ACIT-19(3), MUMBAI V. SAI DIAMONDS, MUMBAI

ITA 6509/MUM/2024

AI Insights

The case involves cross appeals by the assessee, M/s. Sai Diamonds, and the revenue against the order of the CIT(A) - 51, Mumbai, for the Assessment Year 2010-11. The primary issue was the addition of Rs. 2,37,922/- as 6% of Rs.39,65,372/-, which was considered as bogus purchases by the AO based on information from DGIT (Inv.), Mumbai. The CIT(A) had directed the AO to restrict the disallowance to 6% of the bogus purchases without considering the gross profit already declared by the assessee. The Tribunal, referencing a similar case for AY 2012-13, adjusted the addition to 2.33% after accounting for the gross profit margin declared by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 39644 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH; DR
• Assessee Lawyers: MRUGAKSHI K. JOSHI
• Keywords: Bogus purchase; Accommodation entries; Bogus

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 6452/Mum/2024 Assessment Year: 2010-11 M/s. Sai Diamonds HW 6071/72, Bharat Diamond Bourse Bandra Kurla Complex Mumbai - 400051 [PAN: AAAFS6126M] Vs ACIT – Circle 19(3), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) I.T.A. No. 6509/Mum/2024 Assessment Year: 2010-11 ACIT – Circle 19(3), Mumbai Vs M/s. Sai Diamonds HW 6071/72, Bharat Diamond Bourse Bandra Kurla Complex Mumbai - 400051 [PAN: AAAFS6126M] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Ms. Mrugakshi K. Joshi, Advocate Revenue by : Shri Bhangepatil Pushkaraj Ramesh, Sr. D/R सुनवाई की तारीख/Date of Hearing : 13/02/2025 घोषणा की तारीख /Date of Pronouncement: 20/02/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 6452/Mum/2024 & I.T.A. No. 6509/Mum/2024 are cross appeals preferred by the assessee and the revenue against the order of the ld. CIT(A) - 51, Mumbai, pertaining to AY 2010-11. 2. The assessee is aggrieved by the addition of Rs. 2,37,922/- being 6% of Rs.39,65,372/- considered as bogus purchases. The revenue is in I.T.A. No. 6452/Mum/2024 I.T.A. No. 6509/Mum/2024 2 appeal against the restriction of the addition of Rs.39,65,372/- to Rs.2,37,922/-. 3. Briefly stated, the facts of the case are that on receiving information from DGIT (Inv.), Mumbai, the AO came to know that the assessee has taken accommodation entries from a transaction with Rajendra Jain Group amounting to Rs.39,65,372/-. The name of the entry provider was Kalash Enterprises. The AO treated the entire gains of bogus purchases as income of the assessee and added the same. The addition was challenged before the ld. CIT(A) and before the appeal could be decided, the Co-ordinate Bench in assessee’s own case in AY 2012-13, on identical set of facts, adopted 6% as fair estimation of the profit element imbibed in alleged bogus purchases and directed the AO to restrict the disallowance to 6% of the bogus purchase, reduced by the gross profit margin already declared by the assessee in respect of alleged bogus purchases. 4. However, taking a leaf out of the above findings of the Co- ordinate Bench, the ld. CIT(A) simply directed the AO to restrict the disallowance to 6% of the bogus purchases without giving any relief to the gross profit already declared by the assessee on the alleged bogus purchases. 5. We find that in the year under consideration, the gross profit shown by the assessee is 3.67%. Therefore, the assessee will get relief to this extent. The AO is directed to restrict the addition to 2.33% of the I.T.A. No. 6452/Mum/2024 I.T.A. No. 6509/Mum/2024 3 alleged bogus purchase which will be in line with the decision of the Co-ordinate Bench (supra). 6. In the result, appeal of the assessee is partly allowed and that of the revenue is dismissed. Order pronounced in the Court on 20th February, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated /02/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014\u001cथ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "