DILKHUSH BABEL,MUMBAI vs. ITO, WARD 2(3)(7), SURAT

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.105 & 200/SRT/2019 (AY 2008-09) ITA No.106 & 201/SRT/2019 (AY 2013-14) (Hearing in Physical Court) Navratan Jain Income Tax Officer, 2/B-307, Ostwal Park Ward-2(3)(8), Room No. 407, 4th Building, Jesal Park Road, Floor, Anavil Business Centre Nr. JainTemple, Bhayander Surat-395009 East, Mumbai-401105 [PAN No.AHYPJ 4038 J] Income Tax Officer, Navaratan Singh Jain Ward-2(3)(8), Room No. 302, Rushabh Apartment, Hath Vs. 407, 4th Floor, Anavil Failya, Mahidharpur, Surat- Business Centre Surat- 395003 [PAN No.AHYPJ 4038 J] 395009 Applicant Respondent

ITA No.258 & 259/SRT/2019 (AYs 2014-15 & 2015-16)

Navratan Singh Jain Income Tax Officer, 2/B-307, Ostwal Park Ward-2(3)(8), Room No. 407, 4th Vs. Building, Jesal Park Road, Floor, Anavil Business Centre Nr. Jain Temple, Surat-395009 Bhayander East, Mumbai- 401105 [PAN No.AHYPJ 4038 J] Applicant Respondent

ITA No.42 & 122/SRT/2019(AY 2008-09)

Ashish Mohan Mahawar The Income Tax Officer, Office No.325, Amrit Ward-2(3)(7), Room No.602, Vs. Diamond House, Tata Aaykar Bhavan, Majura Gate, Road Nop: 01, Ner. Surat. Pancharatna Building, Opera House, Mumbai- 400004 [PAN No.APMPM 2937 B] The Income Tax Officer, Ashish Mohan Mahawar

Ward-2(3)(7), Room No. Prop. M/s Meet Corporation, 414, 4th Floor, Anavil 303, Navkar Building, 3rd Floor, Business Centre, Adajan- H. No. 6/1943, Dalgiya Street, Hajira Road, Adajan, Mahidarpura, Surat-395003 Surat-395009 Applicant Respondent

ITA No.19 & 88/SRT/2017 (AY 2007-08) & 266/SRT/2018 (AY 2008-09)

Shri Narayan Lal Sharma, Income Tax Officer, Ward- Prop. of M/s P.R. 2(3)(8), Room No. 407, 4thFloor, Diamonds, 304A, Anavil Business Centre, Hazira Sumangal Apartment, Road, Adajan, Surat Jadakhadi, Mahidharpura, Surat-395003 [PAN: AEUPS 4865 H] Vs. Income Tax Officer, Ward- Shri Narayan Lal Sharma, 2(3)(8), Room No. 407, Prop. of M/s P.R. Diamonds, 4thFloor, Anavil Business 304A,Sumangal Apartment, Centre, Hazira Road, Jadakhadi, Mahidharpura, Adajan, Surat Surat Shri Narayan Tulsiram Income Tax Officer, Ward- Sharma, (Prop. of P.R. 2(3)(8), Aaykar Bhavan, Majura Diamond), 304/A, Gate, Surat Sumangal Apartment Jadakhadi, Mahidharpura, Surat-395003 [PAN: AEUPS 4865 H] Applicant Respondent

ITA No.260 & 289/SRT/2019 (AY 2008-09) ITA Nos.538/SRT/2019 & 01/SRT/2020 (AY 2012-13) Dilkhush Babel Income Tax Officer, Ward-2(3)(7) 2/B-307, Ostwal Park Room No.620, Aaykar Bhawan, Building, Jesal Park Majura Gate, Surat Road,Nr. Jain Temple, Bhayander East Mumbai- 400105 [PAN No. AMLPB 2470 Q] Vs. Income Tax Officer, Ward- Dilkush Annraj Babel 2(3)(7), Room No.,414, 4th Prop. of M/s Maulik Diamonds,

Floor, Anavil Business 302, Rushabh Appt., Centre, Adajan-Hajira HathFaliya, Mahidharpura, Road, Adajan, Surat- Surat-395003 [PAN No. AMLPB 2470 Q] 395009 Shri Dilkhush Babel Income Tax Officer, Ward-2(3)(7) 2/B-307, Ostwal Park Room NO.620, Aaykar Bhavan, Building, Jesal Park Majura Gate, Surat-395001 Road,Nr. Jain Temple, Bhayander East Mumbai- 400105 [PAN No. AMLPB 2470 Q] Dilkhush Babel Income Tax Officer, Ward- 302,Rushabh Apartment, Hath 2(3)(7) RoomNo.414, Faliya, Mahidarpur, Surat- 4thFloor, Anavil Business 395003 Centre, Adajan-Hajira [PAN No. AMLPB 2470 Q] Road, Adajan, Surat- 395009 Applicant Respondent

ITA Nos.40, 41 & 261/SRT/2019 (AYs 2013-14 to 2015-16) ITA Nos.123 & 124/SRT/2019 (AYs 2013-14 & 2014-15) Dilkhush Babel The Income Tax Officer, 2/B-307, Ostwal park Ward-2(3)(7), Room No. Building, Jesal Park 620,Aaykar Bhawan, Majuira Road,Nr./ Jain Temple, Gate, Surat-395001 Bhayander East, Mumbai- 401105 [PAN No. AMLPB 2470 Q] Vs. Income Tax Officer Ward- Dilkhush Babel 2(3)(7) Room No.414, 4th 302, Rushabh Apartment, Hath Floor, Anavil Business Faliya, Mhidarpura, Surat- Centre,Adajan-Hajira 395003 [PAN No. AMLPB 2470 Q] Road, Adajan, Surat- 395009 Applicant Respondent

Assessee by Shri Prakash Jhunjhunwala – CA & Shri Pawan Jagetia, CA Revenue by Shri H.P.Meena –CIT-DR & Shri Abhishek Gautam, Sr-DR Date of hearing 08.04.2022 3

Date of pronouncement 13.04.2022 Order under section 254(1) of Income-tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These group of twenty appeals by four different assessee’s are directed against the different orders of ld. Commissioner of Income tax (Appeals)- 1, 4 & 3, Surat [‘CIT(A)’ for short] for different assessment years. In all appeals, the assessees have raised certain common grounds of appeal, facts in all cases are almost similar except variation of figures of amounts. Therefore, with the consent of the parties, all the appeal were clubbed, heard and are decided by consolidated order to avoid conflicting decision. With the consent of parties, appeals of assessee, Navratan Jain in ITA No.105/SRT/2019 Assessment Year 2008-09 was treated as “lead” case and the decision thereof would apply on all appeals. 2. The assessee has raised following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in reopening the assessment u/s 147 by issue of notice dated 30.03.2015 which is barred by limitation in view of the first proviso to sec 147 of Income Tax Act, 1961. 2.On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in reopening the assessment u/s 147 by issue of notice dated 30.03.2015 u/s 148 which is merely due to change of opinion and therefore the re- opening is bad in law. 3.On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action

of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 4. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.1,28,14,715/- as unexplained purchases being 5% of the alleged bogus purchase on the grounds as stated in the impugned orders or otherwise.

“(i) On the facts and in the circumstances of the case and in Law the Ld. CIT(A)has erred in restricting the addition made by the AO of Rs.24,34,79,576/- on account of bogus purchases to 5%. (ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in Law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld.cita-1 Surat may be set-aside and that of the Assessing Officer’s order may be restored.” 5. Brief facts of the assessee that the assessee is in the business of trading in diamonds in the name of Proprietary concern ‘Sai Krupa Trading Co’. The assessee filed his return of income for assessment year 2008-09 declaring of Rs.2,89,947/- on 25.09.2008. The case of assessee was reopened on the basis of information received from DIT(Inv.),Mumbai that assessee is one of the beneficiaries of bogus purchase bills provided for Pravin Kumar Jain Group. On Pravin Kumar Jain Group, a search and seizure action was carried out by Investigation Wing on 08.10.2013. During the course of search, it was established that this group concern was managing various firm, company proprietorship, firm with no real business and solely operating for the purpose of facilitation of fraudulent financial transactions which providing accommodation entry in the form of unsecured loan to interested parties, issuing bogus sales and purchase

bills and providing front to concerns which do not want to import diamonds in their own hands. On the basis of such credible information, the Assessing Officer formed his opinion that income to the extent of purchases / sales shown from various concerned of Pravin Kumar Jain as estimated assessment. The Assessing Officer further noted that during the relevant period, the assessee has shown purchases from the following parties. Sr.No. Name of the entry provider Amount (Rs) 1 Ansh Merchandise P Ltd. (New 4,88,89,729/- Planet Trading Co.P.Ltd) 2 Atharv Business Pvt.Ltd. (Fast Stone 2,2,12,027/- Trading (I) P. Ltd. 3 Casper Enterprises P Ltd. 9Ostwal 5,90,15,418/- Trading (I) P Ltd. 4 Kunal Gems 1,58,40,883/- 5 Mohit International 6,922,51,867/- 6 Natsha Enterprise 3,54,98,691/- 7 Sumukh Commercial P 5,85,676/- Ltd.(Capetown Mer.P) Total 25,62,94,291/- 6. The Assessing Officer after recording the modus operandi and recording the reasons of reopening, issued notice under section 148. The assessee filed his letter dated 22.07.2015 and requested the Assessing Officer to treat the original return of income as return in response to notice under section 148 of the Act. The Assessing Officer after issuing a statutory notice under section 143(2) dated 15.12.2015 proceeded further. The 7

