ACIT 19(2), MUMBAI V. MANEK GEMS & ART INTERNATIONAL, MUMBAI

ITA 230/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9059 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN
• Assessee Lawyers: RAJ A KAPADIA
• Keywords: Bogus purchase; Transfer pricing; Accommodation entries; Onus to prove
• Section: 143(3); 147; 148

Judgement Text

P A G E | 1 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO S .230 - 232 /MUM/201 7 ( / ASSESSMENT YEAR S: 20 0 7 - 08, 2009 - 10 & 2012 - 13 ) ACIT - 19(2), ROOM NO.207, MATRU MANDIR BUILDING, NANA CHOWK, MUMBAI - 400007 / VS. M/S MANEK GEMS & ART INTERNATIONAL , 49, RANCHOD BHUVAN, 55, JSS ROAD, OPERA HOUSE, MUMBAI - 400004 ./ ./ PAN/GIR NO. AAEFM8744R ( / APPELLANT ) : ( / RESPONDENT ) / ASSESSEE BY : SHRI. RAJ A. KAPADIA / REVENUE BY : SHRI. V. JENARDHANAN, D.R. / DATE OF HEARING : 11.10 .2017 / DATE OF PRONOUNCEMENT : 13 .10.2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER : THE PRESENT SET OF APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A) - 30, MUMBAI, IN THE CASE OF THE AFOREMENTIONED ASSESSEE, VIZ. M/S MANEK GEMS & ART INTERNATIONAL FOR A.Y 2007 - 08, 2009 - 10 & 2012 - 13, EACH DATED 26.10.2016, WHICH IN ITSELF ARISES FROM THE RESPECTIVE ASSESSMENT P A G E | 2 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI ORDERS PASSED U/S147 R.W.S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) FOR A.YS. 2007 - 08 AND 2009 - 10, AND THE ORDER PASSED UNDER SEC. 143(3) FOR A.Y. 2012 - 13, EACH DATED. 27.03.2015 . THAT AS COMMON ISSUES ARE INVOLVED, THEREFORE, THE SAID RESPECTIVE APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OF BY WAY OF A CONSOLIDATE ORDER. WE FIRST ADVERT TO THE APPEAL FOR A.Y. 2007 - 08, WHEREIN THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAD RAIS ED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER LD. CIT(A) WAS JUSTIFIED IN SUSTAINING ONLY AN ADDITION@ 3% PROFIT RATE ON TOTAL PURCHASES OF RS. 1,37,73,507 / - MADE FROM FOUR PARTIES. 2. TH E APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT(A) ON THE ABOVE GROUNDS BE SET SIDE AND THAT OF THE A.O BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF DIAMOND AND JEWELLERY HAD FILED ITS RETURN OF INCOME FOR A . Y 2007 - 08 ON 29.1 0 .2007 , DECLARING TOTAL INCOME OF RS.12,97,280/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143 ( 1 ) OF THE ACT. SEARCH AND SURVEY PROCEEDINGS WERE CONDUCTED IN THE CASE OF ONE S HRI BHANWARLAL JAIN AND CERTAIN NAME SAKE DUMMY DIRECTORS/PARTNERS/PROPRIETORS OF VARIOUS CONCERNS THAT WERE ACTUALLY BEING MANAGED, CONTROLLED AND OPERATED BY S HRI BHANWARLAL JAIN AND HIS FAMILY MEMBERS. THAT THE INFORMATION GATHERED DURING THE COURSE OF THE SEARCH & SEIZURE PROCEEDINGS REVEALED THAT SHRI BHANWARLAL JAIN HAD IN THE AFORESAID BOGUS CONCERN S PROJECTED HIS EMPLOYEES AND THEIR FAMILY MEMBERS, MAJORITY OF WHOM HAILED FROM THE NATIVE PLACE OF SHRI BHANWARLAL JAIN IN RAJASTHA N , AS THE DUMMY DIRECTOR S /PARTNERS