M/S STAR BRILLIAN , MUMBAI V. ITO - 19(3)(4), MUMBAI

ITA 1551/MUM/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8297 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 17-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E‘ BENCH MUMBAI BEFORE: SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI M.BALAGANESH, ACCOUNTANT MEMBER ITA No.1551/Mum/2020 (Assessment Year :2009-10) & ITA No.1552/Mum/2020 (Assessment Year :2009-10) M/s. Star Brillian FW 1011, Bharat Diamond Bourse, Bandra Kurla Complex, Bandra (E) Mumbai – 400 051 Vs. Income Tax Officer 19(3)(4) 2 nd Floor, Matru Mandir Tardeo Road Mumbai – 400 007 PAN/GIR No.AAAFS3628J (Appellant) .. (Respondent) Assessee by Shri Ashok Mehta & Shri Dipesh Vora Revenue by Shri Pitta Samuel Date of Hearing 07/07/2022 Date of Pronouncement 12/07/2022 आदेश / O R D E R PER M. BALAGANESH (A.M): These appeals in ITA Nos.1551/Mum/2020 & 1552/Mum/2020 for A.Y.2009-10 & 2013-14 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-59, Mumbai in appeal No.CIT(A)-59, Mumbai/10756/2017-18 & CIT(A)-59, Mumbai/10767/2017-18 dated 31/01/2020 (ld. CIT(A) in short) against the order of assessment passed ITA No.1551 & 1552/Mum/2020 M/s. Star Brillian 2 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2016 & 28/03/2016 by the ld. Asst. Commissioner of Income Tax 16(3), Mumbai (hereinafter referred to as ld. AO). Identical issues are involved in both these appeals and hence, they are taken up together and disposed of by this common order for the sake of convenience. 2. The ground No.1 raised by the assessee challenging the validity of re- assessment for A.Y.2009-10 was stated to be not pressed and hence, the same is hereby dismissed as not pressed. 3. The ground Nos. 2-7 raised by the assessee for A.Y.2009-10 and ground Nos. 1-5 raised by the assessee for A.Y.2013-14 are challenging the validity of disallowance made on account of bogus purchases. 3.1. We have heard rival submissions and perused the materials available on record. The assessee is an importer, exporter and manufacturer of diamonds and dealer in diamonds, precious stones and jewellery. During the course of assessment proceedings, the assessee produced the books of accounts and records containing details of purchases, sales, bank statements and creditors before the ld. AO. The confirmation from all the creditors were called for which were also duly filed before the ld. AO. The ld. AO observed that assessee had made certain purchases from certain parties belonging to Shri Rajendra Jain group and that during the course of search conducted in the case of Shri Rajendra Jain Group on 03/10/2013, it revealed that certain parties were indulged in providing accommodation entries of purchases at the behest of Shri Rajendra Jain group. Since, the assessee had made certain purchases from those ITA No.1551 & 1552/Mum/2020 M/s. Star Brillian 3 parties, the ld. AO proceeded to examine the veracity of the purchases made thereon. It is not in dispute that assessee had indeed made payments for those purchases to the concerned suppliers by account payee cheques. It is not in dispute that assessee had furnished the details of corresponding sales made out of disputed purchases by producing the relevant sale invoices, ledger copy of the parties, bank statement showing payments made through account payee cheques, stock register, copy of affidavits of persons confirming the transactions with the assessee, confirmation from parties confirming sales made to assessee alongwith their copy of ITR, their bank statements, PAN, their affidavit confirming the genuineness of transactions etc., Despite all these facts, the ld. AO observed that the purchases made by the assessee were not proved beyond reasonable doubt as the suppliers belong to Shri Rajendra Jain group. Accordingly, the ld. AO proceeded to estimate the profit element embedded in the value of such disputed purchases at 5% and brought the same to tax in both the years under consideration. This profit percentage was reduced to 3% by the ld. CIT(A) for both the years. It is only an estimation of profit that had been made by both the lower authorities in the instant case. The report of the task group for diamond sector submitted to Department of Commerce suggested that the net profit that could be derived in the diamond manufacturing ranges from 1.5% to 4.5% and in trading activity thereof, the profitability range is 1% to 3%. Considering the same, we deem it fit to estimate the profit percentage embedded in the value of disputed purchases @2% which, in our considered opinion, would meet the ends of justice. Accordingly, the grounds raised by the assessee in this regard for both the years are partly allowed. ITA No.1551 & 1552/Mum/2020 M/s. Star Brillian 4 3.2. The additional grounds raised by the assessee for A.Y.2009-10 was not pressed by the ld. AR even for the purpose of admission. Hence, the same is hereby dismissed as not admitted. 4. In the result, both the appeals of the assessee are partly allowed. Order pronounced on 12/07/2022 by way of proper mentioning in the notice board. Sd/- (VIKAS AWASTHY) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 12/07/2022 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary / Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//