase as non-genuine for an amount of Rs. 43,33,606/- (25% of Rs. 1,73,34,424/-). The ld. CIT(A) dismissed the ground of reopening taken by the assessee. Therefore, the proceedings have rightly been initiated against the assessee. So far as merits of the issue is concerned. The ld. DR vehemently argued that the assessee is engaged inflating purchase for doing bogus purchase. So, assessee cannot be given clean cheat based modus operandi of purchases scam, unearth by the revenue and when the assessee that they were found, doing wrong. Shri Rajendra Jain categorically stated that he is engaged in providing bogus bill for purchase inflation and the conduit adopted by the assessee should not be given relief and the addition made by the Assessing Officer be sustained. Because the assessee did not produce anything contrary to the allegations of the revenue that the purchase made by the assessee are genuine and relief granted by the ld. CIT(A) without considering the various aspects discussed in the order of assessment. The ld. Assessing Officer has made the additions of 33% of the purchase amounting to Rs. 64,02,030/-. The ld. CIT(A) has not dealt with their respective order for that matter. based on the AO’s report and submissions made the appeal filed by the revenue is allowed. In addition to the oral arguments ld. DR relied upon the written submission in this appeal referred as Annexure-A.

“In the above case appeal was filed by the department against the appeal order dated 06.02.2024 passed by CIT (A)-5, Jaipur in appeal No.1/10432/2019-20 whereby Ld. CIT (A) deleted the addition of Rs. 43,33,606/ by accepting the declared G.P. rate of 13.05%.

The department filed appeal before your honor. The assessee in his written submission dated 22.06.2024 submitted following contentions against the appeal filed by the department:-

In this connection it is submitted that however in this case the tax effect is only Rs. 11,86,645/- which is below the below the monetary limit for filling of the appeal by the department before Hon'ble ITAT as per the vide circular no. 5/2024 dated 15.03.2024. Though, CBDT in the above said circular prescribed certain exceptions with regard to filing of appeal where decision to file the appeal shall be taken on merits, without regard to the tax effect and monetary limits. These exceptions are mentioned in para 3.1 of the above said circular. Further, it is pertinent mention here that the above case falls in exception mentioned in clause 'h' of Para 3.1. of the above said circular. Clause 'h' clearly states that "cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries" are considered fit for filing appeal before ITAT without regard to the tax effect and monetary limits.

(a) The onus was upon the assessee to prove the genuineness of the purchases. This view is supported by the decisions of Hon'ble Rajasthan High Court in the case of M/s India Woolen Carpet Factory V/s ITAT and Others (2002) 178 CTR 420 (Raj.) and M. P. High Court in the case of VISP (P) Ltd. V/s CIT186 CTR717(MP).

(b) In CIT V/s Precision Finance Pvt. Ltd 208 11K 455 (Cal). Ine Hon ble Calcutta High Court has held that payment made by account payee cheque is not sacrosanct and it would not make an otherwise non genuine transaction genuine.

(C) In CIT V/s Golcha Prop. Pvt Ltd., 227 ITR 391 (Raj.) it was held that the genuineness of transaction could be decided on the basis of primary facts on records. The department is not required to lead a clinching evidence to prove that purchases are bogug.

(d) In Beena Metals V/s CIT, 240 ITR 222((Ker) the Hon'ble High Court has held that failure to furnish particulars of brokers through whom purchase were made would lead to conclusion of bogus purchases.

(e) It is a well settled law that strict rules of evidence do not apply to I. T. Acts and the real test with regard to genuineness of transaction "Preponderance of Probabilities" and not "Beyond reasonable doubt" is Reliance is placed on, Chaturbhuj Panauj AIT 1669 (SC) 255, Sumati Dayal V/s CIT, 214 , C. VasantLal & Co., 45 ITR 206 (SC). ITR 801 (SC)

(g) The Hon'ble ITAT, Jaipur in the case of M/s Kanchwala Gems V/s JCIT. dated 10-12-2003, affirmed by Hon'ble Supreme Court in 288 ITR 10(SC) has (f) It is also of relevance to mention here that under section 101, 102 and 106 of the Evidence Act, the onus lies upon the assessee to prove all the expenses including purchases to the satisfaction of the Assessing Officer, which was not discharged by the assessee as it failed to produce the parties from whom purchase have been made. The onus lies upon the assessee to prove the genuineness of the transaction when it claimed that the purchases are genuine for which reliance is also place in the case of India Woolen Carpet Factory v/s ITAT and others 178 CTR 420 (Raj)

From the above case laws and discussion, it is crystal clear that- (a) The primary onus is on the assessee to establish the genuineness of the purchases claimed by it. (b) If the investigation done by the department leads to doubt regarding the genuineness of the purchases it is incumbent on the assessee to produce the parties along with necessary documents to establish the genuineness of the transaction which has not been done in this case.

(c) Payment by account payee cheque is not sacrosanct.

In light of the various judicial pronouncements and the above discussion it is to be seen whether the assessee was able to establish the genuineness of the purchases claimed by it or it has whether the assessee was able to establish the genuineness of the purchase claimed by it or it has failed in discharging this onus. The information received from investigation wing and statement of Shri Rajendra Jain group supplied to the assessee clearly explains the modus operandi of this bogus transaction. The case laws cited by the assessee in his defense also do not help him being distinguishable on facts and other decision cited above.

6. In view of above detailed discussion and also in the light judicial pronouncements on the issue by the Hon'ble Gujrat High Court in the case of Samay Oilcake Industries -316 DCIT vs. Sunder Das Sonkiya ITR 274 & in the case of Vijay Proteins Ltd Vs. CIT in which the order of Hon'ble Gujrat High Court has been upheld by the Hon'ble Supreme Court and also various decision of the Rajasthan High Court including the decision in the case of S,t. Amju Laskery (DBIT 654/2008) dad. 3.11.2016 provision of section 145(3) is invoked in this case. In view of the above discussion it is held that purchase of Rs. 1,73,34,424/- from M/s Aadilmpex, M/s Sun Diam, M/s Arihant Exports and M/s KriyaImpex Pvt Ltd. as discussed in above paras are bogus and treated as accommodation entries only. Therefore, addition made of 25% of the above purchase amounting to Rs. 43,33,606/- (25% of Rs. 1,73,34,424) is absolutely justifiable.”

“The above appeal has been filed by department against the appeal order dated 06-02-2024 passed by CIT (A) –5, Jaipur in appeal No. 1/10432/19-20 whereby Ld. CIT (A) deleted the addition of Rs.43,33,606/- by accepting the declared G.P. rate of 13.05% which is higher than past years G.P. rates. The department in the appeal before your honour’s raised the following solitary ground of appeal: “

Ingenuine Purchases of Rs.43,33,606/-(25% of total ingenuine purchases of Rs.1,73,34,424/-)” Before submitting the detailed submission on the ground raised by the department, the appellant places on the record that in this appeal the tax effect is below the monetary limit for filling of appeal by the department before Hon’ble ITAT. It is submitted that for filling the appeal before Hon’ble ITAT the CBDT vide circular number 5/2024 dated 15-03-2024 prescribed the tax effect at Rs.50 Lakh and above. However in this case the tax effect is only Rs.11,86,645/- as worked out by department itself at para no. 11 in the form no. 36 of appeal. Though CBDT in the above said circular prescribed certain exceptions with regard to filling of appeal/SLP where the decision to file the appeal shall be taken on merits, without regard to the tax effect and monetary limits as follows:- a. Where any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid, or b. Where any order, notification, instruction or circular of the Board or the Government has been held to be illegal or ultra vires the Act or otherwise constitutionally invalid, DCIT vs. Sunder Das Sonkiya or c. Where the assessment is based on information in respect of any offence alleged to have been committed under any other law received from any of the law enforcement or intelligence agencies such as CBI, ED, DRI, SFIO, NIA, NCB, DGGI, state law enforcement agencies such as State Police, State Vigilance Bureau, State Anti- Corruption Bureau, State Excise Department, State Sales/Commercial Taxes or GST Department, or Where the case is one in which prosecution has been filed by the Department in the d. relevant case and the trial is pending in any Court or conviction order has been passed and the same has not been compounded, or e. Where strictures/adverse comments have been passed and/or cost has been levied against the Department of Revenue, CBDT or their officers, or Where the tax effect is not quantifiable or not involved, such as the case of f. registration of trusts or institutions under sections 10(23C),

12. A/ 12AA/12AB of the Act, order passed u/s 263 of the Act etc. The reference to cases involving sections referred here, where it is not possible to quantify tax effect or tax effect is not involved, is for the purpose of illustration only. g. Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/undisclosed foreign bank account, or h. Cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries, or Where mandated by a Court's directions, or i. j. Writ matters, or k. Matters related to wealth tax, fringe benefit tax, equalization levy and any matter other than the Income Tax Act, or l. In respect of litigation arising out of disputes related to TDS/TCS matters in both domestic and International taxation charges:- i. Where dispute relates to the determination of the nature of transaction such that the liability to deduct TDS/TCS thereon or otherwise is under question, or ii. Appeals of International taxation charges where the dispute relates to the applicability of the provisions of a Double Taxation Avoidance Agreement or otherwise m. Any other case or class of cases where in the opinion of the Board it is necessary to contest in the interest of justice or revenue and specified so by a circular issued by Board in this regard. It is submitted that appellant’s case does not come under preview of any of the exception provided in the above said circular issued by CBDT. Thus, the appeal filed by the department is not maintainable.

Without prejudice to the above the appellant now submits the reply of the ground raised by the department as follows:- Facts of the case The assessee is an Individual, it during the year was engaged in export of gems & jewellery after purchasing it from local market. The assessee carried on business in proprietor ship under the name & style of M/s S. Naveen Jewellers. The assessee filed return of income declaring income of Rs. 24,000/- after claiming set-off of b/f losses and unabsorbed depreciation. The return was processed u/s 143 (1) and no notice u/s 143 (2) was issued. Thereafter Ld. A.O. initiated reassessment proceedings by issue of notice u/s 148 on 28-03-2019 after recording following reasons: “Your letter dated 11.04.2019 wherein you have requested to provide grounds of reasons for opening the case. In this regard, I am submitting the reasons for re-opening the case recorded after the satisfaction of assessing officer, which were duly approved by the competent authority are as under: - An information was received from Commissioner of Income-tax-1, Jaipur vide his office letter no. 3369 dated 27.02.2014 alongwith letter of DCIT, Central Circle-4, Surat vide his letter dated 30.11.2015. In the letter, it has been informed that during the course of search and seizure operation u/s 132 by the DGIT (Inv.) – Wing Mumbai on 03.10.3013 in the group cases of Sh. Rajendra Jain, Sh. Sanjay Choudhary and Sh. Dharmichand Jain of Mumbai, it was gathered that this group indulged in providing accommodation entries in the nature of bogus purchase. The DCIT, Central Circle-4, Surat having jurisdiction over the group also informed the name of beneficiary parties on the basis of scrutiny of seized material & statements recorded during the course of search operation, who had obtained bogus purchase bills from the above entry providers. In the list supplied by the DCIT, CC-4, Surat name of the assessee Shri Sunder Das Sonkia (Prop. M/s S. Naveen Jewellers) also find place who had obtained purchase bills amounting to Rs. 1,73,34,424/- from M/s Aadi Impex (Prop. Anoop Jain), M/s Arihant Exports (Prop. Shri Sachin Pareek), M/s Sun Diam partnership firm (Partner Shri Rajendra Jain & Manish Jain) and M/s Kriya Impex Pvt. Ltd. (Shri Rajendra Jain & Shri Manish Jain). As the assessee has inflated his purchases by Rs. 1,73,34,424/- by way of introducing ingeneuine/unverifiable/bogus purchases in his books of account from the above entry providers M/s Aadi Impex, (Prop. Anoop Jain), M/s Arihant Exports (Prop. Shri Sachin Pareek), M/s Sun Diam partnership firm (Partner Shri Rajendra Jain & Manish Jain) and M/s Kriya Impex Pvt. Ltd. (Shri Rajendra Jani & Shri Manish Jain) who were searched by the Investigation Wing of Mumbai Charge, it can easily be concluded that the assessee has also reduced his taxable business profit to the extent of Rs. 1,73,34,424/-. The above transactions are related to the assessee wherein there is liability to pay taxes as per the I.T.Act, 1961, which is sufficient information that the assessee reduced his taxable business profit to the extent of Rs. 1,73,34,424/-. Therefore, it is a fit case for initiation of assessment proceedings for escapement of income by the assessee.” Action of A.O. The assessee complied with said notice u/s 148 and asked copy of reasons recorded for issue of notice which A.O. supplied. The assessee filed objections to said notice u/s 148 on 19-07-2019 and Ld. A.O. disposed these objection and rejected them. The reassessment u/s 143 (3) / 147 was completed by Ld. A.O. at an income of Rs. 43,57,610/- by taking total income at 24,000/- as per return filed and by disallowing 25% of said purchases of Rs. 1,73,34,424/- amounting to Rs. 43,33,606/- holding them as ingenuine purchases and added the same in income of assessee. The present appeal is challenging the above said addition of Rs. 43,33,606/- so made in impugned reassessment order. Order of CIT (A) The assessee before Ld. CIT (A) filed written submissions. The Ld. CIT(A) after considering submissions filed by assessee gave his finding in para 5.2 of the appeal order. For ready reference the relevant part of findings of Ld. CIT(A) are reproduced herein below:- 5.2.1 I have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. It is seen that the Assessing Officer has disallowed purchase of Rs. 43,33,606/- being 25% of alleged purchases of Rs. 1,73,34,424/- found to be unverifiable by invoking provisions of section 145 (3) of the Act thereby rejecting books of accounts. The issue regarding unverifiable purchase has been decided by the Hon'ble ITAT, Jaipur and Hon'ble Rajasthan High Court wherein it was held that when purchases are unverifiable, income is to be estimated and for estimation of income of the assessee, application of G.P. is the best course of action based on average G.P. rate on past history. Base upon the same fact and purchase parties’ name, similar nature of addition was made in the appellant’s own case in earlier years 5.2.2 In the appellant’s own case in AY 2009-10, AO disallowed 25% of purchase and made addition at Rs 52,78,865/- on the similar facts and purchase parties name. The Ld CIT(A) estimated GP rate at 19.25% taking average of past years and restricted the addition up to 21,65,807/-. The Hon’ble ITAT vide order dated15/04/2020, had given following judgment and deleted entire addition: 5.2.4 In the appellant’s own case in AY 2011-12, AO disallowed 25% of purchase and made addition at Rs 1,05,91,560/- on the similar facts and purchase parties name. The Ld CIT(A) vide order dated 29/11/2019 following the above ITAT decision in appellant’s own case had estimated GP rate at 12% taking average of past years as against the declared G.P. rate of 11.18% and restricted the addition up to 5,72,667/-. Neither the department nor the appellant had filed further appeal on this decision of CIT(A). The decision para is as under: ………….followed As per the same, the average G.P. rate comes to 12.59% which has come down to 11.18% in A.Υ. 2011-12. The assessee contended that in A.Y. 2008-09 & 2009-10 he was exporting mainly coloured gem stones while in this year export is of diamonds only wherein G.P. margin is much lesser as is commonly known in trade than that in coloured gem stones. It is thus contended that past year declared G.P. rates of A.Y.2008-09 & 2009-10 are not comparable with the G.P. rate declared in this year and same is comparable from A.Y. 2010-11 and G.P. rate declared for this year is better than A.Y. 2010-11. The assessee filed details of purchases and exports of this year in support of contention which was found factually correct. Looking to these facts and also keeping in mind that certain purchases remained unverifiable, provisions of section 145 (3) of the I. T. Act, 1961 are hereby applicable as the books of accounts are not reliable, Therefore, the Assessing Officer is directed to apply GP rate of 12% on total turnover of Rs. 7,03,93,153/- which results in addition of Rs. 5,72,667/- (12% of Rs. 7,03,93,153 declared and accepted income by the AO of Rs. 78,74,511). Accordingly, appellant gets relief of Rs. 1,00,18,893/-. 5.2.5 In this case GP chart of last 3 years and the current years are as under.

A.Y. Gross Profit Turnover GP Rate 2009-10 7614260 50805544 14.99% 2010-11 14510400 155282240 9.34% 2011-12 7874511 70393153 11.18% 2012-13 5090274 39005078 13.05%

Average GP rate of last 3 years – 11.83 %

Average GP rate of last 2 years (same business as held by ITAT) – 10.26 % 5.2.6 In the year under consideration, the facts of the case and name of purchase parties are also same. Further the appellant had declared G.P. rate of 13.05% which is much higher as compared to A.Y. 2010-11 & 2011-12 where in the nature of trade of assessee is similar as that of the year.

In A.Y. 2009-10 as held by ITAT the business of assessee was mixed i.e. export of colour stone, diamonds and studded jewellery while in A.Y. 2010-11 & A.Y. 2011-12 is mainly of diamond and in this assessment year under consideration is that of exports of diamonds only. The results declared by the assessee of this year are thus higher from earlier years. Hence following the judgement of Hon’ble ITAT in the appellant’s own case and considering the higher GP rate from earlier years, the addition made by the AO of Rs 43,33,606/- is hereby deleted. Thus, grounds of appeal on this issue are hereby allowed.

The ground wise submissions of appellant are as under: -

1. The only ground taken by department is “Ingenuine Purchases of Rs.43,33,606/- (25% of total ingenuine purchases of Rs.1,73,34,424/-)” The Ld. A.O. on the ground that information was received from DCIT, Central Circle – 4, Surat that during the course of search operation carried out by Investigation Wing of the Deptt. in case of Rajendra Jain group Mumbai on 3-10- 2013 it is revealed from documents and evidences found during the search, it has been gathered that the assessee Shri Sunder Das Sonkia, Prop. M/s S. Naveen Jewellers also arranged accommodation entry from Sh. Rajendra Jain group and obtained bogus purchase bills of Rs. 1,73,34,424/- from M/s Aadi Impex, (Prop. Anoop Jain) M/s Sun Diam , Partnership firm (Partners Rajendra Jain & Manish Jain) M/s Arihant Exports (Prop. Sachin Pareek) and M/s Kriya DCIT vs. Sunder Das Sonkiya Impex P. Ltd. (Shri Rajendra Jani & Manish Jain) which are treated as bogus and non-genuine. In this connection it is submitted that in course of assessment proceedings the assessee produced complete details of purchases effected from the said party which (i) Purchase invoice received from the party. (ii) VAT Registration No. of party under MVAT Act. (iii) Permanent account No. of party under I. T. Act, 61. (iii) Payments having been made by account payee cheques which stood debited in the Bank account of appellant company and credited in Bank A/c of seller party. (iv) Confirmation from party confirming the purchase transaction.

The Ld. A.O. in course of assessment proceedings raised a querry regarding purchases from said parties. The assessee replied that he has submitted documentary evidences as stated above for verification of the purchases made from said parties. The assessee submitted that it had discharged the initial burden casted on him and relied on various judgements. The assessee also stated that it does not know that what enquiries and which connection investigation wing carried on the alleged investigation and on what basis and evidences in the eyes of law it is concluded by department that the said parties are entry provider and assessee is not concerned/answerable and liable for the transactions carried on by the third party in its books of accounts including Bank A/c. The assessee further submitted that alleged statements made on behalf of alleged concerns cannot be relied and used in case of assessee and for this relies on judgement in case of S. P. Agarwalla Alias Sukhdev Prasad Agarwala Vs. ITO (1983) 140 ITR 1010 (Cal) wherein it was held that mere confession statement by a third party that he was a mere name lender in transaction without naming the assessee would not be sufficient to hold that same transaction as bogus. However Ld. A.O. not found any of contention of assessee as tenable. The Ld. A.O. further held that onus is on assessee to prove the purchases claimed by it the assessee submits that it had made purchases from the party as recorded in its books of accounts and produced all the documents from party to prove genuiness of purchases it submits that it had discharged the initial burden casted upon it to prove the genuineness of purchases from the said parties as has been held by ITAT, Jaipur Bench, Jaipur in its decision in case of Sagar Mal Daga & Co. Vs ITo (2004) XXXII TAX WORLD 40 and Radha Mohan Lal Agarwal Vs. I.T.O. (2003) XXX Tax World 190. The ITAT, Jaipur Bench, Jaipur in case of M/s Sambhav Gems Ltd. (2006) XXXVI T.W. 254 in case of Shri Jatin Hariyani (2007) XXXVII T.W. 116 in case of Vaibhav Gems Ltd. ; Vivek Kala Vs. ACIT (2007) XXXVIII T.W. 65 S.M. Company Vs. ACIT (2007) XXXVIII T.W. 236, Euro Jewels Vs. ACIT (2008) XXXIX T.W. 105 has upheld the above legal views and purchases supported with similar documents as furnished by assessee in assessment proceedings were held as genuine and not bogus. The Ld. A.O. for making disallowance of 25% of said alleged purchases of Rs. 1,73,34,424/- relied on judgement in case of Sanjay Oil Cake Industries. The judgement of Sanjay Oil Cake Industries Vs. CIT (2008) 10 DTR 153 (Guj.) is not applicable. In this connection it is submitted that the facts of the said case are quite different from the facts of the party from whom assessee made purchases. These are as under: -

Facts in case of Sanjay Oil Cake Industries Facts of the parties from whom assessee made purchases (i) It was found that parties were not Parties are traceable as they besides traceable – only bills and sales tax having sales tax No. hold PAN – they No. were furnished. filed regular I.T. Returns gave duly signed confirmations and did not presented itself before A.O. with books of accounts which it maintained. (ii) There is a finding that CIT (A) had No such facts were brought on record in gone through the purchase price of this case. In respect to these parties raw material prevalent at that time there is no finding that purchases and admittedly, the goods in the declared by assessee company were form of raw materials were not on prevalent market price. purchased at a price which was lower than the market price, that no purchase bills at the said price were available, and accordingly, apparent sellers were providing accommodation entries to the assessee and, therefore a conclusion was drawn that purchase price was inflated (though the facts as appear from order suggests deflation of price and not inflation of price). (iii) It was found that the amounts were No such facts were brought on record in credited on account of cheques of this case. the assessee and they were being withdrawn by some unknown person whose address or whereabouts could not be known.

