PRATHANA GEMS, SURAT V. THE INCOME TAX OFFICER WARD -2 (3) (8) SURAT, SURAT

ITA 1/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6628 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 04-06-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 31-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Accommodation entries
• Section: 271(1)(c); 250

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.01/SRT/2024 Assessment Year: (2014-15) (Hybrid Hearing) Prathana Gems, 6/2245-205, Pooja Complex, Hawada Sheri Mahidharpura, Surat - 395003 Vs. The ITO, Ward – 2(3)(8) , Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AAJFP5562F (Appellant) (Respondent) Appellant by Ms Himali Mistry, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 05/06/2024 Date of Pronouncement 06/06/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 24.11.2023 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short, ‘Ld. CIT(A)’] for the Assessment Year (AY) 2014-15. 2. The grounds of appeal raised by the assessee are as under: “1. On the On the facts and circumstances of the case, the learned CIT(A) was not justified in confirming 100% disallowance of alleged purchases being the addition made by the AO by completely brushing aside all evidences tendered during the assessment proceedings. 2. Without prejudice to the above, the learned CIT(A) ought to have restricted the purchase to the extent of profit element since there cannot be sales without purchases. 2 1/SRT/2024/AY.2014-15 Prathana Gems 3. The appellant craves leave to add, alter or vary any of the grounds of appeal.” 3. The facts of the case in brief are that the assessee engaged in the business of import, export, trading in all kinds of diamonds in the name of M/s Prarthana Gems. The assesse filed its return of income for AY.2014-15 declaring total income of Rs. Nil on 24.09.2014. The case was selected for scrutiny in CASS. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made transactions with the entities of Bhanwarlal Jain group. The Assessing Officer was in possession of information that a search and seizure action was carried out by the Investigation Wing, Mumbai on the Bhanwarlal Jain group which was indulged in providing accommodation entries in the form of unsecured loans, bogus purchases or sales to the interest parties. There was a finding that assessee received accommodation entries from the Bhanwarlal Jain group. The assessee had only obtained the bill form M/s Amit Diamonds, a group entity of Bhanwarlal Jain group, to the tune of Rs.1,31,21,120/- without getting the material. Thus, the bill issued by the said group concern is nothing but accommodation entry. Hence, the accommodation entry received from totalling to the tune of Rs.1,31,21,120/- was treated as bogus purchases and added to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the Act was also initiated by the Assessing Officer. 4. Aggrieved by the order of Assessing Officer, the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) observed that the Assessing 3 1/SRT/2024/AY.2014-15 Prathana Gems Officer made the impugned addition based on the information received from DGIT, Mumbai in a group of cases indulging in providing bills and entries for inflating the purchases. The Assessing Officer made addition at the rate of 100% of bogus purchases. The ld. CIT(A) has confirmed the addition on bogus purchases at the rate of 100% of total purchases. 5. Aggrieved by the order of Ld. CIT(A), the assessee has filed appeal before this Tribunal. 6. Before us, the Learned Authorized Representative (Ld. AR) submitted that the assessee had not taken accommodation entry of purchases from various concerns of Shri Bhanwarlal Jain Group. The Ld. AR argued that assessee has submitted bills, vouchers, export bills, stock register, cash book and other books of accounts, therefore, assessee has discharged his onus to prove the genuineness of the purchases. Besides, the assessee`s sales were not doubted by the Assessing Officer; hence, entire addition made by the Assessing Officer should be deleted. The assessee’s case is related to Bhanwarlal Jain Group cases and the ITAT, Surat has been consistently taking decision to sustain the addition at the rate of 6% of bogus purchases. Without prejudice to the primary argument, the Ld. AR argued that the addition may be sustained up to 6% of bogus purchases. 7. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that addition made by the Assessing Officer may be sustained as the assessee made bogus purchases. However, Ld. Sr. DR also stated that the ITAT, Surat Bench upheld the addition in case of bogus 4 1/SRT/2024/AY.2014-15 Prathana Gems purchases @ 6%, therefore addition may be sustained at the rate of 6% of the bogus purchases. 8. We have heard both the parties and perused the material available on record. We find that issue under consideration is covered by the decision of the Co-ordinate Bench of ITAT, Surat in the case of Pankaj K. Chaudhary vs. ITO, in ITA No.1152/Ahd/2017, dated 27.09.2021 wherein the Tribunal has sustained the addition @ 6% of bogus purchases. Since the issue is squarely covered by the decision of Pankaj K. Choudhary (supra) and since there is no change in facts; therefore, following decision and to maintain consistency, we confirm the addition @ 6% of bogus purchases. Hence, we partly allow the appeal of the assessee. 9. In the result, appeal of the assessee is partly allowed. Order is pronounced on 06/06/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 06/06/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat