MAXELL DIAMOND PVT. LTD., MUMBAI V. ITO 5(2)(3), MUMBAI

ITA 135/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTHILAKSHMI NAYAK
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 143(3); 133(6); 9(1); 9(1); 9(1); 22; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMB ER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.135/MUM/2019,ITA NO. 136/MUM/2019 & 137/MUM/2019 ( ASSESSMENT YEARS: 2008-09, 2011-12 & 2014-15 ) MAXELL DIAMOND PRIVATE LIMITED 320-A, PANCHRATNA BLDG CHARNI ROAD MUMBAI-400 004 VS. ITO-5(2)(3) 556, AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AAECM8362J APPELLANT ) .. RESPONDENT ) ASSESSEE BY NONE REVENUE BY SMT.JYOTHILAKSHMI NAYAK, DR DATE OF HEARING 22 / 01/2020 DATE OF PRONOUNCEME NT 29 / 01 /20 20 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER : THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE LD. COMMISSIO NER OF INCOME TAX (A)-10, MUMBAI, ALL DATED 28/09/2018 AND THEY PERTA INS TO AY 2008- 09, 2011-12 & 2014-15. SINCE, THE FACTS ARE IDENTIC AL AND ISSUES ARE COMMON, FOR THE SAKE CONVENIENCE, THESE APPEALS WER E HEARD TOGETHER AND ARE DISPOSED -OFF BY THIS CONSOLIDATED ORDER. ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 2 2. THE ASSESSEE HAS MORE OR LESS FILED COMMON GROUN DS OF APPEAL FOR ALL AYS. THEREFORE, FOR THE SAKE OF BRE VITY, GROUNDS OF APPEAL FILED FOR AY 2008-09 ARE REPRODUCED AS UNDE R:- 1. THE LD. AO AND CIT(A) ERRED IN MAKING AN ADDITIO N OF RS.57,81,073/- TO THE TOTAL INCOME OF THE ASSESSEE (8% OF PROFIT MARG IN EMBEDDED TO NON- VERIFIABLE PURCHASE TRANSACTIONS) BY TREATING GENUI NE PURCHASE TRANSACTIONS WHOSE PAYMENT IS DONE THROUGH ACCOUNT PAYEE CHEQUES IN GOOD FAITH AMOUNTING OF RS. 7,22,63,416/- AS ACCOMM ODATION ENTRIES OF NON-VERIFIABLE PURCHASE FROM VARIOUS CONCERNS DURIN G THE YEAR. 2. ASSUMPTION OF JURISDICTION BY THE LEARNED ASSESS ING OFFICER (AO) FOR THE INITIATING REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT IS BAD IN LAW IN FORCE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN CUT AND POLIS HED DIAMONDS, FILED ITS RETURN OF INCOME FOR AY 2008-09 ON 26/09/ 2008, DECLARING TOTAL INCOME OF RS. 1,24,680/-. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T.ACT, 1961 AND DETERMINED TOTA L INCOME AT RS. 2,16,130/-. SUBSEQUENTLY, THE CASE HAS BEEN REOPEN ED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIT(INVESTIGATION) -II , AS PER WHICH, THE ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODA TION ENTRIES OF BOGUS PURCHASES BILLS OBTAINED FROM HAWALA DEALERS AMOUNTING TO RS. 6,61,52,954/- FROM THREE PARTIES AS LISTED BY T HE LD. AO IN PARA 6 OF HIS ASSESSMENT ORDER. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) R.W.S. 14 7 OF THE I.T.ACT, 1961 ON 08/03/2016, DETERMINING THE TOTAL INCOME AT RS. 59,97,203/-, AFTER MAKING ADDITIONS OF 8% PROFIT ON ALLEGED BOGUS PURCHASE FROM COMPANIES CONTROLLED AND OPERATED BY BHANWARALAL JAIN GROUP OF COMPANIES AND MADE ADDITIONS OF RS. 5 7,81,073/-. ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 3 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESEE HAS SUBMITTED THAT THE LD. AO WAS ERRED IN MAKING ADDIT IONS TOWARDS PURCHASES FROM CERTAIN PARTIES, ON THE BASIS OF STA TEMENT RECORDED FROM THEM, DURING THE COURSE OF SEARCH IN THEIR CAS ES, IGNORING, THE FACT THAT THE ASSESSEE HAS JUSTIFIED PURCHASE WITH NECESSARY EVIDENCES. THE ASSESEE, FURTHER, STATED THAT ALL PU RCHASES ARE GENUINE AND WHICH ARE RECORDED IN BOOKS OF ACCOUNTS . FURTHER, THE DIRECTOR OF THE ASSESSEE COMPANY HAD DENIED THE CON TENTS OF THE STATEMENT OF RAJENDRA JAIN. ALL TRANSACTIONS WERE D ONE THROUGH PROPER BANKING CHANNEL. THEREFORE, MERELY FOR THE R EASONS THAT SOME PARTIES WERE NOT RESPONDED TO U/S 133(6) NOTIC ES AND ALSO, ON THE BASIS OF STATEMENT OF THIRD PARTIES ADDITIONS C ANNOT BE MADE TOWARDS PURCHASES, WHEN ASSESEE HAS DISCHARGED ITS BURDEN BY FILING NECESSARY EVIDENCES. 5. THE LD.CIT(A) AFTER CONSIDERING RELEVANT SUBMISS IONS OF THE ASSESEE AND ALSO, TAKEN SUPPORT FROM THE RECOMMENDA TION FROM THE TASK FORCE GROUP FOR DIAMOND INDUSTRY SET UP BY TH E GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY, WHICH AFT ER CONSIDERING THE BENIGN ASSESSMENT PROCESS (BAP) SCHEME RECOMME NDED A NET PROFIT OF 2% FOR TRADING ACTIVITY AND 3% FOR M ANUFACTURING ACTIVITY AND 2.5% ACROSS THE BOARD FOR DIAMOND INDUSTRY AND ALSO BY RELIED UPON CERTAIN JUDICIAL PRECEDENTS, INCLUDING THE DEC ISION OF ITAT, MUMBAI BENCH IN THE CASE OF RENISHA IMPEX PVT.LTD. IN ITA NO. 4464/MUM/2016 AND ITA NO. 4453/MUM/2016 HAS UPHLED ADDITIONS MADE BY THE LD. AO TOWARDS 8% PROFIT ON ALLEGED NON GENUINE PURCHASES. THE RELEVANT FINDINGS OF THE LD.CIT(A) A RE AS UNDER: ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 4 7.3.33 THE NEXT CONTENTION OF THE APPELLANT IS THAT ADDITION MADE BY THE AO @8% OF PURCHASE VALUE IS EXCESSIVE AS THE GLOBAL MARGIN OF DIAMOND INDUSTRIES IS IN THE RANGE OF 1 TO 4% AND SAME WAS ACCEPTED BY DEPARTMENT OF COMMERCE. THE APPELLANT HAS PLACED RE LIANCE ON JUDICIAL PRECEDENTS AND THE RECOMMENDATIONS OF THE TASK GROU P FORMED UNDER DEPARTMENT OF COMMERCE FOR DIAMONDS SECTOR IN THIS REGARD. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT. IT IS W ELL KNOWN THAT IF PURCHASES ARE MADE FROM OPEN MARKET WITHOUT INSISTI NG FROM THE GENUINE BILLS, THE SUPPLIERS MAY BE WILLING TO SELL THOSE P RODUCTS AT A MUCH LOWER RATE AS COMPARED TO THE RAT AT WHICH THEY MAY CHARG E IN CASE THE DEALER HAS TO GIVE A GENUINE SALE INVOICE IN RESPECT OF TH AT SALE AND SUPPLY THE GODOS. THERE MAY BE VARIOUS FACTORS DUE TO WHICH TH ERE IS BOUND TO BE A SUBSTANTIAL DIFFERENCE BETWEEN THE PURCHASE PRICE O F UNACCOUNTED MATERIAL AND RATE OF PURCHASE OF ACCOUNTED FOR GOOD S. THEREMAY BE A SAVING ON ACCOUNT OF SALES-TAX AND OTHER TAXES AND DUTIES WHICH MAY BE LEVIABLE IN RESPECT OF MANUFACTURE OF SALE OF GOODS IN QUESTION. THE SUPPLIERS OR THE MANUFACTURERS MAKE A SUBSTANTIAL S AVING IN THE INCOME- TAX ALSO IN RESPECT OF IN RESPECT OF INCOME FROM S ALE OF UNACCOUNTED GOODS PRODUCED AND SOLD BY THEM. THIS MAY ALSO BE O NE OF THE FACTORS DUE TO WHICH THE SELLER MAY BE WILLING TO CHARGE LO WER RATES FOR UNACCOUNTED GOODS AS COMPARED TO ACCOUNTED FOR GOOD S. THUS THE MOTIVE BEHIND OBTAINING BOGUS BILLS IS INFLATION OF PURCHASE PRICE SO AS TO SUPPRESS THE PROFITS. THEREFORE, THE PROFIT ELEMENT EMBEDDED IN SUCH BOGUS PURCHASE WHICH THE ASSESEE COULD HAVE MADE, H AS TO BE ASSESSED AS UNDISCLOSED INCOME OF THE APPELLANT. TH IS BEING THE POSITION, IT NEEDS TO BE DETERMINED WHT SHOULD BE THE FAIR PR OFIT RATE OUT OF THE BOGUS PURCHASES WHICH SHOULD BE ADDED BACK TO THE I NCOME OF THE ASSESSEE. THE ESTIMATION VARIES WITH THE NATURE OF BUSINESS AND NO UNIFORM YARDSTICK CAN BE ADOPTED. FURTHER, THE ADDI TION WILL DIFFER FROM CASE TO CASE DEPENDING UPON THE FACTS OF THE CASE. IN THIS REGARD, IT MAY ALSO BE OBSERVED HERE THT THE CBDTS INSTURCITON NO .2/2008, DATED FEBRUARY 22, 2008 LAYS DOWN GUIDELINE IN THE FORM O F BENIGN ASSESSMENT PROCEDURE FOR ASSESSEES ENGAGED IN DIAMOND MANUFAC TURING AND/OR TRADING AS UNDER:- ..THE BENGIN ASSESMENT PROCEDURE, IN THE CASE OF A SSESSEE ENGAGED IN DIAMOND BUSINESS AS ANNOUNCED BY HONBLE FINANCE MINISTER IN HIS BUDGET SPEECH ON 28.08.2007 SHALL B E AS UNDER:- A. THE PROCEDURE WILL APPLY TO ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING AND/OR TRADING OF DIAMONDS (REFERR ED TO BELOW AS SUCH BUSINESS). B. IF AN ASSESSEE HAS SHOWN A SUM EQUAL TO OR HIGHE R THAN 6% OF HIS TOTAL TURNOVER FROM SUCH BUSINESS AS HIS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION FO R A PARITUCLAR ASSESSMENT YEAR, THE ASSESSING OFFICER S HALL ACCEPT HIS TRADING RESULTS. D. THE PROCEDURE SHALL NOT APPLY TO AN ASSESSEE F OR AN ASSESSMENT YEAR- .. (VI) WHERE THERE IS INFORMATION REGARDING ESCAPEMEN T OF INCOME. ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 5 E. THE RATE OF PROFIT AS A PERCENTAGE OF TURNOVER W OULD BE REVIEWED ANNUALLY ON THE BASIS OF REVENUE GENERATION AND RES ULTS OF SCRUTINY ASSESSMENTS, SEARCHES AND SURVEYS MADE DUR ING THE YEAR. 2. THE ABOVE INSTRUCTION IS ISSUED UNDER SECTION 11 9(1) OF THE INCOME TAX ACT, 1961 AND WOULD BE APPLICABLE FOR ASSESSMEN TS MADE DURING FINANCIAL YEAR 2008-09. 7.3.34 THE ABOVE RECOMMENDATIONS ARE FOR COMPUTATI ON OF INCOME UNDER BAP (BENIGN ASSESSMENT PROCEDURE) I.E. WHEN T HE ASSESSEE OPTS FOR BAP AND FURTHER THE ABOVE INSTRUCTION ARE APPLI CABLE FOR ASSESSMENTS MADE DURING FINANCIAL YEAR 2008-09. FURTHER, IT WOU LD NOT BE APPLICABLE WHERE THERE IS INFORMATION REGARDING ESCAPEMENT OF INCOME. HOWEVER, THE PERSUASIVE VALUE OF THE AFORESAID INSTRUCTION C ANNOT BE IGNORED. IN THE AFORESAID INSTRUCTION IT HAS ALSO BEEN STATED THAT THE ACCEPTANCE OF PROFIT AT 6% OR ABOVE AS FOR A PARTICULAR ASSESSMENT YEAR WILL NOT BE A PRECEDENT FOR THAT ASSESSEE OR FOR ANY OTHER ASSESS EE. HOWEVER, THE PERSUASIVE VALUE OF THE AFORESAID INSTRUCTION CANNO T BE IGNORED. 7.3.35 IT IS ALSO OBSERVED THAT THE HONBLE ITAT, MUMBAI IN THE DECISION DATED 16.08.2017 IN ITA NO.3760/MUM/2016 IN THE CAS E OF ITO 5(3)(1), MUMBAI VS M/S. RATNALAYA DIAMONDS PVT.LTD. HAS UPHE LD AN ADDITION @6% FO THE PURCHASES IN THE DECISION DATED 1/12/201 7 IN THE CASE OF RALF JEMS PVT.LTD. IN ITA NO. 3707 & 3761, IN THE D ECISION DATED 06/12/2017 IN THE CASE OF KARP IMPEX LTD. IN ITA NO .6761, 6760,6652,6653 & 6651/MUM/2016, IN THE DECISION DAT ED 13/12/2017 IN THE CASE OF FANCY DIAMONDS INDIA PVT.LTD. IN ITA NO S. 47/MUM/2017 & 167/MUM2017 AND IN THE DECISION DATED 08/11/2017 IN CASE OF SHIKHA DIAMONDS PVT.LTD. DATED 08/11/2017 IN ITA NO. 3302/ MUM/2017. FURTHER, IN THE DECISION DATED 10/01/2018 IN THE CA SE OF GOENKA DIAMONDS & JEWELS LTD. IN ITA NO. 216 & 153/JP/2014 & 124/JP/2015 THE HONBLE ITAT HAS SUSTAINED AN ADDITION @6.5% OF THE PURCHASE SHOWN FROM THE IMPUGNED BOGUS PARTIES. 7.3.36 THE HONBLE ITAT, MUMBAI IN THE DECISION DA TED 19/05/2017 IN THE CASE OF M/S DHADDA GEMS LTD. VS. ITO 5(1)(3), M UMBAI IN ITA NO. 7310 TO 7314 HAS ALSO SUSTAINED AN ADDITION @8% OF THE PURCHASES AND IN THE DECISION DATED 05/02/2018 IN THE CASE OF M/S AHIMSA JEWELLERY MFG. CO. P.LTD. VS ITO 5(1)(1) , MUMBAI IN ITA NO. 4960/MUM/2017 IT HA SUSTAINED AN ADDITION @12.5% OF THE PURCHASES SHOWN FROM THE BOGUS PARTIES, HENCE THE PROFIT EMBEDDED IN ACCOMMODATION ENTRIES OF PURCHASE TAKEN @8% THE PURCHASE AMOUNT BY THE AO, W HICH RESULTS FROM THE SAVING ON ACCOUNT