The ITO, Ward-3(1)(5), Surat V. Shri Manish Agarwal, Surat

ITA 1160/AHD/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4049 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Capital asset; Search and seizure; Opportunity of cross examination; Tangible material; Accommodation entries; Tax effect; Reason to believe; Set aside
• Section: 143(3); 73; 13; 153; 22; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO.1152/AHD/2017 (AY 2007-08) (H EARING IN VIRTUAL COURT) THE INCOME TAX OFFICER, WARD-3(1)(5), SURAT. VS. PANKAJ K. CHOUDHARY, 6B, 2080-81, 407, DEVRATNA APARTMENT, RAMPURA, MAIN ROAD, SURAT 395003. PAN: ACUPC 2441 F APPLICANT RESPONDENT ITA NO.1379/AHD/2017 (AY 2007-08) PANKAJ K. CHOUDHARY, 6B, 2080-81, 407, DEVRATNA APARTMENT, RAMPURA, MAIN ROAD, SURAT 395003. PAN: ACUPC 2441 F VS. THE INCOME TAX OFFICER, 3(1)(5), SURAT. APPLICANT RESPONDENT ITA NO.1159 & 1160/AHD/2017(AY 2007-08 & 2012-13) THE INCOME TAX OFFICER, WARD-3(1)(5), SURAT. VS. SHRI MANISH AGARWAL, 204, VAIBHAV CHAMBERS, MAIN ROAD, RUGHNATHPURA, SURAT. PAN: AFWPA 2629 A APPLICANT RESPONDENT ITA NO.1385 & 1386/AHD/2017 (AY 2007-08 & 2012-13) SHRI MANISH AGARWAL, 204, VAIBHAV CHAMBERS, MAIN ROAD, RUGHNATHPURA, SURAT. PAN: AFWPA 2629 A. VS. THE INCOME TAX OFFICER, WARD-3(1)(5), SURAT APPLICANT RESPONDENT ITA NO.1728/AHD/2017 (AY 2007-08) ITA NO.247 & 248/SRT/2017 (AY 2008-09 & 2013-14) MANISH CHORDIA, 702, SATYAM APARTMENT, NAVYUG COLLEGE, RANDER ROAD, SURAT 395003. VS. THE INCOME TAX OFFICER, WARD-2(3)(8), SURAT. & THE ITO, WARD-3(1)(5), SURAT. 2 PAN: ADVPJ 8719 M APPLICANT RESPONDENT ITA NO.1382/AHD/2017 (AY 2012-13) OM PRAKASH S. LADDHA, H-14, NEW DTC HAT FALIA, HARIPURA, SURAT 395 003. PAN: ACGPL 2468 P VS. THE INCOME TAX OFFICER, WARD-2(3)(8), SURAT. APPLICANT RESPONDENT ITA NO.1166/AHD/2017 (AY 2012-13) THE INCOME TAX OFFICER, WARD-2(3)(8), SURAT. VS. OM PRAKASH S. LADDHA, H-14, NEW DTC HAT FALIA, HARIPURA, SURAT 395 003. PAN: ACGPL 2468 P APPLICANT RESPONDENT ITA NO.1389/AHD/2017 (AY 2012-13) RAJKUMAR D. JAIN, 11, SHAKTI CHAMBERS, RAGHUNATHPURA, MAIN ROAD SURAT 395003. PAN: AESPJ 4971 P VS. THE INCOME TAX OFFICER, WARD-3(1)(5), SURAT. APPLICANT RESPONDENT ITA NO.207/SRT/2017 (AY 2008-09) THE INCOME TAX OFFICER, WARD-3(1)(5), SURAT. VS. SHRI GAUTAM PUKHRAJ MEHTA, 11, SHAKTI CHAMBERS, RUGHNATHPURA MAIN ROAD, SURAT. PAN: AOHPM 3899 N APPLICANT RESPONDENT ITA NO.249/SRT/2017 (AY 2008-09) SHRI GAUTAM PUKHRAJ MEHTA, 11, SHAKTI CHAMBERS, RUGHNATHPURA MAIN ROAD, SURAT. PAN: AOHPM 3899 N VS. THE INCOME TAX OFFICER, 3(1)(5), SURAT. APPLICANT RESPONDENT 3 ASSESSEE BY SHRI SUCHEK ANCHALIYA CA REVENUE BY SHRI RITESH MISHRA CIT-DR DATE OF HEARING 02.07.2021 DATE OF PRONOUNCEMENT 27.09.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS SET OF 14 APPEALS, CONSISTING APPEAL AND CROSS BY REVENUE AS WELL AS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, SURAT FOR DIFFERENT ASSESSMENT YEARS. IN ALL APPEALS AND IN CROSS APPEALS THE PARTIES HAVE RAISED CERTAIN COMMON GROUNDS OF APPEAL, FACTS IN ALL CASES ARE ALMOST SIMILAR EXCEPT VARIATION OF FIGURES OF ADDITIONS ON ACCOUNT OF BOGUS PURCHASES, THE LD CIT(A) HAS ALSO PASSED ALMOST SIMILAR ORDER IN ALL CASES, THEREFORE WITH THE CONSENT OF THE PARTIES, ALL THE APPEAL WERE CLUBBED, HEARD AND ARE DECIDED WITH COMMON ORDER. THE PARTIES WERE AGREED TO TREAT THE APPEALS OF PANKAJ K. CHAUDHARY AS LEAD CASE AND THE DECISION THEREOF WOULD APPLY ON ALL APPEALS. 2. THE REVENUE IN ITS APPEAL IN PANKAJ K. CHAUDHARY HAS RAISED FOLLOWING GROUNDS OF APPEAL: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF NON-GENUINE PURCHASES FROM RS. 4,34,00,343/- TO RS.54,25,040/-. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DIRECTING TO MAKE AN ADDITION OF 5% (*) OF UNVERIFIED PURCHASES WHICH IS NOT AS PER LAW. ONCE PURCHASES ARE NOT 4 GENUINE THEN EITHER ENTIRE SUCH PURCHASES ARE TO BE DISALLOWED OR BOOKS OF ACCOUNTS OUGHT TO HAVE BEEN REJECTED AND G.P. ESTIMATED. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS NOT CONSIDERED THE FACT THAT EVEN IN THE CASE OF M/S. MAYANK DIAMONDS PVT. LTD REFERRED BY HIM, THE HONBLE GUJ.HIGH COURT HAS DIRECTED TO ESTIMATE G.P. @ 5%, AND NOT 5% OF UNVERIFIED PURCHASES WERE DIRECTED TO BE ADDED. (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A) SURAT MAY BE SET ASIDE TO THAT EXTENT AND THAT OF THE AOS MAY BE RESTORED TO THAT EXTENT. (*) TYPING MISTAKE IT SHOULD BE 12.5%. (SUO MOTO CORRECTION BY US) 3. THE ASSESSEE IN ITS CROSS APPEAL HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER IS BAD IN LAW AS THE CONDITIONS LAID DOWN UNDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING HAVE NOT BEEN FULFILLED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 5 4. BRIEF FACTS OF THE ASSESSEE THAT THE ASSESSEE IS PROPRIETOR OF PARVATI EXPORTS AND ENGAGED IN THE BUSINESS OF DIAMOND. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2007-08 ON 26.09.2007 DECLARING TOTAL INCOME OF RS.1,81,840/-. SCRUTINY ASSESSMENT FOR THIS ASSESSMENT YEAR WAS COMPETED UNDER SECTION 143(3) ON 10.03.2009 DETERMINING THE TOTAL INCOME OF RS.6,50,490/-. THEREAFTER, THE CASE OF ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT. NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 29.03.2014 SERVED ON 31.03.2014. THE CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION) MUMBAI. IN THE INFORMATION RECEIVED FROM INVESTIGATION WING, MUMBAI IT WAS INFORMED THAT A SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY INVESTIGATION WING-MUMBAI ON BHANWARLAL JAIN GROUP ON 03.10.2013, WHICH RESULTED IN COLLECTION OF EVIDENCE THAT BHANWARLAL JAIN, HIS SONS RAJESH AND MANISH WERE OPERATING CERTAIN BENAMI CONCERNS IN THE NAME OF THEIR EMPLOYEES AND STAFF FOR PROVIDING BOGUS ACCOMMODATION ENTRIES OF UNSECURED LOANS, SALE AND PURCHASE OF DIFFERENT KINDS OF MATERIAL. IT WAS UNEARTH THAT SAID BHANWARLAL JAIN GROUP PROVIDED ACCOMMODATION ENTRIES OF RS. 25,000 CRORE. THE STATEMENT OF BHANWARLAL JAIN WAS RECORDED UNDER SECTION 132(4) OF THE ACT, WHEREIN HE HAD ADMITTED THAT HIS FAMILY MEMBERS ARE MANAGING VARIOUS ENTITIES WHICH ARE PROVIDING ACCOMMODATION ENTRIES. DURING THE COURSE OF SEARCH, BLANK CHEQUE BOOK SIGNED BY DUMMY PARTNERS / DIRECTORS /PROPRIETOR OF ENTITIES WERE FOUND 6 AND SEIZED. IT WAS INFORMED THAT ASSESSEE IS ONE OF THE BENEFICIARIES OF BOGUS PURCHASE FORM THREE FOLLOWING ENTITIES MANAGED BY BHANWARLAL JAIN GROUP. THE ASSESSEE HAS SHOWN FOLLOWING PURCHASED FROM THE SAID PARTIES: NAME OF THE PARTY AMOUNT PARVATI EXPORT 2,00,06,398/- MAHALAXMI GEMS PVT LTD 2,28,37,445/- MAYUR EXPORT 5,56,500/- 4,34,00,343/- 5. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER (AO) FORMED OPINION THAT INCOME OF THE ASSESSEE OF RS.4.34 CRORE HAS ESCAPED FROM ASSESSMENT AND THAT HE WAS SATISFIED THAT IT IS A FIT CASE FOR REOPENING UNDER SECTION 147 OF THE ACT. THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 148, FILED HIS REPLY DATED 28.04.2014, STATING THEREIN THAT RETURN OF INCOME FILED ON 26.09.2007 MAY BE TREATED RETURN IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE DEMANDED COPY OF REASONS RECORDED. THE COPY OF REASONS RECORDED WAS PROVIDED TO THE ASSESSEE. THE ASSESSEE FILED HIS WRITTEN OBJECTION ON 18.12.2014. IN THE OBJECTION, THE ASSESSEE STATED THAT INFORMATION RECEIVED BY AO IS GENERAL IN NATURE WITH NO EVIDENTIARY VALUE. IN THE OBJECTION, THE ASSESSEE STATED THAT IT IS NOT DISCLOSED THAT THE PARVATI EXPORTS, MAHALAXMI GEMS PVT. LTD AND MAYUR EXPORTS ARE RELATED TO BHANWARLAL JAIN GROUP. BHANWARLAL JAIN HAS NO CONNECTION WITH ALL THREE CONCERNS. THE ASSESSEE HAS NEVER MADE ANY TRANSACTION WITH BHANWARLAL JAIN GROUP. THE ASSESSEE HAS SHOWN 7 PURCHASES IN THE INCOME TAX RETURN FOR THE A.Y. 2007-08 IN PROFIT AND LOSS ACCOUNT WHICH INCLUDES PURCHASE FROM SAID CONCERNS AND THUS FULLY DISCLOSED IN THE RETURN OF INCOME AND THERE WAS NO ESCAPEMENT OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE ALSO REFERRED CERTAIN CASE LAWS IN ITS OBJECTIONS. THE OBJECTION OF ASSESSEE WAS DISPOSE OFF BY AO VIDE SEPARATE ORDER DATED 09.02.2015 WHEREIN THE OBJECTION OF ASSESSEE WAS REJECTED. THE AO AFTER REJECTION OF OBJECTION PROCEEDED FOR ASSESSMENT. 6. THE AO ISSUED SHOW CAUSE NOTICE DATED 13.03.2015, AS TO WHY THE PURCHASES SHOWN FROM THREE ENTITIES SHOULD NOT BE ADDED TO THE INCOME OF ASSESSEE. THE EXTRACT OF NOTICE IS REFERRED IN PARA 5 OF THE ASSESSMENT ORDER. THE ASSESSEE FILED HIS REPLY DATED 19.03.2015. THE ASSESSEE ALONG WITH ITS REPLY FURNISHED CONFIRMATION OF PARTIES, PURCHASE BILL, BANK STATEMENTS, STOCK REGISTER AND COPY OF ITR OF PURCHASED PARTIES. THE ASSESSEE CLAIMED THAT ALL TRANSACTIONS WERE ROUTED THROUGH BANKING CHANNEL AND THAT THERE IS NO PROOF THAT ASSESSEE RECEIVED CASH AGAINST THE CHEQUE ISSUED FOR PURCHASE. THE EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO. THE AO CONCLUDED THAT MERE TRANSACTION ROUTED THROUGH BANKING CHANNEL IS NOT SUFFICIENT EVIDENCE. THE AO BY RELYING UPON THE REPORT OF INVESTIGATION WING OF BHANWARLAL JAIN GROUP MADE ADDITION OF 100% OF THE PURCHASES SHOWN FROM ALL THREE ENTITIES. 8 7. AGGRIEVED BY THE 100% ADDITION OF IMPUGNED PURCHASES IN THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING AS WELL AS ADDITIONS ON MERIT. THE ASSESSEE FILED DETAILED WRITTEN SUBMISSION. THE SUBMISSION OF ASSESSEE IS RECORDED IN PARA 7 OF THE ORDER OF LD.CIT(A). IN THE SUBMISSION, THE ASSESSEE EXPLAINED THAT AO HAS NOT MENTIONED IN THE REASONS RECORDED AS WELL AS IN THE ASSESSMENT ORDER, IF HE HAS TAKEN PRIOR APPROVAL OF HIGHER AUTHORITIES AS REQUIRED UNDER SECTION 151 OF THE ACT. THEREFORE, REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF THE ACT IS VOID AND NEED TO BE QUASHED. NO INDEPENDENT ENQUIRY IS CONDUCTED BY AO BEFORE ISSUING NOTICE UNDER SECTION 148 OF THE ACT. THE AO PURELY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING. THE AO WAS REQUIRED TO FORM HIS OWN OPINION THAT INCOME HAS ESCAPED ASSESSMENT. THE AO HAS NOT APPLIED HIS MIND TO THE INFORMATION THE BASIS