Without prejudice to above it is submitted that A.O. has not disbelieved purchases but only disbelieved the purchase vouchers. The trading account as DCIT vs. Sunder Das Sonkiya such has not been disturbed as op. stock, closing stock and sales as declared have been accepted. The A.O. has only doubted the sellers from whom purchases was made by assessee. Without prejudice to above in a recent case the Gujrat High Court in case of CIT Vs. Sathya Narayan P. Rathi (2013) 351 ITR 350 the Hon’ble Court noticed that “the assessee was not able to prove the purchases to the extent of Rs. 61.40 lakhs, the Assessing Officer disallowed the entire amount, but in first appeal it was felt that the profit element therefrom alone could be assessed, so that only 30 per cent of such purchases amounting to Rs. 18.42 lakhs was taxed. The Tribunal reduced the percentage of possible overstatement of purchases to 12.5 per cent. The Revenue came in appeal to the High Court on the plea that the entire amount should have been treated as bogus purchase. The High Court pointed out that it was found by the Tribunal that the stock details indicated that the assessee could not have made the sales, which were accounted in the books without acquiring a corresponding stock. It was, therefore, not a case of bogus purchase, but the inference can only be that it is an unproved purchase. In such a case, the approach of the Tribunal that a reasonable disallowance for possible inflation could be warranted, has to be upheld.” Recently the Gujrat High Court in Judgement reported at (2013) 356 ITR 451 CIT Vs. Simit P. Seth held as under: - “In the present case, the Commissioner of Income-tax (Appeals) believed that when as a trader in steel the assessee sold certain quantity of steel, he would have purchased the same quantity from some source. When the total sale is accepted by the Assessing Officer, he could not have questioned the very basis of the purchases. In essence, therefore, the Commissioner (Appeals) believed the assessee’s theory that the purchases were not bogus but were made from the parties other than those mentioned in the books of account. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. So much is clear by the decision of this court. In particular, the court has also taken a similar view in the case of CIT v. Vijay M. Mistry Construction Ltd. vide order dated January 10, 2011 passed in Tax Appeal No. 1090 of 2009-since reported in [2013] 355 ITR 498 (Guj) and in the case of CIT v. Bholanath Poly Fab P. Ltd. vide order dated October 23, 2012, passed in Tax Appeal No. 63 of 2012 – since reported in [2013] 355 ITR 290 (Guj).”

Recently the ITAT, Jaipur Bench, Jaipur in case of Vijay Kedia (HUF) Vs. ACIT (ITA No. 197 & 248/JP/2016) decided on 29-01-2018 held as under: - “We further noted that when the corresponding sale is not in dispute then the question is only regarding the correct amount of purchases and verification of the same. The Ld. DR has relied upon the various decisions of Hon'ble Gujarat High Court however, we find that in all those decisions there was a finding of facts that the assessee inflated the purchases upto 25% and therefore, it was not a case of non verification of the purchase and rejection of books of accounts but the fact was established in the investigation that the assessee inflated the purchase price and accordingly the addition of 25% being inflated purchases was made and upheld by the Tribunal which was again upheld by the Hon'ble High Court. On the contrary in the case of the assessee the AO not given any finding of inflated purchases by the assessee but doubted the very transactions of purchases due to non production of these parties before the AO. The AO has not given the finding that the prices of the goods was inflated by the assessee but the AO doubted the genuineness of the purchases on the ground that the suppliers were found to be accommodation entries providers. When the AO rejected the book results u/s 145 (3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgement instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee’s own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the Ld. CIT (A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substance or merits.” Accordingly, in view of the above facts and circumstances of the case and the decision of this Tribunal in case of ACIT Vs. M/s Allied Gems Corporation (Supra) the grounds raised by the Revenue in this appeal are without any substance or merits.” The similar views were upheld by ITAT, Jaipur Bench, in case of DCIT Vs. Gem Paradise (ITA No. 747 & 65/JP/12) vide order dated 26-12-2017. In the case of Shri Rajkumar Agarwal, the Hon'ble ITAT Jaipur Bench, Jaipur has decided vide as follows: “Accordingly, the addition made by the authorities below on account of unverifiable purchases is restricted to gross profit rate addition to be computed by the A.O. on the basis of past history of the assessee comprising the G.P. rate declared and accepted by the A.O. as well as G.P. rate which has attained finality. Therefore, for limited purposes computing the income by applying the average G.P. rate of the past history at minimum 3 years. Needless to say that the assessee be given an appropriate opportunity of hearing. As regards the rejection of books of accounts following the earlier decision of the Tribunal cited (supra), we uphold the action of the Assessing Officer”. The turnover and trading results of assessee for this year and last three years are as under:- A.Y. Gross Profit Turnover GP rate 2009-10 7614260 50805544 14.99% 2010-11 14510400 155282240 9.34% 2011-12 7874511 70393153 11.18% 2012-13 5090274 39005078 13.05%