assessee asked reasons recorded. The reasons recorded that the reasons recorded were provided to the assessee. Thereafter, the assessee filed his objection against the reasons recorded. The objection of assessee was disposed of in a speaking order. The Assessing Officer thereafter issued show cause notice dated. 07.03.2014. The contents of show cause notice is recorded in para-6 of the assessment order. In the show cause notice, the Assessing Officer mentioned the modus operandi of Pravin Kumar Jain and its group concern and specifically stated that assessee has received accommodation entry of Rs.25.62 crores, which is received to suppress the profit to that extent. The Assessing Officer also mentioned the name of various concerns from which the assessee has shown such disputed / bogus transactions and show cause notice as to why the purchase of Rs.25.62 crores should not be treated as bogus purchases. The assessee filed his detailed reply dated 17.03.2016. The contents of reply of assessee are extracted by Assessing Officer in para-7 of his assessment order (from pages 9 to 18 of assessment order). In the reply, assessee submitted that the allegations in the show cause notice are not true. The entire purchases & sales are genuine and are verifiable. The party-wise details of purchase & sells with copy of invoices and copy of bank statement reflecting the payments were furnished. The assessee further stated that documents furnished by assessee, clearly show that purchase are made and subsequently goods were sold to other parties 8

which are evident from the stock register. The statement of third party cannot be used against the assessee. Pravin Kumar Jain Group is neither proprietary nor signatory in all the concerns from which the assessee has shown purchases. The assessee is not provided the statement of Pravin Kumar Jain nor any opportunity of his cross-examination as provided the assessee relied on a number of case law and prayed that no addition can be made on the statement of third party without any concrete evidence against the assessee. The purchases of assessee are genuine. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer on the basis of report of Investigation Wing held that during the search & seizure action, which was conclusive group and Pravin Kumar Jain and his group, was engaged in the business of providing accommodation entry. The assessee has shown purchases from such bogus entity with a modus operandi to reduce his true income by inflating expenses. The books of assessee to the extent of purchases shown from such bogus parties remain unverifiable and the Assessing Officer held that the purchase shown by assessee in the books of account is bogus. Mere filing evidence in support of purchase and showing payments through account payee cheque cannot be a conclusive in case where genuine of transaction is doubted to the payments made by account payee cheques are not sacrosanct. On the basis of aforesaid observation, the Assessing Officer held that the purchases made by assessee from the said disputed parties 9

and claim expenses in his profit and loss account are not genuine and rejected the books result of assessee. The Assessing Officer disallowed the entire purchases shown from the seven entities allegedly managed by Pravin Kumar Jain. 7. On appeal before Ld. CIT(A), the assessee challenged the validity of re- opening as well as addition on merit. The assessee filed his detailed written submission. The submissions of assessee are recorded in para-7 of order of Ld. CIT(A). On the merit, the assessee furnished confirmation and ledger account of suppliers, purchase bills, corresponding sells invoices, bank statement, evidence in payments and stock register, quantitative details of various parties. On the submission of assessee, the Ld. CIT(A) called for remand report from Assessing Officer. The Assessing Officer furnished his remand report vide letter dated 18.06.2018. The contents of remand report is extracted in para-8 of the order of Ld. CIT(A). In the remand report, Assessing Officer mentioned that neither assessee produced seller bills nor furnished their respective addresses. Thus, assessee has not proved the existence of the seller bills despite granting sufficient opportunities. The assessee filed his rejoinder to the remand report submitted by Assessing Officer. In the rejoinder / objection, assessee stated that they have provided the persons addresses of disputed suppliers vide their letter dated 25.06.2018 and that the assessee also requested that all the supplies wish to attend the hearing 10

before Assessing Officer to confirm the purchases. The assessee again requested to issue fresh notice to all the suppliers to verify the transactions and to consider the documents for furnishing remand report dated 22.12.2018. The assessee made second submission vide letter dated 22.12.2018 and submitted that they have furnished the confirmations, purchases bills, corresponding sells, bank statement, evidencing the payments and the stock register and claim that they have discharged their onus to substantiate the genuineness of said purchases. 8. The Ld. CIT(A) after considering the submission of assessee on validity of re-opening held that quashing the re-opening and assessment would mean to given undue benefit of mistake of individual officer, which is neither fair nor equitable for the Revenue. However, on the addition on account of disputed / bogus purchases shown from various entities managed by associates of Pravin Kumar Jain, the Ld. CIT(A) held that the Assessing Officer has not rebutted or discarded the material evidence furnished by assessee nor doubted the sales. The Assessing Officer has not made any efforts to find out whether Pravin Kumar Jain is a proprietor / partner or director of the concern from whom the assessee made purchases. The assessee in his submission has demonstrated that purchases in quantity are duly entered in the stock register and corresponding sales have been made. The sale could not be made in absence of purchases. Hence, the impugned purchases cannot be denied 11

in the quantitative terms. The Ld. CIT(A) held that on identical issue in his earlier order in case of Gagnani Impex for A.Y. 2013-14 Appeal No.CAS-3/512/2015-16 dated 24.11.2016, Ld. CIT(A), he by relying various other decisions of Tribunal restricted the addition to the extent of 5%. Further, aggrieved assessee has filed present appeal before this Tribunal. The revenue has also filed its cross appeal challenging the deletion of addition to the extent of 5% of such disputed / bogus purchases. 9. We have heard the submission of ld. Commissioner of Income Tax- Departmental Representative (CIT-DR) and Ld. Sr. Departmental Representative (Sr. DR) for the Revenue in different appeals of revenue and the ld. Authorised Representative(AR) of the assessee. We have also gone through the various documentary evidences furnished by assessee. At the outset of hearing, Ld. AR of the assessee submits that he has filed an application for admission of additional evidence in all cases and application for admission of additional evidence. The Ld.AR for the assessee further submits that he has filed affidavit of assessee. The ld AR for the assessee submits that assessee has filed assessment order in case of Jitendra Kumar Jain for assessment year 2008-09, order of Ld.CIT(A) in case of Jitendra Kumar Jain for AY 2008-09 dated 10.06.2011. 10. The Ld. AR for the assessee submits that in case of Jitendra Kumar Jain a survey was conducted under section 133A on 31.03.2008, wherein the 12

blank signed and unsigned of cheque books / bank letter head and belonging to assessee-firm were found and impounded. The assessment order was passed in case of Jitendra Kumar Jain by DDIT(CC) Mumbai for AY 2008-09 on 30.12.2010, wherein the Assessing Officer of Jitendra Kumar Jain held that he was running a bogus proprietary concern for providing entry. The Assessing Officer in case of Jitendra Kumar Jain and further the Ld. CIT(A) after analysing the evidence held that transactions are in the nature of accommodation bills and estimated commission at .05% from turnover. The assessment order of Jitendra Kumar Jain was not considered by the Assessing Officer of assessee wherein the entire transactions are held in the nature of accommodation bills. The assessee could not furnish the copies of assessment order and order of Ld. CIT(A) in case of Jitendra Kumar Jain and he has no access to such documents as Jitendra Kumar Jain he refused to share of such documents. Now the assessee has accessed to such assessment. The assessee is also able to obtain the statement of Jitendra Kumar Jain, wherein he has also provided my statement recorded, the statement of assessee under section 133A of the Act about blank signed and unsigned cheque book of Sai Kripa Trading Co., the proprietor concern of assessee. The Ld. AR of the assessee by referring the various paragraphs of assessment order of Jitendra Kumar Jain submits that the case of assessee is similar to that case of Jitendra Kumar Jain. The assessee was also 13

earning commission on providing accommodation entries. The Ld. AR of the assessee submits that the additional evidences are vital piece of evidence and require consideration, which has material hearing on the huge addition made against the assessee. 11. On the other hand, Ld. CIT-DR for the Revenue strongly objected the admission of additional evidence. The Ld. Ld. CIT-DR submits that assessee has taken a “U” turn and now came with the fresh plea, which was never reached either before the Assessing Officer or Ld. CIT(A). The case of assessee throughout the proceeding before lower authorities was that he is a trader engaged in the trading of diamond. The assessee claimed that his purchases are genuine and try to show the various evidences in an attempt to prove the purchases as genuine. The Ld.CIT- DR for the Revenue invited our attention on the reply filed by assessee, contents on which is extracted by Assessing Officer in para-7 of the assessment order, wherein the assessee submitted that his entire sales and purchases are genuine and also verifiable. Further the assessee has claimed that he has purchased goods and sold to various other parties. The Ld. CIT-DR for the Revenue further submits that the assessee objected to the rejection of books of account, the assessee offered his income as a trader. The application of assessee filed under Rule 29 of Income Tax Appellate Tribunal Rules, 1963 is beyond the scope of said Rule. The assessee has no right vested right to seek permission to file 14

additional evidence until and unless the assessee submits that he was not provided opportunity to adduce such evidence before lower authorities. The assessee nowhere in his application contended that he was not given such opportunity to file such evidence. The so-called evidence filed by the assessee has no bearing on the facts of the case of assessee. Even otherwise, the assessment order of Jitendra Kumar Jain relates to AY 2007-08 and the alleged survey referred in the said case relates back to 31.03.2008. However, the present case relates to subsequent assessment year, wherein the assessee was beneficiary of purchases shown from Pravin Kumar Jain and given. The case was relied upon Ld. AR of the assessee is not applicable on the facts of the present case. 12. We have considered the rival submission of both the parties and have gone through the order of authorities below. We find that the assessee has also filed application for additional ground of appeal. First, we are taking the additional ground of appeal raised by assessee. We find that no specific submission was made by either of the parties for admission or non-admission of additional ground of appeal. It is the settled law that additional ground of appeal may be admitted by the Appellate Authorities if no new facts are required to be brought on record and that the facts related to additional ground of appeal are emanating from the orders of the lower authorities. We find that the assessee has raised first additional ground of appeal that assessee’s statement was recorded on oath and 15