AND THE MATERIAL OF THE SO-CALLED INFORMATION. THE AO ACTED ON VAGUE INFORMATION. DURING THE ORIGINAL ASSESSMENT, THE ASSESSEE FURNISHED ALL DETAILS RELATED TO THE TRANSACTIONS OF ALL THREE CONCERN. THE AO HAS NO NEW MATERIAL OR INFORMATION FOR REOPENING. THE ASSESSEE DISCLOSED TRUE AND MATERIAL THINGS AND THE RETURN OF INCOME AND THERE IS NO ESCAPEMENT OF INCOME OF THE ASSESSEE. THE RE-OPENING OF THE ASSESSMENT IS BASED ON THIRD PARTY INFORMATION, WHICH WAS RECORDED DURING THE SEARCH ACTION IN THEIR PLACES. THE INITIATION UNDER SECTION 148 OF THE ACT IS BAD IN LAW 9 BEING BASED ON STATEMENT OF THIRD PARTY. THE AO HAS NOT MENTIONED ANY TANGIBLE MATERIAL TO PROVE HIS CONTENTION. ON ADDITION, THE ASSESSEE SUBMITTED THAT HE HAS FURNISHED COMPLETE EVIDENTIARY PROOF OF PURCHASE CONSISTING OF ACCOUNT INFORMATION OF PARVATI EXPORTS, MAHALAXMI GEMS PVT. LTD AND MAYUR EXPORTS. THE COPY OF PURCHASE BILL, ONE TO ONE MAPPING AND SPECIFIC SALE, STOCK REGISTER, BANK STATEMENT AND ITR ACKNOWLEDGMENT OF PARTIES WERE FILED BEFORE AO. THE ASSESSEE REITERATED THAT HE HAS NOT DEALT WITH BHANWARLAL JAI GROUP AND HE DOES NOT KNOW HIM AS FAR AS TRANSACTIONS OF PURCHASE OF GOODS ARE CONCERNED. THE ASSESSEE IS NOT AWARE IN WHICH CAPACITY BHANWARLAL JAIN IS CONNECTED WITH PARVATI EXPORTS, MAHALAXMI GEMS PVT. LTD AND MAYUR EXPORTS AND NOT KNOWS HOW HE WAS AUTHORISED TO GIVE STATEMENT ON THEIR BEHALF. THERE WAS NO CORROBORATIVE EVIDENCE THAT ASSESSEE RECEIVED ACCOMMODATION ENTRY. THE AO SOLELY RELIED UPON THE STATEMENT OF BHANWARLAL JAIN. THE ASSESSEE STATED THAT THE ASSESSEE HAS NOT RECEIVED BACK ANY CASH AGAINST THE PURCHASE, NO CORROBORATIVE EVIDENCE WAS PROVIDED BY THE AO. THE GOODS PURCHASED FROM THE SAID PARTIES HAS BEEN SUBSEQUENTLY SOLD AND QUANTITATIVE TALLY THEREOF GIVEN IN THE TAX AUDIT REPORT WHICH TALLIES WITH THE BOOKS OF ACCOUNTS. ONCE THE SALES ARE ACCEPTED, THE PURCHASE CANNOT BE DOUBTED. THE ASSESSEE IS MAINTAINING PURCHASE REGISTER, SALES REGISTER, STOCK REGISTER, LEDGER, DAY BOOK, BANK BOOK AND NO DEFECTS OR IRREGULARITY WAS FOUND ARE NOTED BY THE AUDITORS. 10 THE STATEMENT OF THIRD PARTY CANNOT BE RELIED. THE AO DISREGARDED THE EVIDENCES PROVIDED BY ASSESSEE. THE ASSESSEE AGAIN FURNISHED ALL THE EVIDENCES AS FURNISHED BEFORE THE AO AND REITERATED THAT HE IS ENGAGED IN THE BUSINESS OF IMPORT, EXPORT, TRADING OF CUT & POLISHED AND ROUGH DIAMOND. THE STATEMENT OF BHANWARLAL JAIN WAS NOT PROVIDED TO THE ASSESSEE. 8. THE ASSESSEE ALSO RELIED UPON CERTAIN CASE LAWS AS RECORDED BY THE LD. CIT(A). THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE ON THE VALIDITY OF REOPENING OF THE ASSESSMENT HELD THAT THE ASSESSEE IS BENEFICIARY OF ACCOMMODATION ENTRY, THE ENTRY OPERATOR ADMITTED BEFORE INVESTIGATION WING ABOUT THE ACCOMMODATION ENTRY THAT HE IS PROVIDING BOGUS ENTRIES TO MANY PERSONS. ON THE BASIS OF SUCH REPORT, THE AO HAD REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE LD.CIT(A) HELD THAT ON EXAMINATION OF RECORD, HE NOTED THAT AO RELIED ON THE REPORT OF INVESTIGATION WING WITHOUT FURNISHING COPY OF MATERIAL RELIED UPON TO THE ASSESSEE. THE LD.CIT(A) CONCLUDED THAT IN HOLDING ASSESSMENT AS INVALID FOR THE ABOVE REASON WITHOUT GOING INTO MERIT WOULD BE AMOUNT TO GAVE UNDUE BENEFIT TO THE ASSESSEE FOR TECHNICAL MISTAKE OR OMISSION BY AO AND THE PRINCIPLE OF EQUITY DO NOT ALLOW THIS, WITHOUT CONSIDERING THE GROUNDS ON MERIT. 9. ON MERIT, THE LD.CIT(A) AFTER DISCUSSING THE SUBMISSION OF ASSESSEE HELD THAT AO HAS NOT DISCUSSED ABOUT ANY DETAILS OF BOOKS OF ACCOUNTS, 11 DOCUMENTS, STOCK REGISTER PRODUCED BY ASSESSEE DURING THE ASSESSMENT. THE AO NEITHER EXAMINED NOR FOUND ANY DEFECT IN THE DOCUMENT TO DISCREDIT THE SAME. THE ASSESSEE HAS PRODUCED DAY TO DAY STOCK REGISTER, DETAILS OF PURCHASE AND SALE. THE PURCHASES MADE DURING THE YEAR ARE SOLD DURING THE YEAR AS SEEN FROM THE TRADING ACCOUNT. IF THE IMPUGNED PURCHASES ARE TREATED AS BOGUS, THEN THE STOCK IN HAND WILL BECOME NEGATIVE FROM 26.06.2006 ONWARDS AND NO SALE IS POSSIBLE IN ABSENCE OF PURCHASES. THE AO RELIED ON THE STATEMENT OF BHANWARLAL JAIN RECORDED BY INVESTIGATION WING AGAINST, COPY OF PURCHASE BILL, COPY OF BANK STATEMENT, SHOWING PAYMENT, DAY TO DAY STOCK REGISTER, INCOMING AND OUTGOING DIAMONDS AND DAILY STOCK TALLY, CONFIRMATION OF THE IMPUGNED PARTIES FROM WHOM THE SAID PURCHASES HAS BEEN MADE, THUS, THE ASSESSEE PRACTICALLY FURNISHED ALL POSSIBLE EVIDENCES IN SUPPORT OF HIS CLAIM FOR PURCHASES. MOREOVER ALL THE PAYMENT ARE MADE BY BANK ACCOUNT. THE AO HAS MADE NO COMMENTS ABOUT THESE DOCUMENTARY EVIDENCES. ON THE AFORESAID OBSERVATION, THE LD.CIT(A) CONCLUDED THAT ASSESSMENT ORDER SUFFER FROM INCOMPLETE INVESTIGATION, LACK OF MARSHALLING OF ALL RELEVANT FACTS AND PROCEDURAL LOOP HOLES. SIMILARLY, THE LD. CIT(A) ALSO OBSERVED THAT THERE IS NO DENYING CIRCUMSTANCES UNDER WHICH STATEMENT WERE MADE BY BHANWARLAL JAIN AND THE ELABORATE MODUS-OPERANDI UNEARTHED BY INVESTIGATION WING, MUMBAI, WHICH HAS CREATED SUFFICIENT SUSPICION REGARDING THE PURCHASE MADE BY THE ASSESSEE. THE SAID PARTIES ARE 12 ASSESSED WITH CENTRAL CIRCLE, MUMBAI WHERE THEY ARE TREATED AS ENTRY PROVIDER AND ASSESSED ACCORDINGLY. 