P A G E | 3 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI /PROPRIETORS IN THE SAID CONCERNS. THE AFORESAID DUMMY PERSONS IN THE COURSE OF THE S EARCH AND SURVEY PROCEEDINGS HAD ADMITTED IN THEIR STATEMENTS RECORDED UNDER OATH THAT THEY WERE MERELY NAME SAKE DIRECTORS/PARTNERS/PROPRIETORS , W HILE FOR THE REAL CONTROL AND MANAGEMENT OF ALL THE SAID CONCERNS REMAINED IN THE HANDS OF SHRI BHANWARLAL JAIN AND HIS FAMILY MEMBERS. THE POST S EARCH AND SURVEY PROCEEDINGS CONDUCTED IN TH E CASE OF THE AFOREMENTIONED PERSONS/ENTITIES REVEALED THAT SHRI . BHANWARLAL JAIN AND THE AFORESAID BOGUS CONCERNS WERE MERELY ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND WERE NOT CARRYING ON ANY GENUINE BUSINESS. 3. THE A.O WAS IN RECE IPT OF INFORMATION FROM THE OFFICE OF THE DGIT (INV.), MUMBAI , THAT THE ASSESSEE HAD DURING THE YEAR UNDER CONSIDERATION TAKEN THE FOLLOWING ACCOMMODATION ENTRIES OF PURCHASES FROM CERTAIN DUMMY CONCERNS FORMING PART OF BHANWARLAL JAIN GROUP , AS UNDER : - SR. NO. NAME OF THE HAWALA PARTY BILL AMOUNT (IN RS.) 1. PRIME STAR 1 6 , 43 , 537 / - 2. RAJAN DIAMONDS 70 , 90 , 480 / - 3. MAYUR EXPORTS 20 , 72 , 436 / - 4. PARVATI EXPORTS 29 , 67 , 054 / - TOTAL 1 , 37 , 73 , 507 / - THE A.O ON THE BASIS OF THE AFORESAID INFORMATION REOPENED THE CASE OF THE ASSESSEE UNDER SEC. 147 OF THE ACT. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE TRANS ACTIONS OF PURCHASE , WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THE P A G E | 4 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI AFOREMENTIONED FOUR PARTIES , AND WAS DIRECTED TO FURNISH THE DETAILS OF PURCHASES MADE FROM THEM ALONG WITH THE S TOCK REGISTER, M ANUFACTURING REGISTER AND COPY OF PURCHASE BILLS. T HE ASSESS EE EXCEPT FOR PLACING ON THE RECORD OF THE A.O THE STOCK REGISTER ENTRY, CUSTOM APPRAISAL REPORT IN RESPECT OF EXPORT SALES AND STRESSING ON THE FACT THAT THE PAYMENTS TO THE AFOREMENTIONED RESPECTIVE PARTIES WERE MADE VIDE CHEQUES, HOWEVER , FAILED TO PROD UCE ANY SUCH DOCUMENTARY EVIDENCES, VIZ. DELIVERY CHALLANS ETC. WHICH COULD GO TO IRREBUTABLY SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE TRANSACTIONS OF PURCHASE OF GOODS WHICH WERE CLAIMED TO BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. THE A.O ON THE BASIS OF THE AFORESAID FACTS , BEING OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS AS REGARDS THE GENUINENESS AND VERACITY OF THE TRANSACTIONS OF PURCHASE WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THE AFO REMENTIONED PARTIES, THERE FORE, CONCLUDED THAT THE INFORMATION RECEIVED FROM THE DGIT(INV . ), MUMBAI THAT THE ASSESSEE HAD MERELY OBTAINED ACCOMMODATION BILLS FROM THE SAID CONCERNS AND HAD NOT CARRIED OUT ANY GENUINE PURCHASES, THUS WAS PROVED TO THE HILT. THE A.O CHARACTERISED THE TRANSACTIONS OF PURCHASE OF GOODS BY THE ASSESSEE FROM THE AFORESAID DUMMY CONCERNS AS BOGUS TRANSACTIONS, BY OBSERVING AS UNDER : A. T HAT THE PHYSICAL DELIVERY OF THE GOODS WERE OBTAINED FROM THE PARTY BASED IN GREY MARKET AND TO GIVE IT COLOUR OF BEING A GENUINE PURCHASE, THE BOGUS BILL/ACCOMMODATION BILL WAS OBTAINED FROM THE SUPPLIER. B. THOUGH THE PURCHASE ALLEGED AS GENUINE IS SHOWN TO HAS BEEN MADE BY MAKING PAYMENT THEREOF BY AN ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPARENT SELLERS. C. THE ASSESSEE COULD NOT PRODUCE ANY DELIVERY CHALLAN TO PROVE THAT THE DELIVERY OF THESE GOODS HAVE BEEN ACTUALLY RECEIVED BY THEM FROM THESE ALLEGED SUPPLIERS. P A G E | 5 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI D. T HE DIRECTOR/ PARTNER/ PROPRIETOR OF ABOVE PARTY HAS NO KNOWLEDGE OF DIAMOND BUSINESS. E. THE DIRECTOR/ PARTNER/ PROPRIETOR OF ABOVE PARTY HAD ONLY RECEIPT OF SALARY, MOSTLY IN CASH. AT TIMES THE SALARY IS DISBURSED TO THEM ON NEED BASIS, AS AND WHEN REQUIRED. IT HAS BEEN OBSERVED THAT THE PROFIT OF THE CONCERNS IN WHICH SUCH EMPLOYEES ARE SHOWN AS DIRECTORS, PARTNERS OR PROPRIETORS ARE MAINTAINED MORE OR LESS EQUIVALEN T TO THEIR ANNUAL SALARY. IN THE REGULAR BOOKS OF THE SAID CONCERN, THE PROFIT IS SHOWN TO BE APPROPRIATED BY THE CONCERNED DIRECTOR/PARTNER/PROPRIETOR; HOWEVER THE SAME IS AC TUALLY APPROPRIATED BY BHAN WARL AL JAIN & FAMILY. THESE EMPLOYEES MERELY GET SALAR Y FOR /ENDING THEIR NAMES TO VARIOUS CONCERNS AND FOR DOING MISCELLANEOUS OFFICE WORK LOOKING AFTER BANKING TRANSACTIONS AND DATA ENTRY OF THE ACCOUNTS ETC. IN SOME CASES, WIVES OF THESE EMPLOYEES ARE SHOWN TO BE RECEIVING SALARY FROM CERTAIN CONCERNS WITH OUT RENDERING ANY SERVICES. F. THE CONCERNS IN WHICH THESE EMPLOYEES ARE SHOWN AS DIRECTORS/ PAR TNERS/ PROPRIETORS ARE OPERATING PREMISES IN THE NAME OF BHANWARLAL JAIN & FAMILY. G. T HE CONCERN IS SHOWN TO BE ENGAGED IN IMPORT OF DIAMONDS. HOWEVER WHEN TH E N AME SAKE DIRECTORS/PARTNE RS/PROPRIETORS WERE SPECIFICALLY ASKED TO EXPLAIN HOW THEY CONTACTED THE PARTY FROM WHOM THE IMPORTS HAVE BEEN MADE IN THE RESPECTIV E CONCERNS, HE WAS UNABLE TO COMMENT ON THE SAME. HE ADMITTED OF NOT HAVING ANY PERSO NAL CONTACT WITH ANY OF THE IMPORTERS EITHER THROUGH PHONE OR EMAIL. HE ALSO ADMITTED OF NOT HA VING VISITED ANY FOREIGN COUNTRY FOR THE PURPOSE OF BUSINESS. H. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE ABOVE SUPPLIERS FOR VERIFICATION BUT HE FAILED TO PRODUCE THEM BEFORE THE UNDERSIGNED. WHEN EXPENDITURE (PURCHASE) IS CLAIMED TO HAVE BEEN INCURRED, THE INITIAL BURDEN WILL BE ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASE. IN CASE THE PARTY HAVE SHIFTED, THE ASSESSEE IS EXPECTED TO KN OW THEIR CURRENT ADDRESS AS THE ONUS IS ON THE ASSES SEE (LEGAL HEIR) TO PROVE THAT THE PURCHASES WERE GENUINE. RELIANCE IS PLACED ON JUDGMENT OF THE GUJARAT HIGH COURT REPORTED IN CIT VS CHANDRA VIL A S HOTEL (1987) 164 ITR 102 (GUJ) . THIS ONUS HAS NOT BE EN DISCHARGED BY THE ASSESSEE . THUS , ON THE BASIS OF THE AFORESAID OBSERVATIONS THE A.O HOLDING A STRONG CONVICTION THAT AS THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS P A G E | 6 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI IN RESPECT OF PROVING THE GENUINENESS AND VERACITY OF THE TRANSACTIONS OF PURCHASE OF GOODS WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED BOGUS CONCERNS , THEREFORE , CONCLUDED THAT THE SAID TRANSACTIONS WERE PROVED TO BE NOT GENUINE. THE A.O ON THE BASIS OF HIS AFORESAID OBSERVATIONS , BEING OF THE VIEW THAT AS T HE PURCHASES TO THE EXTENT THE SAME WERE CLAIM ED TO HAVE BEEN MADE FROM THE AFORESAID PARTIES, VIZ. (I) P RIME STAR; (II) RAJAN DIAMOND; (III) MAYUR EXPORTS; AND (IV) PARVATI EXPORTS AGGREGATING TO RS.1,37,73,507/ - HAD REMAINED UNVERIFIABLE , THEREFORE, REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER SEC. 145(3) OF THE ACT. THE A.O FINALLY CONCLUDED THAT THE PURCHASES CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM BHANWARLAL JAIN GROUP WERE NOT JUST TO COVER UP THE GREY MARKET PURCHASES, BUT WAS WIT H THE INTENT TO SUPPRESS THE TAXABLE PROFIT AND DEFRAUD THE REVENUE, THEREFORE, ON THE BASIS OF HIS SAID CONVICTION DISALLOWED THE ENTIRE AMOUNT OF PURCHASES OF RS.1,37,73,507/ - AND ADDED BACK THE SAME TO THE RETURN ED INCOME OF THE ASSESSEE. 4. THE REVENU E BEING AGGRIEVED WITH THE ASSESSMENT ORDER, THEREIN ASSAILED THE SAME BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTION S OF THE ASSESSEE IN THE BACKDROP OF THE FACTS OF THE CASE , THEREIN APPRECIATED THAT AS THE ASSESSEE HAD FAILED TO SUBS TANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTIONS CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED ENTITIES, VIZ. (I) PRIME STAR; (II) RAJAN DIAMONDS; (III) MAYUR EXPORTS; AND (IV) PARVATI EXPORTS, THEREFORE, THE A.O HAD CHARACTERISED T HE SAME AS BOGUS PURCHASE TRANSACTIONS. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE A.O HAD AFTER RELYING ON THE STATEMENT S RECORDED UNDER OATH OF THE PERSONS IN CHARGE OF THE AFOREMENTIONED BOGUS CONCERNS OF BHANWARLAL JAIN GROUP, AND FURTHER DELIBERATING ON THE INFORMATION AVAILABLE ON RECORD, HAD ONLY THEREAFTER CONCLUDED THAT THE ASSESSEE P A G E | 7 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI HAD MERELY TAKEN ACCOMMODATION ENTRIES FROM THE SAID BOGUS CONCERNS AND HAD NOT CARRIED OUT ANY GENUINE PURCHASES FROM THEM. IT WAS FURTHER OBSERVED BY TH E CIT(A) THAT THE AO AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER SEC. 145(3) , HAD THUS DISALLOWED THE ENTIRE PURCHASES OF RS.1,37,73,507/ - WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES . THE CIT(A) OBSERV ED THAT THOUGH IT REMAIN ED AS A MATTER OF FACT THAT THE A.O HAD NEITHER MADE ANY INDEPENDENT VERIFICATION S, NOR MADE ANY EFFORTS TO ISSUE NOTICES UNDER SEC. 133(6)/131 OF THE ACT TO THE AFOREMENTIONED PARTIES , BUT AFTER TAKING INTO CONSIDERATION THE OVER WHELMING EVIDENCE IN THE FORM OF SWORN STATEMENT S OF THE NAME SAKE DIRECTORS/PARTNERS/PROPRIETORS OF THE AFOREMENTIONED DUMMY CONCERNS WHICH WERE RECORDED BY THE I NVESTIGATION