material found during the survey under section133A of the Act revealed that assessee was engaged in proving accommodation bills. We find that there is no such fact that in the assessment order, or in the order of First Appellate Authority. However, we find that Ld. AR of the assessee is trying to bring this fact on the basis of survey conducted at the premises of Jitendra Kumar Jain and the Assessing Officer of Jitendra Kumar Jain for AY 2007-08 and 2008-09 respectively. We find that this fact referred in case of Jitendra Kumar Jain are not emanating from the order of lower authorities in the present case. Moreover, the stand of assessee, throughout the proceeding before lower authorities are that assessee is a trader and the purchases shown by him are genuine. The assessee is nowhere pleaded that he is a part of syndicate who are engaged in providing accommodation entries. The assessee for the first time after more than ten years has raised this plea that assessee is a part of syndicate of operator who were earning commission by providing entries. At the time of hearing, we are specifically asked Ld. AR of the assessee to show if such plea was ever raised before lower authorities or any statement of facts filed before Ld. CIT(A) while hearing submission of admission of additional evidence. The Ld. AR of the assessee submits that these facts were nowhere pleaded; however, the assessee came to know about the facts only on when the assessee lays his hand on the assessment order of Jitendra Kumar Jain. In our considered view, the fact required for 16

adjudication of additional ground of appeal are not emanating from the order of lower authorities, therefore the additional ground of appeal raised by assessee are not admitted. 13. Now adverting to the admission of additional evidence, the assessee is seeking permission to file the assessment order of Jitendra Kumar Jain for assessment years 2007-08 and 2008-09 respectively and balance-sheet for assessment year 2007-08. We find that these documents have no relevance with the facts of the present case of the assessee for the year under consideration. For the year under consideration, the case of assessee was re-opened on the basis of information that assessee was one of the beneficiaries who have shown purchases from Pravin Kumar Jain Group. The assessee neither before the Assessing Officer nor before First Appellate Authority or in any correspondence ever claimed that he is a part of syndicate of bogus hawala trader and his income should be assessed as assessed in case of hawala trader. In our considered view, these documents have no relevancy with the grounds of appeal raised by assessee. Even otherwise, assessee in his application under Rule 29 of the Income Tax Appellate Rule, 1963 nowhere pleaded that assessee was not given sufficient opportunity by the Income Tax Authority to adduce such evidence by filing the additional evidence, the assessee wanted to set up a new case without bringing such fact on the record, which is not permissible under the law. The assessee by filing these documents are 17

taken as diagnosis root, which in our considered view is not permissible. In the result, application for admission of additional evidence is rejected. 14. Now adverting to the adjudication of main grounds of appeal raised by assessee as well as Revenue. Ground No.1and 2 relate to validity of re- opening under section 147 of the Act. We find that none of the parties made any submission on ground Nos.1 & 2. Even otherwise, for complete adjudication of the controversy raised in both the grounds, we are considering the facts available on record. The Assessing Officer made re- opening by recording the reasons on the basis information received from Investigation Wing about the syndicate being operated by Pravin Kumar Jain and his group for providing accommodation entry. The Hon'ble jurisdictional High Court in the case of Pass Industrial Engineers Pvt. Ltd. vs. DCIT 77 taxman.com 185 (Guj) held that when the Assessing Officer received information from Investigation Wing, that hawala entry operator provided bogus entries to beneficiary and assessee was one of such beneficiary. The Assessing Officer was justified in re-opening assessment. Considering the decision of Hon'ble jurisdictional High Court in the case of Pass Industrial Engineering Pvt. Ltd. (supra), the ground Nos .1 & 2 raised by assessee are dismissed. 15. Ground No.3 relates to rejection of books of account under section 145 of the Act as recorded above that no submission was made by either of the parties on this ground as well. During assessment the assessing officer 18

held that the purchase shown by assessee in the books of account is bogus. Mere filing evidence in support of purchase and showing payments through account payee cheque cannot be a conclusive in case where genuine of transaction is doubted to the payments made by account payee cheques are not sacrosanct. On the basis of aforesaid observation, the Assessing Officer held that the purchases made by assessee from the said disputed parties and claim expenses in his profit and loss account are not genuine and rejected the books result of assessee. The ld CIT(A) upheld the action of assessing officer. In absence of any specific submission, we do not find any reason to deviate from the order of Ld. CIT(A). This ground of assessee’s appeal is dismissed. 16. Ground No.4 in assessee’s appeal and Ground No.1 raised by Revenue are inter-connected. The assessee has filed appeal against sustained of being 5%. Similarly, the Revenue has filed its appeal against sustaining the addition to the extent of 5% only. During assessment the Assessing Officer rejected books of account by taking view that mere filing evidence in support of purchase and showing payments through account payee cheque cannot be a conclusive in case where genuine of transaction is doubted to the payments made by account payee cheques are not sacrosanct. On the basis of aforesaid observation, the Assessing Officer held that the purchases made by assessee from the said disputed parties and claim expenses in his profit and loss account are not genuine and 19

rejected the books result of assessee. The Assessing Officer disallowed the entire purchases shown from the seven entities allegedly managed by Pravin Kumar Jain. The ld CIT(A) upheld the addition of the disputed / bogus purchases to the extent of 5% 17. The Ld. CIT(A) held that the Assessing Officer has not rebutted or discarded the material evidence furnished by assessee nor doubted the sales. Further, the Assessing Officer has not made any efforts to find out whether Pravin Kumar Jain is a proprietor / partner or director of the concern from whom the assessee made purchases. The assessee claimed that purchases in quantity are duly entered in the stock register and corresponding sales have been made. It is settled position that sale could not be made in absence of purchases. The ld CIT(A) concluded that the impugned purchases cannot be denied in the quantitative terms. The Ld. CIT(A) held that on identical issue in his earlier order in case of Gagnani Impex for A.Y. 2013-14 Appeal No.CAS-3/512/2015-16 dated 24.11.2016, Ld. CIT(A), he by relying various other decisions of Tribunal restricted the addition to the extent of 5%. The Ld. CIT(A) restricted the addition to the extent of 5% of such disputed / impugned purchases. We also find that the ld.CIT(A) also considered the decision of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in Mayank Diamonds Pvt Ltd (supra) and noted that assessee in that case was also engaged in the trading of 20

polished diamonds. The ld CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(A) the disallowances were maintained. However, the Tribunal gave partial relief to the assessee directing to sustain the addition @12% of such bogus purchases. And on further appeal, the Hon'ble High Court sustained Gross Profit Rate @ 5% being average rate of profit in industry. 18. We find that considering the aforesaid overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 4 raised by the assessee is dismissed and that of ground of appeal raised by Revenue are partly allowed. 19. In the result the appeal of revenue is partly allowed and that of assessee’s appeal is dismissed. ITA No.106 & 201/SRT/2019 (AY 13-14) 20. The assessee as raised the following grounds of appeal:- 1. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of accounts u/s 145, on the grounds as stated in the impugned orders or otherwise. 2. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.34,36,000/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise.

consistency the appeal of the revenue is partly allowed and the appeal of the assessee is dismissed. ITA No. 258 & 259/SRT/2019 (AY 14-15 & 15-16) 24. The assessee has raised the following respective grounds in assessment year-wise:- “(AY-2014-15) 1. On the facts and circumstances of the appellant’s case and in law the Ld. Assessing Officer failed to provide an opportunity of cross-examination of the parties on whose statements the Ld. Assessing Officer relied upon as per the grounds stated in the order or otherwise. 2. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 3. On the facts and circumstances of the appellant’s case and in law the Ld.Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.41,885/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise. (AY 2015-16) 1. On the facts and circumstances of the appellant’s case and in law the Ld. Assessing Officer failed to provide an opportunity of cross-examination of the parties on whose statements the Ld. Assessing Officer relied upon as per the grounds stated in the order or otherwise. 2. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 3. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance

of Rs.1,60,000/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise. 4. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.10,150/- being 10% of the conveyance, office, travelling and telephone expenses claimed amounting to Rs.1,05,095/- as per the grounds stated in the impugned order. 25. During the hearing the Ld. A.R. for the submitted that he is not pressing the grounds of appeal raised in A.Y. 2014-15 & 2015-16. Considering the submissions of the AR of the assessee both the above appeals treated as not pressed. Hence, both appeals of assessee are dismissed as not pressed. ITA No. 42 & 122/SRT/2019 (AY 2008-09) Ashish Mohan Mahawar 26. The assessee has raised the following grounds of appeal:- “1. On the facts and circumstances of the appellant’s case and in law the Ld Commissioner of Income Tax (Aps) erred in confirming the action of Ld. Assessing Officer’s in re-opening of the assessment u/s 147 by issue of notice u/s 148 dated 12.03.2015 which is barred by limitation in view of the first proviso to section 147 of Income Tax Act, 1961. 2. On the facts and circumstances of the appellant’s case and in law the Ld Commissioner of Income Tax (Appeals) erred in confirming the action of Ld. Assessing Officer’s in reopening the assessment u/s 147 by issue of notice dated 13.03.2015 u/s 148 which is merely due to change of opinion and therefore the re-opening is bad in law. 3. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 4. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of