10. THE LD.CIT(A) AFTER REFERRING THE DECISION OF TRIBUNAL IN BHOLANATH POLY FAB PRIVATE LIMITED IN ITA NO.137/AHD/2009 DATED 26.07.2011 WHEREIN THE ADDITION WAS SUSTAINED TO THE EXTENT OF 12%. THE LD CIT(A) BY FOLLOWING THE OBSERVATION OF ORDER OF TRIBUNAL IN BHOLANATH POLY FAB PVT. LTD.(SUPRA), THE LD.CIT(A) HELD THAT THE ASSESSEE MAY HAVE MADE PURCHASES FROM ELSEWHERE AND OBTAINED THE BILLS FROM IMPUGNED SUPPLIER TO INFLATE GROSS PROFIT RATE. THE LD CIT(A) AFTER CONSIDERING THE OVERALL FACTS, SUBMISSIONS OF THE ASSESSEE AND EVIDENCES PRODUCED BY ASSESSEE, CONCLUDED THAT THE 100% DISALLOWANCE OF PURCHASE IS NOT JUSTIFIED. THE LD.CIT(A) ALSO CONSIDERED THE DECISION OF JURISDICTIONAL HIGH COURT IN MAYANK DIAMONDS PVT. LTD. REPORTED IN [2014] 11 TMI 812 (GUJ) (TAX APPEAL NO.200 OF 2003 DATED 07.11.2014). THE LD.CIT(A) COMPARED THE FACT OF THE PRESENT CASE, WITH THE FACTS IN CASE OF MAYANK DIAMONDS (SUPRA) AND NOTED THAT ASSESSEE IN THAT CASE WAS ALSO ENGAGED IN THE TRADING OF POLISHED DIAMONDS. THE AO IN SAID CASE MADE DISALLOWANCE OF ENTIRE BOGUS PURCHASE. THE LD.CIT(A) DISMISSED THE APPEAL, HOWEVER, THE TRIBUNAL GAVE PARTIAL RELIEF TO THE ASSESSEE DIRECTING AND SUSTAINED THE ADDITION @12%. AND ON FURTHER APPEAL BEFORE HON'BLE HIGH COURT, THE DISALLOWANCE WAS SUSTAINED AT GROSS PROFIT RATE OF 5%, WHICH IS AVERAGE RATE OF PROFIT IN INDUSTRY. THE LD. CIT(A) FURTHER HELD THAT IN SOME OTHER 13 SIMILAR CASES THOUGH HE HAS SUSTAIN 5% OF GROSS PROFIT RATE CONSIDERING THE FACT THAT WHERE GROSS PROFIT SHOWN BY ASSESSEE IS MORE THAN 5%. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE HAS MERELY SHOWN GROSS PROFIT RATE ONLY AT 0.78% OF TURNOVER, ACCORDINGLY, THE LD.CIT(A) WAS OF THE VIEW THAT DISALLOWANCE OF 12.5% OF IMPUGNED PURCHASES/BOGUS PURCHASES WOULD BE REASONABLE TO MEET THE END OF JUSTICE, HENCE THE DISALLOWANCE WAS RESTRICTED TO 12.5% OF THE IMPUGNED PURCHASE. 11. AGGRIEVED BY THE ORDER OF LD. CIT(A), BOTH THE PARTIES HAVE FILED CROSS APPEALS. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING AS WELL AS SUSTAINING THE ADDITION TO THE EXTENT OF 12.5% ONLY. LIKEWISE, THE REVENUE HAS ASSAILED THE ORDER FOR SUSTAINING ADDITION TO THE EXTENT OF 12.5% ONLY. WE HAVE NOTICED THAT THERE IS TYPING MISTAKE IN THE GROUND NO. 2 OF REVENUES APPEAL WHEREIN THE ASSESSING OFFICER HAS MENTIONED THE ADDITIONS OF 5% INSTEAD OF 12.5%. 12. WE HAVE HEARD THE SUBMISSION OF LD.CIT-DR FOR THE REVENUE AND THE LD. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE VARIOUS DOCUMENTARY EVIDENCES FURNISHED BY ASSESSEE. THE LD. CIT-DR FOR THE REVENUE SUPPORTED THE ORDER OF AO. THE LD. CIT-DR SUBMITS THAT INVESTIGATION WING, MUMBAI MADE A SEARCH ON BHANWARLAL JAIN GROUP. DURING THE SEARCH AND AFTER SEARCH, THE INVESTIGATION WING MADE A THOROUGH INVESTIGATION AND CONCLUDED THAT BHANWARLAL JAIN GROUP AND HIS ASSOCIATES INCLUDING HIS SONS WERE INDULGING IN MANAGING ABOUT 14 70 BENAMI CONCERNS. THE BENAMI CONCERNS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. THE ASSESSEE IS ONE OF THE BENEFICIARIES OF SUCH ACCOMMODATION ENTRIES. IN THE TRANSACTION OF ACCOMMODATION ENTRIES, THE DOCUMENTARY EVIDENCES ARE CREATED IN SUCH A WAY, SO THAT THE BOGUS TRANSACTION IS LOOKS LIKE GENUINE TRANSACTION. IN BOGUS TRANSACTION, THE FABRICATED EVIDENCES ARE ALWAYS MAINTAINED PERFECTLY. THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRY ONLY TO INFLATE THE EXPENSES AND TO REDUCE THE ULTIMATE PROFIT. NO STOCKS OF DIAMONDS WERE FOUND AT THE TIME OF SEARCH ON BHANWARLAL JAIN GROUP. THE ASSESSEE HAS SHOWN A VERY MEAGRE GROSS PROFIT (GP) @ 0.78% AND NOT NET PROFIT (NP) AT 0.02%. THE LD. CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% WHICH IS ON THE LOWER SIDE. THE LD. CIT-DR FOR THE REVENUE PRAYED THAT DISALLOWANCE MADE BY THE AO MAY BE UPHELD OR IN ALTERNATIVE SUBMITTED THAT IT MAY RESTRICTED AT LEAST @ 25%, KEEPING IN VIEW THAT THE NP DECLARED BY THE ASSESSEE IS EXTREMELY ON LOWER SIDE. 13. ON THE VALIDITY OF REOPENING, THE LD.CIT-DR FOR THE REVENUE SUBMITS THAT THE AO RECEIVED CREDIBLE INFORMATION ABOUT THE ACCOMMODATION ENTRY PROVIDED BY BHANWARLAL JAIN GROUP. THE ASSESSEE IS ONE OF THE BENEFICIARIES, WHO HAD AVAILED ACCOMMODATION ENTRIES FROM SUCH HAWALA TRADER. AT THE TIME OF RECORDING REASONS, THE MERE SUSPICIOUS ABOUT THE ACCOMMODATION ENTRY IS SUFFICIENT AS HELD BY HON'BLE JURISDICTIONAL HIGH 15 COURT IN VARIOUS CASES. TO SUPPORT HIS SUBMISSIONS, THE LD.CIT-DR RELIED UPON THE DECISION; PUSHPAK BULLION (P) LTD VS DCIT [2017] 85 TAXMANN.COM 84 (GUJARAT HIGH COURT), PEASS INDUSTRIAL ENGINEERS (P) LTD VS DCIT [2016] 73 TAXMANN.COM 185 (GUJARAT HIGH COURT), ITO VS PURUSHTTOM DASS BANGUR [1997} 90 TAXMAN 541 (SC) AND MAYANK DIAMOND PRIVATE LIMITED (2014) (11) TMI 812 (GUJARAT HIGH COURT). AGR INVESTMENT VS ADDITIONAL COMMISSIONER 197 TAXMAN 177 (DELHI) AND CHUHARMAL VS CIT [1998] 38 TAXMAN 190 (SC). 14. ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SUBMITS THAT HE HAS CHALLENGED THE VALIDITY OF REOPENING AS WELL AS RESTRICTING THE ADDITION TO THE EXTENT OF 12.50% OF THE ALLEGED BOGUS PURCHASES. THE LD.AR OF THE ASSESSEE SUBMITS DURING THE ASSESSMENT, THE AO HAS NOT MADE ANY INDEPENDENT INVESTIGATION. THE AO REOPENED THE CASE OF THE ASSESSEE ON THE BASIS OF THIRD PARTY INFORMATION WITHOUT MAKING ANY PRELIMINARY INVESTIGATION. THE AO RECEIVED VAGUE INFORMATION ABOUT PROVIDING ACCOMMODATION ENTRY BY BHANWARLAL JAIN GROUP. NO SPECIFIC INFORMATION ABOUT THE ACCOMMODATION ENTRY OBTAINED BY ASSESSEE WAS RECEIVED BY AO. THERE IS NO LIVE LINK BETWEEN THE REASONS RECORDED QUA THE ASSESSEE. THEREFORE, THE RE-OPENING IS INVALID AND ALL SUBSEQUENT ACTION IS LIABLE TO BE SET ASIDE. 16 15. ON ACCOUNT OF ADDITIONS OF BOGUS PURCHASES, THE LD.AR SUBMITS THAT IN THE ORIGINAL ASSESSMENT, THE ASSESSEE FILED ITS COMPLETE DETAILS OF PURCHASES TO PROVE THE GENUINENESS OF EXPENSES. THE AO ACCEPTED THE SAME IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) ON 10.03.2009. DURING RE- ASSESSMENT, THE ASSESSEE AGAIN FURNISHED COMPLETE DETAILS ABOUT THE GENUINENESS OF PURCHASES. THE ASSESSEE FILED CONFIRMATION PURCHASES INVOICES, ACCOUNTS OF THE PARTIES, BANK STATEMENT OF ASSESSEE SHOWING TRANSACTION TO THE BANKING CHANNEL. THE AO HAS NOT MADE ANY COMMENT ON THE DOCUMENTARY EVIDENCE FURNISHED BY ASSESSEE. THE AO SOLELY RELIED UPON THE STATEMENT OF THIRD PARTY AND THE REPORT OF INVESTIGATION WING. THE REPORT OF WING AND THE STATEMENT OF BHANWARLAL JAIN WERE NOT PROVIDED TO THE ASSESSEE. THE AO HAS NOT DISPUTED THE SALES OF ASSESSEE. NO SALE IS POSSIBLE IN ABSENCE OF PURCHASE. THE BOOKS OF ACCOUNTS WERE NOT REJECTED. THE AO MADE THE DISALLOWANCE OF ENTIRE PURCHASES. THE ASSESSING OFFICER NOT PROVIDED CROSS EXAMINATION OF THE ALLEGED HAWALA DEALERS. THE DISALLOWANCES SUSTAINED BY THE LD. CIT(A) @ 12.5% OF THE IMPUGNED PURCHASES, IS ON HIGHER SIDE AND DESERVE TO BE DELETED IN TOTAL. THE LD.AR OF THE ASSESSEE SUBMITS THAT ENTIRE PURCHASES SHOWN BY ASSESSEE ARE GENUINE. IN WITHOUT PREJUDICE AND ALTERNATIVE SUBMISSIONS, THE LD. AR FOR THE ASSESSEE SUBMITS THAT IN ALTERNATIVE SUBMISSION, THE DISALLOWANCE MAY BE SUSTAINED ON REASONABLE BASIS. TO SUPPORT HIS VARIOUS SUBMISSION, THE LD.AR FOR THE ASSESSEE IS RELIED UPON CASE LAWS: 17 1 M/S ANDAMAN TIMBER INDUSTRIES VSCOMMISSIONER OF CENTRAL EXCISE, CIVIL APPEAL NO. 4228 OF 2006 (SUPREME COURT) 2 CIT VS. INDRAJIT SINGH SURI [2013] 33 TAXMANN.COM 281 (GUJARAT) 3 ALBERS DIAMONDS PVT. LTD. VS ITO 1(1)(1), SURAT I.T.A. NO.776 &1180/AHD/2017 4 THE PCIT-5 VS. M/S. SHODIMAN INVESTMENTS PVT. LTD. TTANO. 1297 OF 2015 (BOMBAY HIGH COURT) 5 SHILPIJEWELLERS PVT. LTD. VS. UNION OF INDIA &ORS. WRIT PETITION NO. 3540 OF 2018 (BOMBAY HIGH COURT) 6 CIT IN VS. MOHMED JUNED DADANI 355 ITR 172 (GUJARAT) 7 MICRO INKS PVT. LTD. VS. ACIT [2017] 79 TAXMANN.COM 153 (GUJARAT) 8 SHAKTI KARNAWAT VS. ITO - 2(3)(8), SURAT ITA 1504/AHD/2017 AND 1381 /AHD/2017 9 ASIAN PAINTS LTD. VS. DCIT, [2008] 296 ITR 90 (BOMBAY ) 10 PCIT, SURAT 1 VS. TEJUA ROHIT KUMAR KAPADIA [2018] 94 TAXMANN.COM 325 (SC) 11 THE PCIT-17 VS. M/S MOHOMMAD HAJI ADAM & CO. ITA NO. 1004 OF 2016(BOMBAY HIGH COURT) 12 PANKAJ KANWARLAL JAIN HUF VS. ITO 2(3)(8) SURAT ITA.NO.269/SRT/2017 16. IN THE REJOINDER SUBMISSIONS THE LD. CIT-DR FOR THE REVENUE SUBMITS THAT THAT RIGOUR OF THE RULES OF EVIDENCE CONTAINED IN THE EVIDENCE ACT IS NOT APPLICABLE BEFORE THE TAX AUTHORITIES. IT WAS SUBMITTED THAT THE RATIO OF VARIOUS CASE LAWS RELIED BY THE LD. AR FOR THE ASSESSEE IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASES. THE RATIO OF DECISION OF HONBLE GUJARAT HIGH COURT IN MAYANK DIAMOND PRIVATE LIMITED (SUPRA) IS DIRECTLY APPLICABLE ON THE FACTS OF THE PRESENT CASE. 17. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES. WE HAVE ALSO DELIBERATED ON EACH AND EVERY CASE LAWS RELIED BY BOTH THE PARTIES. WE HAVE ALSO EXAMINED THE FINANCIAL STATEMENT OF ALL THE ASSESSEE(S) CONSISTING OF COMPUTATION OF 18 INCOME AND AUDIT REPORT. WE HAVE ALSO GONE THROUGH THE DOCUMENTARY EVIDENCES FURNISHED IN ALL CASES. GROUND NO.1 IN ASSESSEES APPEAL RELATES TO THE VALIDITY OF REOPENING. THE LD AR FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE AO REOPENED THE CASE OF THE ASSESSEE ON THE BASIS OF THIRD PARTY INFORMATION, AND WITHOUT MAKING ANY PRELIMINARY INVESTIGATION, WHICH WAS VAGUE ABOUT THE ALLEGED ACCOMMODATION ENTRY BY BHANWARLAL JAIN GROUP. AND THAT THERE WAS NO SPECIFIC INFORMATION ABOUT THE ACCOMMODATION ENTRY AVAILED BY THE ASSESSEE. THERE IS NO LIVE LINK BETWEEN THE REASONS RECORDED QUA THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS RAISED OBJECTION AGAINST THE VALIDITY OF THE REOPENING BEFORE THE AO. THE OBJECTIONS OF THE ASSESSEE WAS DULY DISPOSED BY AO IN HIS ORDER DATED 09.02.2015. THE ASSESSEE RAISED GROUND OF APPEAL BEFORE LD CIT(A) WHILE ASSAILING THE ORDER OF AO ON REOPENING. THE LD CIT(A) WHILE CONSIDERING THE GROUND OF APPEAL AGAINST THE REOPENING HELD THAT THE AO HAS RECEIVED REPORT FROM INVESTIGATION WING MUMBAI, WHICH INDICATE THAT THE ASSESSEE IS BENEFICIARY OF THE ACCOMMODATION ENTRY OPERATORS. THE ACCOMMODATION ENTRY PROVIDER ADMITTED BEFORE INVESTIGATION WING THAT HE HAS GIVEN SUCH ENTRY TO VARIOUS PERSONS; BASED ON SUCH REPORT THE AO HAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND THUS THE ACTION OF AO IN REOPENING IS JUSTIFIED. 18. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN PEASS INDUSTRIAL ENGINEERS (P) LTD VS DCIT (SUPRA) WHILE CONSIDERING THE VALIDITY OF 19 SIMILAR NOTICE OF REOPENING, WHICH WAS ALSO ISSUED ON THE BASIS OF INFORMATION OF INVESTIGATION WING THAT THEY HAVE SEARCHED A PERSON WHO IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, HELD THAT WHERE AFTER SCRUTINY ASSESSMENT THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT WELL KNOWN ENTRY OPERATORS OF THE COUNTRY PROVIDED BOGUS ENTRIES TO VARIOUS BENEFICIARIES, AND ASSESSEE WAS ONE OF SUCH BENEFICIARY, ASSESSING OFFICER WAS JUSTIFIED IN RE-OPENING ASSESSMENT. FURTHER SIMILAR VIEW WAS TAKEN BY HONBLE JURISDICTIONAL HIGH COURT IN PUSHPAK BULLION (P) LTD VS DCIT (SUPRA). THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF HONBLE HIGH COURT, WE FIND THAT THE ASSESSING OFFICER VALIDLY ASSUMED THE JURISDICTION FOR MAKING RE-OPENING UNDER SECTION 147 ON THE BASIS OF INFORMATION OF INVESTIGATION WING MUMBAI. SO FAR AS OTHER SUBMISSIONS OF THE LD AR FOR THE ASSESSEE THAT THERE IS NO LIVE LINK OF THE REASONS RECORDED, WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN PEASS INDUSTRIAL ENGINEERS (P) LTD CLEARLY HELD THAT WHEN ASSESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT TWO WELL KNOWN ENTRY OPERATORS OF THE COUNTRY PROVIDED BOGUS ENTRIES TO VARIOUS BENEFICIARIES, AND ASSESSEE WAS ONE OF SUCH BENEFICIARY, ASSESSING OFFICER WAS JUSTIFIED. HENCE, THE GROUND NO. 1 IN ASSESSEES APPEAL IS DISMISSED. 19. GROUND NO. 2 IN ASSESSEES APPEAL AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE INTERCONNECTED, WHICH RELATES TO RESTRICTING THE 20 DISALLOWANCE OF BOGUS PURCHASES TO THE EXTENT OF 12.5%. THE AO MADE OF 100% OF PURCHASES SHOWN FROM THE HAWALA DEALERS/ ENTRY PROVIDER NAMELY BHANWARLAL JAIN. WE FIND THAT THE AO WHILE MAKING ADDITIONS OF 100%, OF DISPUTED PURCHASES SOLELY RELIED ON THE REPORT OF THE INVESTIGATION WING MUMBAI. NO INDEPENDENT INVESTIGATION WAS CARRIED BY THE AO. THE AO HAS NOT DISPUTED THE SALE OF THE ASSESSEE. THE AO MADE NO COMMENT ON THE EVIDENCES FURNISHED BY THE ASSESSEE. WE FURTHER FIND THAT LD CIT(A), WHILE CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ACCEPTED THE LAPSES ON THE PART OF THE AO AND NOTED THAT NO SALE IS POSSIBLE IN ABSENCE OF PURCHASES. THE BOOKS OF THE ASSESSEE WAS NOT REJECTED BY THE AO. THE LD CIT(A) ON FURTHER EXAMINATION OF THE FACTS AND VARIOUS LEGAL SUBMISSIONS FIND THAT AHMEDABAD TRIBUNAL IN BHOLANATH POLY FAB PRIVATE LIMITED (SUPRA) HELD THAT IN THE SUCH CASES THE ADDITION OF BOGUS PURCHASES WAS SUSTAINED TO THE EXTENT OF 12%, ON THE OBSERVATION THAT THE ASSESSEE MAY HAVE MADE PURCHASES FROM ELSEWHERE AND OBTAINED THE BILLS FROM IMPUGNED SUPPLIER TO INFLATE GROSS PROFIT RATE. THE LD CIT(A) BY CONSIDERING THE OVERALL FACTS, CONCLUDED THAT THE 100% DISALLOWANCE OF PURCHASE IS NOT JUSTIFIED. 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 POLISHED 21 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. 20. NOW ADVERTING TO THE FACTS OF THE PRESENT CASE, THE LD.CIT(A) HELD THAT IN SOME OTHER SIMILAR CASES; THOUGH HE HAD SUSTAIN 5% OF GROSS PROFIT RATE, CONSIDERING THE FACT THAT WHERE GROSS PROFIT SHOWN BY THOSE ASSESSEES ARE MORE THAN 5%. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE HAS MERELY SHOWN GROSS PROFIT RATE ONLY AT 0.78% OF TURNOVER, ACCORDINGLY, THE LD. CIT(A) WAS OF THE VIEW THAT DISALLOWANCE OF 12.5% OF IMPUGNED PURCHASES/BOGUS PURCHASES WOULD BE REASONABLE TO MEET THE END OF JUSTICE. 21. WE HAVE SEEN THAT DURING THE FINANCIAL YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN TOTAL TURNOVER OF RS. 66,09,62,458/-. THE ASSESSEE HAS SHOWN GROSS PROFIT @ .78% AND NET PROFIT @ .02% (PAGE 11 OF PAPER BOOK). THE ASSESSEE WHILE FILING THE RETURN OF INCOME HAS DECLARED TAXABLE INCOME OF RS. 1,81,840/- ONLY. WE ARE CONSCIOUS OF THE FACTS THAT DISPUTE BEFORE US IS ONLY WITH REGARD OF THE DISPUTED PURCHASES OF RS, 4.34 CRORE, WHICH WAS SHOWN TO HAVE PURCHASED FROM THE ENTITY MANAGED BY BHANWARLAL JAIN GROUP. DURING THE SEARCH ACTION ON BHANWARLAL JAIN NO 22 STOCK OF GOODS/ MATERIAL WAS FOUND TO THE INVESTIGATION PARTY. BHANWARLAL JAIN WHILE FILING RETURN OF INCOME HAS OFFERED COMMISSION INCOME (ENTRY PROVIDER). BEFORE US, THE LD CIT-DR FOR THE REVENUE VEHEMENTLY SUBMITTED THAT THE RATIO OF DECISION OF HONBLE GUJARAT HIGH COURT IN MAYANK DIAMOND PRIVATE LIMITED (SUPRA) IS DIRECTLY APPLICABLE ON THE FACTS OF THE PRESENT CASE. WE FIND THAT IN MAYANK DIAMONDS THE HONBLE HIGH COURT RESTRICTED THE ADDITIONS TO 5% OF GP. WE HAVE SEEN THAT IN MAYANK DIAMONDS P LTD (SUPRA), THE ASSESSEE HAD DECLARED GP @ 1.03% ON TURNOVER OF RS. 1.86 CRORE. THE DISPUTED TRANSACTION IN THE SAID CASE WAS RS. 1.68 CRORE. HOWEVER, IN THE PRESENT CASE THE ASSESSEE HAS DECLARED THE GP @ 0.78%. IT IS SETTLED LAW THAT UNDER INCOME-TAX, THE TAX AUTHORITIES ARE NOT ENTITLED TO TAX THE ENTIRE TRANSACTION, BUT ONLY THE INCOME COMPONENT OF THE DISPUTED TRANSACTION, TO PREVENT THE POSSIBILITY OF REVENUE LEAKAGE. THEREFORE, CONSIDERING 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. 