OF SALES TAX AND OTHER TAXES AND DUTIES WHICH MAY BE LEVIABLE IN RESPECT OF MANUFACTURE FO AND SALE O F GOODS IN QUESTION, WHICH IS TRANSFERRED TO THE PURCHASER, WHEN PURCHAS ES ARE MADE WITHUT GENUINE BILLS, CANNOT BE CONSIDERED EXCESSIVE. AS I T IS AN ESTIMATE OF THE PROFIT EMBEDDED IN PURCHASE, IT CANNOT BE SUBJECT T O ANY ADJUSTMENT ON ACCOUNT OF ANY SUBSEQUENT PROFIT ARISING FROM THE S ALE OF THE MATERIALS AS HELD BY THE HONBLE ITAT, MUMBAI BENCH IN THE DECIS ION IN ITA NO.6555/MUM/2017 FOR AY 2009-10 IN THE CASE OF M/S MUHTA MARKFIN (P) LIMITED VS. ITO -5(2)(3), HAS HELD AS UNDER;- ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 6 WE ARE OF THE CONSIDERED VIEW THAT AS PER PROFIT E LEMENT ACCOUNTED FOR BY THE ASSESEE IN ITS REGULAR BOOKS O F ACCOUNTS PERTAINS TO THE PROFIT WHICH IT WOULD HAVE MADE FROM SELLING THE GOODS UNDER CONSIDERATION, THEREFO RE, THE SAME WOULD HAVE NO BEARING ON THE QUALIFICATION OF THE MONETARY BENEFIT INVOLVED IN MAKING OF PURCHASES BY THE ASSESEE AT A LOWER PRICE FROM THE OPEN/GREY MARKET, AS IN COMPARISON TO PURCHASES MADE FROM REGISTERED DEALER . 7.3.37 THUS TAKING IN TO ACCOUNT THE TOTALITY OF THE FACTS, THE PROFIT EMBEDDED IN ACCOMMODATION ENTRIES OF PURCHASE OF DI AMONDS, ESTIMATED BY THE AO @8% OF THE PURCHASE AMOUNT IS UPHELD . 6. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD TH E LD. DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE T HROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. AO HAS MADE ADDITIONS TOWARDS ALLEGED NON GENUINE BOGUS PURCHASE FROM CER TAIN PARTIES, ON THE BASIS OF INFORMATION GATHERED DURING THE COU RSE OF SEARCH AND SURVEY IN THE CASES OF SHRI. BHAWARLAL JIAN AND HIS ASSOCIATES AND ALSO, ON THE BASIS OF INFORMATION RECEIVED FROM IN VESTIGATION WING, AS PER WHICH CERTAIN PARTIES WERE INVOLVED IN PROVI DING ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS TO VA RIOUS PARTIES AND THE ASSESSEE BEING ONE OF THE BENEFICIARY OF AC COMMODATION ENTRY OF SUCH BOGUS PURCHASE BILLS ISSUED BY SUSP ICIOUS DEALERS/ENTRY PROVIDERS. THE LD. AO HAS EXTENSIVELY DISCUSSED THE ISSUE IN LIGHT OF MODUS OPERANDI USED BY THE ENTRY PROVIDERS, THEIR STATEMENT RECORDED DURING THE COURSE OF SEARCH AND ALSO INPUTS GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDING S AND CAME TO THE CONCLUSION THAT ALTHOUGH, THE ASSESEE HAS FILE D NECESSARY BASIC EVIDENCE IN SUPPORT OF PURCHASES, BUT FAILED TO FIL E FURTHER EVIDENCES TO PROVE THE PURCHASE TO THE SATISFACTION, MORE PAR TICULARLY IN THE BACKDROP OF REPORT OF INVESTIGATION WING AND THE S TATEMENT OF THOSE PARTIES, DURING THE COURSE OF SURVEY. IT IS THE CON TENTION OF THE ASSESEE BEFORE THE LOWER AUTHORITIES THAT PURCHASES FROM THOSE PARTIES ARE GENUINE, WHICH ARE SUPPORTED BY NECESSA RY EVIDENCES. ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 7 ALL PURCHASES WERE RECORDED IN BOOKS OF ACCOUNTS. P AYMENTS AGAINST SAID PURCHASE HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. THE LD. AO NEITHER POINTED OUT ANY DISCRE PANCIES IN BOOKS OF ACCOUNTS, NOR MADE OUT A CASE OF SALES OUT SIDE BOOKS OF ACCOUNTS. IN ABSENCE OF ANY INCORRECTNESS OF BOOKS OF ACCOUNTS MERE, NO ADDITION COULD BE MADE TOWARDS ALLEGED NON GENUINE PURCHASES, ONLY ON THE BASIS OF INFORMATION COLLECT ED FROM THIRD PARTY SOURCE, WHEN THE ASSESSEE HAS JUSTIFIED PURCHASES W ITH NECESSARY EVIDENCES. 7. HAVING CONSIDERED THE RELEVANT MATERIAL ON RECOR D, WE FIND THAT THE LD.CIT(A) HAS CATEGORICALLY RECORDED FACTS WITH REGARD TO MODUS OPERANDI OF ENTRY PROVIDERS, IN LIGHT OF THEIR FINANCIAL ST ATEMENTS AND CAME TO THE CONCLUSION THAT ALL THOSE COMPANIES ARE SHOWING HIGH TURNOVER WITHOUT THERE BEING ANY ASSET BASE, WHIC H CLEARLY PROVES THE FACT THAT THEY ARE INVOLVED IN PROVIDING ACCOMM ODATION ENTRIES WITHOUT THERE BEING ANY ACTUAL BUSINESS ACTIVITY. T HE LD.CIT(A) HAS ALSO RECORDED CATEGORICAL FINDING THAT, THE FINDING S OF THE LD. AO THAT SHRI BHANWARLAL JAIN AND OTHER ENTITIES ARE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES IS NOT MERELY BA SED ON THEIR STATEMENTS RECORDED U/S 132(4) OF THE ACT, BUT IT I S FURTHER SUPPORTED BY INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF SEARCH, WHICH CLEARLY SUGGEST THE FACT THAT THEY ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. THUS, THE FINDINGS OF THE SE ARCH OPERATIONS ARE BASED NOT ONLY ON THE CONFESSIONAL STATEMENTS O F THE BHANWARLAL JAIN GROUP, BUT ALSO SEVERAL OTHER INDIVIDUALS, WHO ARE PART AND PARCEL OF THE ENTIRE OPERATION OF BUSINESS OF THE B HANWARLAL JAIN GROUP. THE LD.CIT(A), FURTHER NOTED THAT INDEPENDEN T SEARCHES HAVE BEEN CONDUCTED ON FEW BENEFICIARIES, BASED ON THE I NPUTS OF THE SEARCH ON THE CASE OF ENTRY PROVIDERS AND SUCH BENE FICIARIES HAVE ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 8 ADMITTED TAKING OF ACCOMMODATION ENTRIES FROM THE G ROUP CONCERNS OF ENTRY PROVIDERS. THEREFORE, THE LD.CIT(A) CAME T O THE CONCLUSION THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE LD. AO TO ARRIVE AT CONCLUSION THAT PURCHASES CLAIMS TO HAVE BEEN M ADE FROM CERTAIN PARTIES ARE NON GENUINE, WHICH ARE NOT SUPPORTED B Y NECESSARY EVIDENCES. THE LD.CIT(A), FURTHER TAKING NOTE OF TH E FACT OF DIAMOND INDUSTRY