Rs.21,58,482/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise.” 27. Further, the assessee has filed following additional grounds of appeal on 01.04.2022:- “The assessee prefers an additional grounds of appeal against an order passed by Ld. Commissioner of Income Tax (A)-1, Surat dated 30/01/2019 on following amongst other grounds each of which are without prejudice to any other:- 1. On facts and circumstances of the case and in law, the addition of non- genuine purchases made in assessment order and partly sustained in 1st appeal is erroneous, since the assessee’s statement recorded on oath and material found during survey u/s 133A revealed that the assessee was engaged in providing accommodation bills, resultantly only real commission income on disputed transactions could utmost be brought to tax; 2. A prayer is made to estimate the brokerage income @ 0.05% of disputed purchases, since the AO, in assessment order of mastermind person Shri Jitendra Kumar Jain, had already estimated the commission @ 0.50% of transaction value. 28. The Revenue has raised the following grounds of cross-appeal:- “(i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricted the addition made by the AO of Rs.4,31,69,643/- on account of bogus purchases to 5%. (ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is sustained by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A)-1 Surat may be set-aside and that of the Assessing Officer’s order may be restored.” 29. As we have recorded the earlier that fact in the present case is almost similar as in case of Navratan Singh Jain in ITA No.105/SRT/2019 for

AY 2008-09 (supra). Considering the fact that we have already dismissed similar application for admissions of additional grounds of appeal and dismissed admissions of additional documents as per para 13 & 14 of this order (supra) and partly the appeal of Revenue (ITA No.200/SRT/2019) (supra) by sustaining the addition to the extent @ 6%. Resultantly the appeal of the assessee is dismissed. 30. In the result, the appeal of Revenue is partly allowed and that of assessee is dismissed. ITA No.19 & 88/SRT/2017 (AY 07-08) & 265/SRT/2018 (AY 08-09) Narayan lal Sharma 31. The assessee has raised the following grounds in year-wise:- “AY 07-08 1.On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of Ld. AO in reopening the assessment u/s 147 by issue of notice dated 29.03.2014 u/s 148 which is merely due to change of opinion and therefore reopening is bad in law. 2. On the facts and circumstances of the appellant’s case and in law the Ld Commissioner of Income Tax (Appeals) erred in confirming the action of Ld. AO in reopening the assessment u/s 147 by issue of notice dated 29.03.2014 u/s 148 which is barred by limitation in view of the first proviso to section 147 of the Income Tax Act 1961. 3. On the facts and circumstances of the appellant’s case and in law the Ld Commissioner of Income Tax (Appeals) erred in confirming the action of LD. AO in holding that the assessee has entered into accommodation transactions of bogus purchases with Pravin Kumar Jain group without any material evidence on record. 26

collection of evidences and other findings, which conclusively proved that the said Shri Pravin Kumar Jain group of Mumbai had, through benami concerns, run and operated by them, provided accommodation entries to various parties, the as being one of them, in respect of bogus unsecured loans, bogus purchases and bogus sales. Therefore, the Ld. CIT(A) should have treated the whole amount of these purchases as income of the assessee as reduced his income to this extent by inflating his purchases by this amount in his P&L account. iii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the plea of the ae that proper books of account and stock register was maintained without considering the fact that no such books of account and documents were produced before the AO. Ld. CIT(A) did not give any opportunity to the AO to rebut the contention of the ae raised before him and relied upon the judicial pronouncement, facts of which are different from the instant case. iv) On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-III, Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A)-III, Surat may be set-aside and that of the Assessing Officer’s order may be restored.” 35. Considering the fact that we have already allowed partly the appeal of Revenue (ITA No.200/SRT/2019) (supra) by sustaining the addition to the extent @ 6%. Further we have dismissed the similar application for admissions of additional grounds of appeal and admission of additional documents in para 13 & 14 (supra), therefore, following the principle of consistency both the applications of the assessee assessment order also dismissed with similar directions. 36. In the result, appeal of Revenue for A.Y. 2007-08 is partly allowed and that of assessee for A.Y. 2007-08 and 2008-09 are dismissed.

ITA No.260, 538, 40, 41 & 261/SRT/2019 (assessee- Dilkush Babel) and ITA No.289/SRT/2019, ITA No.01/SRT/2020, 123 & 124/SRT/2019 (Revenue) 37. The assessee has raised the following grounds of appeal in (year-wise):- “AY 2008-09: 1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) erred in reopening the assessment u/s 147 by issue of notice dated 12.03.2015 which is barred by limitation in view of the first proviso to section 147 of Income Tax Act, 1961. 2.On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) erred in reopening the assessment u/s 147 by issue of notice dated 12.03.2015 u/s 148 which is merely due to change of opinion and therefore the reopening is bad in law. 3. On the facts and circumstances of the appellant’s case and in law the Ld. Assessing Officer failed to provide an opportunity of cross examination of the parties on whose statements the Ld. Assessing Officer relied upon as per the grounds stated in the order or otherwise. 4. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 5. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.94,74,320/- as unexplained purchases being 5% of the alleged bogus purchase on the grounds as stated in ethe impugned orders or otherwise. AY 2012-13: 1. On the facts and circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming the action of ld. AO in holding that the appellant has entered into accommodation transactions of bogus purchases with Pravin Kumar Jain Group without any material evidence on record. 2.On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in disallowing a sum of