2 OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED AND THE GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED. 22. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 23 MANISH AGGARWAL (AY 2007-08 & 2012-13) 23. THE REVENUE IN MANISH AGGARWAL CASE IN ITA NO.1159/AHD/2017 FOR A.Y. 2007-08 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF NON-GENUINE PURCHASES FROM RS.5,64,99,389/- TO RS.70,62,420/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DIRECTING TO MAKE AN ADDITION OF 12.5% OF UNVERIFIED PURCHASES WHICH IS NOT AS PER LAW. ONCE PURCHASES ARE NOT GENUINE THEN EITHER ENTIRE SUCH PURCHASES ARE TO BE DISALLOWED OR BOOKS OF ACCOUNTS OUGHT TO HAVE BEEN REJECTED AND G.P. ESTIMATED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE CIT(A) HAS NOT CONSIDERED THE FACT THAT EVEN IN THE CASE OF M/S.MAYANK DIAMONDS PVT.LTD REFERRED BY HIM, THE HON GUJ.HIGH COURT HAS DIRECTED TO ESTIMATE G.P. @ 5%, AND NOT 12.5@ OF UNVERIFIED 9PURCHASES WERE DIRECTED TO BE ADDED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A) SURAT MAY BE SET ASIDE TO THAT EXTENT AND THAT OF THE AOS MAY BE RESTORED TO THAT EXTENT. 24. THE REVENUE IN MANISH AGGARWAL CASE IN ITA NO.1160/AHD/2017 FOR A.Y. 2012-13 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF NON-GENUINE PURCHASES FROM RS.13,35,11,366/- TO RS.1,66,88,920/-. 24 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DIRECTING TO MAKE AN ADDITION OF 12.5% OF UNVERIFIED PURCHASES WHICH IS NOT AS PER LAW. ONCE PURCHASES ARE NOT GENUINE THEN EITHER ENTIRE SUCH PURCHASES ARE TO BE DISALLOWED OR BOOKS OF ACCOUNTS OUGHT TO HAVE BEEN REJECTED AND G.P. ESTIMATED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE CIT(A) HAS NOT CONSIDERED THE FACT THAT EVEN IN THE CASE OF M/S.MAYANK DIAMONDS PVT.LTD REFERRED BY HIM, THE HON GUJ.HIGH COURT HAS DIRECTED TO ESTIMATE G.P. @ 5%, AND NOT 12.5% OF UNVERIFIED 9PURCHASES WERE DIRECTED TO BE ADDED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A) SURAT MAY BE SET ASIDE TO THAT EXTENT AND THAT OF THE AOS MAY BE RESTORED TO THAT EXTENT. 25. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.1385/AHD/2017 FOR A.Y. 2007-08 ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER IS BAD IN LAW AS THE CONDITIONS LAID DOWN UNDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING HAVE NOT BEEN FULFILLED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 25 26. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.1386/AHD/2017 FOR A.Y. 2012-13 ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 27. CONSIDERING OUR DECISION IN PARA 21 (SUPRA) IN PANKAJ K CHAUDHARY, WHEREIN WE HAVE SUSTAINED THE DISALLOWANCE @6% OF THE DISPUTED/ BOGUS PURCHASES, THUS, FOLLOWING THE PRINCIPAL OF CONSISTENCY THE APPEALS OF THE REVENUE FOR BOTH THE YEARS ( AY 2007-08 & 2012-13) ARE DISMISSED AND THE APPEALS OF THE ASSESSEE FOR BOTH YEARS ARE PARTLY ALLOWED. MANISH CHORDIA (AY 2007-08, 2008-09 & 2013-14) 28. THE ASSESSEE IN ITA NO.1728/AHD/2017 (AY 2007-08) RAISED THE FOLLOWING GROUNDS OF APPEAL: (5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER IS BAD IN LAW AS THE CONDITIONS LAID DOWN UNDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING HAVE NOT BEEN FULFILLED. (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DISALLOWING THE ALLEGED BOGUS PURCHASE OF RS.53,95,133/-, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT 26 WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. (7) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN PARTLY ALLOWING THE PURCHASE FROM M/S NICE DIAMOND, WITHOUT APPRECIATING THE FACT THAT THE PARTY APPEARED BEFORE THE LD. A.O. AND GIVEN THE FULL DETAIL OF PURCHASE OF RS.38,53,943/-. (8) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 29. THE ASSESSEE IN ITA NO.247/SRT/2017 (AY 2008-09) RAISED THE FOLLOWING GROUNDS OF APPEAL: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER IS BAD IN LAW AS THE CONDITIONS LAID DOWN UNDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING HAVE NOT BEEN FULFILLED. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. (3) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 30. THE ASSESSEE IN ITA NO.248/SRT/2017 (AY 2013-14) RAISED THE FOLLOWING GROUNDS OF APPEAL: 27 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. (2) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 31. WE FIND THAT THERE IS NO CROSS APPEAL BY REVENUE IN CASE OF PRESENT ASSESSEE FOR ALL THREE YEARS (WHICH MAY HAVE BEEN DISMISSED DUE TO LOW TAX EFFECT). CONSIDERING OUR DECISION IN PARA 21 (SUPRA) IN PANKAJ K CHAUDHARY, WHEREIN WE HAVE SUSTAINED THE DISALLOWANCE @6% OF THE DISPUTED/ BOGUS PURCHASES, THUS, FOLLOWING THE PRINCIPAL OF CONSISTENCY THE APPEALS THE ASSESSEE FOR ALL THREE YEARS (AY 2007-08, 2008-09 & 2013-14) ARE PARTLY ALLOWED. PRAKASH LADHA (AY 2012-13) 32. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.4,04,99,200/- ON ACCOUNT OF BOGUS PURCHASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN ESTIMATING INCOME @ 12.5% OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT CONCERNS LIKE, M/S. NAVKAR INDIA, MAXIMUM GEMS AND RAJAN DIAMONDS WERE NON-EXISTENT ENTITIES AND THEY WERE USED FOR PROVIDING BOGUSPURCHASE BILLS TO THE ASSESSEE I.E. 28 SHRI OM PRAKASH S.LADDHA. THEREFORE, CIT(A) SHOULD HAVE TREATED WHOLE AMOUNT OF THESE PURCHASES AS INCOME OF THE ASSESSEE AS ASSESSEE REDUCED HIS INCOME TO THIS EXTENT BY INFLATING HIS PURCHASES BY THIS AMOUNT IN HIS P & L ACCOUNT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE PLEA OF THE ASSESSEE TO ESTIMATE THE PROFIT AT 12.5% OF THE BUGS PURCHASE ON THE BASIS THAT PROPER BOOKS OF ACCOUNTS AND STOCK REGISTER WERE MAINTAINED WITHOUT CONSIDERING THE FACT THAT NO SUCH BOOKS OF ACCOUNTS AND DOCUMENTS WERE PRODUCED BEFORE AO. CIT(A) DID NOT GIVE ANY OPPORTUNITY TO THE AO TO REBUT THE CONTENTION OF THE ASSESSEE RAISED BEFORE HIM AND RELIED UPON THE JUDICIAL PRONOUNCEMENTS, FACTS OF WHICH ARE DIFFERENT FROM THE INSTANT CASE. 4. THE ASSESSEE IN ITS CROSS APPEAL HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. 33. CONSIDERING OUR DECISION IN PARA 21 (SUPRA) IN PANKAJ K CHAUDHARY, WHEREIN WE HAVE SUSTAINED THE DISALLOWANCE @6% OF THE DISPUTED/ BOGUS PURCHASES, THUS, FOLLOWING THE PRINCIPAL OF CONSISTENCY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. RAJKUMAR D JAIN (AY 2012-13) 34. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 29 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER IS BAD IN LAW AS THE CONDITIONS LAID DOWN UNDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING HAVE NOT BEEN FULFILLED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.50% ON ALLEGE BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COY OF STATEMENTS RELIED UPON. 35. WE FIND THAT THERE IS NO CROSS APPEAL BY REVENUE IN CASE OF PRESENT ASSESSEE BEFORE US. CONSIDERING OUR DECISION IN PARA 21 (SUPRA) IN PANKAJ K CHAUDHARY, WHEREIN WE HAVE SUSTAINED THE DISALLOWANCE @6% OF THE DISPUTED/ BOGUS PURCHASES, THUS, FOLLOWING THE PRINCIPAL OF CONSISTENCY THE APPEAL THE ASSESSEE IS PARTLY ALLOWED. GAUTAM P MEHTA (AY 2008-09) 36. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF NON-GENUINE PURCHASES FROM RS. 4,33,53,430/- TO RS.2,16,76,714/-. 2. WHETHER, ON FACTS AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE AND ESTIMATING DISALLOWANCE @12.5% OF TOTAL BOGUS PURCHASES OF RS.17,34,13,718/- WHICH COMES TO RS.2,16,76,714/- DESPITE OF THE FACT THE AO HAS MADE THE ADDITION OF RS.4,33,53,430/- WHICH IS 25% OF IMPUGNED BOGUS PURCHASES WHICH 30 STANDS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF VIJAY PROTEINS? 3. WHETHER, ON FACTS AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN RELAYING THE DECISION IN THE CASE OF M/S. MAYANK DIAMONDS PVT. LTD. ESPECIALLY WHEN THE FACTS OF THE CASE OF ASSESSEE IS DIFFERENT THAN M/S. MAYANK DIAMONDS PVT. LTD. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A) SURAT MAY BE SET ASIDE AND EITHER THE RATIO OF M/S. MAYANK DIAMONDS MAY BE APPLIED OR THE ADDITION MADE BY THE AO BE UPHELD. 37. THE ASSESSEE IN ITS CROSS APPEAL HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER IS BAD IN LAW AS THE CONDITIONS LAID DOWN UNDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING HAVE NOT BEEN FULFILLED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @12.50% ON ALLEGED BOGUS PURCHASE, WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS MADE THROUGH CROSS ACCOUNT PAYEE CHEQUE AND THE SAME GOODS WERE SUBSEQUENTLY SOLD AND QUANTITY IS TALLIED AND THE ADDITION WAS MADE WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION, WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT PROVIDING COPY OF STATEMENTS RELIED UPON. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 38. CONSIDERING OUR DECISION IN PARA 21 (SUPRA) IN PANKAJ K CHAUDHARY, WHEREIN WE HAVE SUSTAINED THE DISALLOWANCE @6% OF THE DISPUTED/ BOGUS 31 PURCHASES, THUS, FOLLOWING THE PRINCIPAL OF CONSISTENCY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 39. REGISTRY IS DIRECTED TO PLACE ONE COPY OF THIS ORDER IN ALL APPEALS FOLDER/CASES FILES. ORDER ANNOUNCED ON 27 TH SEPTEMBER, 2021 BY PLACING THE RESULT ON THE NOTICE BOARD. SD/- SD/- (DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 27/09/2021 / SGR* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER / / TRUE COPY / / SR.PVT. SECRETARY, ITAT, SURAT