WING, MUMBAI , WHEREIN THE Y HAD ADMITTED THAT THEY WERE MERELY NAME LENDERS, WHIL E FOR THE ENTIRE SHOW WAS BEING MANAGED BY SH. BHANWARLAL JAIN AND HIS FAMILY MEMBERS, AND THE SAID CONCERNS WERE ONLY PROVIDING ACCOMMODATION ENTRIES AND NOT CARRYING OUT ANY GENUINE BUSINESS, HAD THUS OBSERVED THAT IN THE ABSENCE OF ANY PRIMARY EVIDENCE BEING PLACED ON RECORD BY THE ASSESSEE TO PROVE THE GENUINENESS AND VERACITY OF THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES, IT COULD FAIRLY BE CONCLUDED THAT THE ASSESSEE HAD MERELY TAKEN ACCOMMODATION ENTRIES FROM THE SAID BOGUS CONCERNS AND NOT CARRIED OUT ANY GENUINE PURCHASES FROM THEM. THUS, THE CIT(A) AFTER FINDING HIMSELF AS BEING IN AGREEMENT WITH THE VIEW OF THE A.O THAT THE GENUINENESS OF THE PURCHASE TRANSACTIONS COULD NOT BE ESTABLISHED BY THE ASSESSEE , THEREFORE, CONCLUDED THAT THE SAME COULD SAFELY BE CHARACTERIZED AS BOGUS TRANSACTIONS. THE CIT(A) FURTHER OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT IT WAS OBLIGATORY ON THE PART OF THE A.O TO HAVE PRODUCE D THE AFORESAID PARTIES FOR P A G E | 8 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI VERIFICATION , AS THEY AS PER THE ASSESSEE S VERSION HAPPENED TO BE THE WITNESSE S OF THE REVENUE , DID NOT MERIT ACCEPTANCE. THE CIT(A) REMAINED OF THE VIEW THAT NOW WHEN THE ASSESSEE HAD CLAIMED TO HAVE ENTERED INTO PURCHASE TRANSACTIONS WITH THE AFOREMENTIONED PARTIES, TH EREFORE , THE ONUS TO PROVE THE GENUINENESS OF THE SAID TRANSACTIONS WAS CAST UPON IT. 5. THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE , THEREIN FOUND HIMSELF AS BEING IN AGREEMENT WITH THE VIEW OF THE A.O THAT THE ASSESSEE HAD NOT CARRIED OUT ANY GENUINE PURCHASES FROM THE AFOREMENTIONED BOGUS CONCERNS . H OWEVER , THE CIT(A) OBSERVED THAT AS THE GOODS CLAIMED BY THE ASSESSEE TO HAVE BEEN PURCHASE D FROM THE AFORESAID BOGUS CONCERN S WERE ENTERED INTO THE STOCK REGISTER , AND THE CORRESPONDING SALES O F THE SAME HAD ALSO BEEN RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT , THEREFORE, THE FACTUM OF PURCHASE OF GOODS UNDER CONSIDERATION COULD NOT BE DOUBTED. THUS, IN THE BACKDROP OF THE AFORESAID FACTS IT WAS CONCLUDED BY THE CIT(A) THAT THOUGH IT RE MAIN ED AS A MATTER OF FACT THAT THE GENUINENESS OF THE PARTIES FROM WHOM PURCHASES WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE WAS UNDER SERIOUS DOUBTS, BUT THE GENUINENESS OF THE PURCHASES ON A WHOLE COULD NOT BE DOUBTED. IT WAS OBSERVED BY THE CIT(A) THAT IT COULD SAFELY BE CONCLUDED THAT THE ASSESSEE HAD MADE PURCHASES OF THE GOODS UNDER CONSIDERATION, THOUGH NOT FROM THE AFOREMENTIONED BOGUS PARTIES, BUT FROM CERTAIN OTHER PARTIES OPERATING IN THE OPEN/ GREY MARKET. THAT IN THE BACKDROP OF THE AFORESAID FACTS, IT WAS OBSERVED BY THE CIT(A) THAT NOW WHEN THE CORRESPONDING SALES OF THE AFORESAID GOODS WAS DULY ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THEREFORE , THE ENTIRE AMOUNT OF THE PURCHASE CONSIDERATION COULD NOT HAVE BEEN ADDED TO THE IN COME OF THE ASSESSEE. THE CIT(A) DELIBERATING ON THE AFORESAID FACTS , THUS P A G E | 9 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI CONCLUDE D THAT ADDITION IN THE HANDS OF THE ASSESSEE COULD ONLY BE MADE IN RESPECT OF THE PROFIT EMBEDDED IN THE PURCHASES MADE BY THE ASSESSEE FROM THE OPEN/GREY MARKET. 