Rs.37,21,901/- being 5% of the impugned purchases without appreciating the facts that the net profit margin in appellant’s business ranges from 1 to 3%.” AY 2013-14: 1. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of accounts u/s 145, on the grounds as stated in the impugned orders or otherwise. 2. On the facts and circumstances of the appellant’s case and in law the Ld.Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.34,36,000/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise. 3. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the disallowance considering the total bogus purchases at Rs.6,87,20,000/- as against actual purchases disallowed by AO at Rs.5,54,10,000/- on the grounds as stated in the impugned orders or otherwise.” AY 2014-15: 1.On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 2.On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.11,54,265/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise.” AY 2015-16: “1.On the facts and circumstances of the appellant’s case and in law the Ld.Commissioner of Income Tax (Appeals) erred in confirming the action of rejection of books of account u/s 145, on the grounds as stated in the impugned orders or otherwise. 2.On the facts and circumstances of the appellant’s case and in law the Ld. Assessing Officer failed to provide an opportunity of cross examining the

party on whose statements the Ld. Assessing Officer relied upon as per the grounds stated in the order or otherwise. 3. On the facts and circumstances of the appellant’s case and in law the Ld. Commissioner of Income Tax (Appeals) erred in restricting the disallowance of Rs.2,50,000/- as unexplained purchases being 5% of the alleged bogus purchases on the grounds as stated in the impugned orders or otherwise.” 38. Further in all assessment years the assessee has raised identical additional, following grounds of appeal; “The assessee prefers an additional grounds of appeal against an order passed by Ld. Commissioner of Income Tax (A)-1,Surat on following amongst other grounds each of which are without prejudice to any other:- 1.On facts and circumstances of the case and in law, the addition of non- genuine purchases made in assessment order and partly sustained in 1st appeal is erroneous, since the assessee’s statement recorded on oath and material found during survey u/s 133A revealed that the assessee was engaged in providing accommodation bills, resultantly only real commission income on disputed transactions could utmost be brought to tax; 2.A prayer is made to estimate the brokerage income @ 0.05% of disputed purchases, since the AO, in assessment order of mastermind person Shri Jitendra Kumar Jain, had already estimated the commission @ 0.50% of transaction value. 39. The Revenue has raised the following grounds of appeal in (year-wise):- AY:2008-09: “(i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricted the addition made by the AO of Rs.18,94,86,406/- on account of bogus purchase to 5%. (ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider.

(iii) On the facts and circumstances of the case and in law, the Ld. CIT(A),Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of theLd.cita-1 Surat maybe set-aside and that of the Assessing Officer’s order may be restored.” AY: 2012-13: (i)On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in amending assessment order of the AO holding bogus purchase to the extent of Rs.7,44,38,012/- only whereas the assessee was engaged in bogus purchase from two firms controlled by the entry provider to the extent of Rs.7,69,38,094/-. (ii)On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns to the extent of Rs.7,69,38,094/- were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A), Surat ought to have confirmed the addition on the amended facts to the extent of Rs.7,69,38,094/- which is the bogus purchase from two concerns viz M/s Josh Trading Pvt. Ltd., and M/s Taj Impex. (iv) Without prejudice to grounds No.(ii)&(iii) the Ld. CIT(A) in the facts and circumstances of the case, erred in restricting the addition to 5% of bogus purchases to the extent of Rs.7,44,38,012/- instead of Rs.7,69,38,094/-.”

AY:2013-14: (i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricted the addition made by the AO of Rs.6,87,20,000/- on account of bogus purchases to 5%. (ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to supress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A) Surat ought to have upheld the order of the Assessing Officer. It is, therefore,

prayed that the order of the Ld. CIT(A)-1 Surat may be set-aside and that of the Assessing Officer’s order may be restored.” A.Y. 2014-15: (i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricted the addition made by the AO of Rs.6,17,02,781/- on account of bogus purchase to 5%. (ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider. (iii)On the facts and circumstances of the case and in law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A)-1 Surat may be set-aside and that of the Assessing Officer’s order may be restored.” 40. Considering the fact that in case of Navratan Singh Jain in ITA No.105/SRT/2019 for AY 2008-09 (supra), we have dismissed similar application for additional of additional grounds of appeal as well as admissions of additional documents in para 13 & 14 of this order and further restricted the additions of similar bogus purchases to the extent of 6%, therefore following the principles of consistency, the appeals of the revenue in all years are partly allowed and the appeals of the assessee in all the years are dismissed. 41. In the result, four appeals of Revenue are partly allowed whereas four assessee’s appeals are dismissed. 42. In combine result, four set of different assessee’s twelve (12) appeals are dismissed whereas Revenue’s eight (8) appeals are partly allowed.