It is submitted that assessee was earlier to A.Y. 2009-10 was carrying on export business of colour stones. However from A.Y. 2009-10 it started shifting to business of export diamonds and in A.Y. 2009-10 export sale was of colour stones & Diamonds both and from A.Y. 2010-11 & 2011-12 the export sale of assessee is mainly of Diamonds. As is commonly known that the profit margin in diamond is much lesser than in colour stones and, therefore G.P. rate of A.Y. 2010-11 & 2011-12 has fallen as compared to A.Y. 2009-10. The purchase made has been exported as it is and there is bill to bill tally of purchases & export. In A.Y. 2009-10, 2010-11 & 2011-12 in case of assessee the Ld. A.O. made similar additions by disallowing 25% of purchases in respect to purchases from parties of the said group. In A.Y. 2009-10 in case of assessee the A.O. made disallowance of 25% of such purchases of Rs. 2,11,15,458/- alleging them as non-genuine and not verifiable in assessment u/s 143 (3) / 147 by rejecting the books of accounts u/s 145 (3). The CIT (A) in appeal not uphold disallowance of 25% of said purchases and order to apply G.P. rate of 19.25% on sales. The assessee filed furthur appeal before ITAT, Jaipur Bench, Jaipur which was decided by Hon'ble ITAT on 15-4-2020 (ITA No. 1126/JP/2018 and deleted the addition sustained by CIT (A) holding that declared G.P. rate of 14.99% by assessee is reasonable looking to mixed export sale of Diamonds & colour stones/studded jewellery. The copy of ITAT order is submitted herewith. In A.Y. 2010-11 also the Ld. A.O. made disallowance of 25% of such purchases of 11,60,43,873/- alleging them as non-genuine and not verifiable in assessment u/s 143 (3) / 147 and in appeal CIT (A) upheld rejection of books of account and ordered to apply G.P. rate of 12% on sales and upheld addition to the extent of Rs. 41,23,468/-. The Department as well as assessee both filed appeal before ITAT, Jaipur Bench, Jaipur against said appeal order. The ITAT decided both the appeals vide order dated 18-1-2021 (ITA No. 1383/JP/19 & and deleted the entire addition upheld by CIT (A) holding that G.P. rate of 9.34% as reasonable. Copy of ITAT order is submitted herewith. In A.Y. 2011-12 also again Ld. A.O. in assessment u/s 143 (3) / 147 disallowed 25% of such purchases of Rs. 4,23,66,235/- alleging them as non-genuine and not verifiable and addition amounting to Rs. 1,05,91,559/- was made. In appeal the CIT (A) while upholding rejection of books of accounts held G.P. rate of 12% as reasonable and deleted addition of Rs. 1,00,18,893/- sustaining addition of Rs. 5,72,667/- against which no appeal filed before ITAT looking small amount involved. Thus in view of past history of case on exactly same facts of the case the disallowance of 25% of disputed purchases is uncalled for and is wrong and bad DCIT vs. Sunder Das Sonkiya in law. In the year under consideration the assessee declared G.P. rate of 13.05% which is high as compared to A.Y. 2010-11 & 2011-12 where in the nature of trade of assessee is similar as that of the year. In A.Y. 2009-10 as held by ITAT the business of assessee was mixed i.e. export of colour stone, diamonds and studded jewellery while in A.Y. 2010-11 & A.Y. 2011-12 is mainly of diamond and in this assessment year under consideration is that of exports of diamonds only. The results declared by the assessee of this year is thus better in earlier years and hence no addition is called for. Furthur recently the ITAT, Surat Bench in case of Brij Kishore Radhey Shyam Sonkhiya Vs. DCIT (ITA No.(s) 364-369/SKT/2018 order dated 02-08-2019) wherein exactly on similar facts the Hon'ble ITAT held that no addition can be called for on the facts of the case. In view of the above facts and position of law as given above the disallowance of Rs. 43,33,606/- being 25% of purchases of Rs. 1,73,34,424/- alleging them as being ungenuine/ bogus is wrong and bad in law which deserves to be deleted. It is prayed that order of Ld. CIT(A) may kindly be upheld. The appellant prays accordingly.”

Added to this, it is submitted that it is a settled position of law that such evidences are legally inapplicable in Income Tax proceedings. The appellant also submits that learned DR has tried to blame the entire Jewellery Trade without going through the facts of other cases including the appellant's case, in which, there is no such findings of the Indian Customs Department and Department of Revenue Intelligence that the goods exported by the appellant were not real goods. Based on these argument ld. AR of the assessee supported the order of the ld. CIT(A).