AND ITS MARGINS AND ALSO, TAKEN SUPPORT FR OM THE RECOMMENDATION OF THE TASK FORCE GROUP FOR DIAMOND INDUSTRY SET UP BY THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY, WHICH AFTER CONSIDERING THE BAP SCHEME RECOMMENDED A NET PROFIT OF RANGING TO 2% TO 3% DEPENDING UPON THE NATURE O F THE BUSINESS HAS UPHLED ADDITIONS MADE BY THE LD. AO TOWARDS 8% PROFIT ON ALLEGED NON GENUINE PURCHASES. FURTHER, ALTHOUGH, B OTH AUTHORITIES HAVE ADOPTED 8% PROFIT ON ALLEGED PURCHASE, BUT NO ONE COULD SUPPORT THEIR STAND WITH EVIDENCES, EXCEPT RELIANCE UPON THE REPORT OF TASK FORCE SET UP BY THE GOVT. OF INDIA, MINISTR Y OF COMMERCE AND INDUSTRY. BUT, FACT REMAINS THAT THE TASK FORCE HAS RECOMMENDED 2% TO 3% PROFIT DEPENDING UPON NATURE OF TRADE, WHEREA S THE AO AS WELL AS THE LD. CIT(A) HAS ESTIMATED 8% PROFIT. ON THE O THER HAND, THE CO- ORDINATE BENCH OF ITAT, IN THE CASE OF RENISHA IMPE X PVT.LTD. IN ITA NO. 4464/MUM/2016 AND ITA NO. 4453/MUM/2016 HAS CON SIDERED AN IDENTICAL ISSUE AND DIRECTED THE AO TO ESTIMATE 6% PROFIT ON ALLEGED NON-GENUINENE PURCHASES. IN YET ANOTHER CAS E, THE ITAT, MUMBAI BENCH IN CASE OF M/S DECENT DIA JEWEL PVT LT D, IN ITA NO. 7080 TO 7083/MUM/2018 HAS TAKEN SIMILAR VIEW AND ES TIMATED 6% PROFIT ON ALLEGED NON-GENUINE PURCHASES. WE, THEREF ORE, CONSIDEREING FACTS AND CIRCUMSTANCES OF THIS CASE A ND BY FOLLOWING THE CASE LAWS DISCUSSED HEREIN ABOVE, DIRECT THE LD . AO TO ESTIMATE 6% PROFIT ON ALLEGED NON-GENUINE PURCHASES. ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 9 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR AY 2008-09 IS PARTLY ALLOWED. ITA NO.136 & 137/MUM/2019:- 9. THE FACTS AND ISSUES INVOLVED IN THESE TWO APPEA LS ARE IDENTICAL TO THE FACTS AND ISSUES, WHICH WE HAD CON SIDERED IN ITA NO.135/MUM/2019. THE REASONS GIVEN BY US IN PRECEDI NG PARAGRAPH IN ITA NO. 135/MUM/2019 SHALL MUTATIS MUTANDIS APPLY TO THESE APPEALS AS WELL. THEREFORE FOR DETAILED REASONS REC ORDED IN PRECEDING PARAGRAPH IN ITA NO. 135/MUM/2019, WE DIR ECT THE LD. AO TO ESTIMATE 6% PROFIT ON ALLEGED NON-GENUINE PURCHA SES. ACCORDINGLY, THE APPEALS FILED BY THE ASSESSEE FOR AY 2011-12 AND 2014-15 ARE PARTLY ALLOWED. 10. IN THE RESULT, ALL APPEALS FILED BY THE ASSESSE E FOR AY 2008- 09,2011-12 AND 2014-15 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 /01/ 2020 SD/- ( SAKTIJIT DEY ) SD/- ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 29 /01/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. ITA NOS.135,136 & 137/MUM/2019 MAXELL DIAMOND PVT.LTD. 10 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI //TRUE COPY//