S. No. Name of Case/Circular Name of Court Date of order Page No. 1 Copy of CBDT Circular No. 05/2024 1-5 dated 15.03.2024 2 Sundar Das Sonkia vs. Income Tax ITAT Jaipur, 15.04.2020 6-14 Officer, Ward-1(2), Jaipur Bench 3 Sundar Das Sonkia vs. Income Tax ITAT, Jaipur 18.01.2021 15-46 Officer, Ward-1(2), Jaipur Bench 4 Sundar Das Sonkia vs. Income Tax CIT(Appeals)-4, 08.11.2019 47-62 Officer, Ward-1(2), Jaipur Jaipur submission so filed vehemently argued that the assessee stated that the appeal of the revenue is not sustainable based on the Circular issued by the CBDT. So far as the merits of the issue is concerned. The ld. AR of the assessee relied on arguments as recorded in the order of the ld. CIT(A).

The ld. CIT(A) after going through and deliberating the submissions of the assessee deleted the additions made by the assessee in both the orders.

The ld. AR of the assessee also submitted that the assessee against the purchase invoices so raised by that Rajendra Jain Group Companies made payment by account payee cheque and also subsequent two these purchases sales have not disputed by the revenue. All the details submitted before the ld. CIT(A) have not been disputed by Assessing Officer through DR for the Assessment Years 2009-10 & 2010-11. The similar issue was arisen and ITAT has granted relief to the assessee and ld. CIT(A) has respectively followed that decision of the Co-ordinate Bench of ITAT, Jaipur and therefore, the appeal of the revenue is not maintainable.

13.1 Brief facts related to the dispute are that the assessee is an Individual, engaged in export of gems & jewellery under the name & style of M/s S Naveen Jewellers. Return of income declaring Income of Ra 24,000/- was filed and also processed u/s 143(1). No notice u/s 143(2) was issued.

Thereafter AO after approval from competent authority- initiated reassessment proceedings by issue of notice u/s 148 on 28-03-2019 after recording reasons. Reasons for invoking the reassessment as the recorded purchases from the concerns of associates of Shri Rajendra Jain whose premises were searched by the revenue wherein Shri Rajendra Jain admitted that he is engaged in the bogus billing activities through the concerns the reassessment was initiated against the assessee. The assessee Shri Sunder Das Sonkia (Prop. M/s S. Naveen Jewellers) find place who had obtained purchase bills amounting to Rs. 1,73,34,424/- from Mis Aadi Impex (Prop. Anoop Jain), M/s Arihant Exports (Prop. Shri Sachin Pareek), M/s Sun Diam partnership firm (Partner Shri Rajendra Jain & Manish Jain) and M/s Kriya Impex Pvt. Ltd. (Shri Rajendra Jain & Shri Manish Jain). As the assessee has inflated his purchases by Rs. 1,73,34,424/- by way of introducing nongenuine/unverifiable/bogus purchases in his books of account from the above entry providers ld. AO concluded that the assessee has also reduced his taxable business profit to the extent of Rs. 1,73,34,424 and thereby after considering the submission made in the assessment proceeding, he completed the assessment by disallowing 25% of said purchases of Rs. 1,73,34,424/- amounting to Rs 43,33,606 holding them as non- genuine purchases and added the same as income of the assessee. When the matter carried to Before ld. CIT(A) he has allowed the appeal of the assessee following the decision of the co- ordinate bench as referred in his judgment.

As we note that the gross profit as declared by the assessee for the year under consideration is 13.05 %. While dealing with the aspect of the where in the High Court has held that:

Taking into account the average GP rate which will be applied in the present case will be 12 per cent. It is made clear that where ever the profit is more than 12 per cent, the same will not be refunded to the assessee but where it is less than 12 per cent, the income will be assessed on the basis of 12 per cent GP.

Even in [ 2022] 136 taxmann.com 345 (Mumbai - Trib.) Deputy Commissioner of Income-tax v DBM Geotechnics and Construction (P.) purchases as income of the purchaser.

As we have been guided by our high court decision in the case of Clarity Gold supra wherein such cases profit rate of 12.5 % was considered as reasonable and as we found that in the year under consideration the profit declared by the assessee is 13.05 % we do not see any infirmity in the finding of the ld. CIT(A).

In terms of these observations, the appeal of the revenue in ITA no.

453/JP/2024 stands dismissed.

Order pronounced in the open court on 09/10/2024. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 09/10/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- DCIT, Central Circle-04, Jaipur izR;FkhZ@ The Respondent- Sunder Das Sonkiya, Jaipur 2. vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA Nos. 453 & 454/JP/2024) vkns'kkuqlkj@ By order,

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