6. THE CIT(A) AFTER CONCLUDING THAT THE ADDITION IN RESPECT OF THE AFORESAID BOGUS PURCHASE TRANSACTIONS WAS LIABLE TO BE RESTRICTED ONLY AS REGARDS THE PROFIT ELEMENT THAT WOULD BE INVOLVED IN MAKING OF THE PURCHASES O F THE GOODS UNDER CONSIDERATION BY THE A SSESSEE FROM THE OPEN/ GREY MARKET, THEREIN TOOK INTO CONSIDERATION THE RELEVANT ASPECTS WHICH WOULD HAVE A STRONG BEARING O N THE DETERMINING OF SUCH PROFIT ELEMENT. IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE WOULD HAD PROCURED DIAMONDS F ROM THE OPEN/ GREY MARKET AT A SUBSTANTIALLY CHEAPER RATE, AS AGAINST THE PRICE AT WHICH THE SAME WOULD BE AVAILABLE FROM A GENUINE DEALER, MAINLY FOR TWO REASONS, VIZ. (I) THE DIAMONDS IN THE OPEN/ GREY MARKET WOULD ALWAYS BE CHEAPER THAN THE DIAMONDS SOURCED FROM THE G ENUINE DEALER, BECAUSE THE LATTER WOULD CHARGE ITS INCIDENTAL COST INCLUDING THE WHOLE ADMINISTRATION COST WHILE SELLING DIAMONDS IN THE MARKET, WHILE FOR THE PETTY DEALERS OPERATING IN THE OPEN/ GREY MARKET DO NOT CARRY SUCH INCIDENTAL CHARGES ON SUCH SALE S , AS THEY ARE ALWAYS LOOKING FOR A QUICK PROFIT; AND (II) THERE IS ALWAYS AN ELEMENT OF DISCOUNT IN THE CASE OF INSTANT CASH PURCHASE. IT WAS OBSERVED BY THE CIT(A) THAT THE PROFIT ELEMENT THAT WOULD BE INVOLVED IN MAKING OF THE PURCHASES OF DIAMONDS BY T HE ASSESSEE FROM THE OPEN/GREY MARKET COULD SAFELY BE ADOPTED @3% AFTER CONSIDERING THE FOLLOWING FACT S: (I) VAT LEVIED ON DIAMON DS WAS 1%, WHILE FOR PURCHASES MADE FROM PLACE LIKE SURAT WERE FULLY EXEMPT; (II) THE TASK FORCE FOR DIAMOND INDUSTRY CONSTITUTED BY THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY, P A G E | 10 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI AFTER CONSIDERING THE BAP SCHEME , HAD RECOMMENDED PRESUMPTIVE TAX FOR NET PROFIT CALCULATED @ 2% OF TRADING ACTIVITY AND @ 3% FOR MANUFACTURING ACTIVITY OR @ 2.5% ACROSS THE BOARD; (III) THAT THE OPERATING PROFIT IN THE CASE OF DIAMOND TRADING FOR COMPUTATION OF ARMS LENGTH PRICE ( ALP ) BY THE TRANSFER PRICING WING WAS ALSO CONSISTENTLY IN THE REGION OF AROUND 1.75% TO 3%. ; AND (IV). THAT BY WAY OF A CONSISTENT PRACTISE THE A.OS WER E ADOPTING 3% ON THE PURCHASES MADE FROM BHANWARLAL JAIN/RAJENDRA JAIN GROUP CONCERNS, AS THE PROFIT ELEMENT EMBEDDED IN THE ASSESSMENTS INVOLVING THE SIMILAR FACTS IN OTHER CASES THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAD DURING THE COURSE OF THE APPELLATE PROCEEDINGS SUBMITTED THAT AS THE A.O WHILE FRAMING THE ASSESSMENT IN ITS HANDS FOR A.Y 2011 - 12, HAD VIDE HIS ORDER DATED 07.09.2016 HIMSELF WORKED OUT THE PROFIT IN RESPECT OF THE BOGUS PURCHASES MADE BY THE ASSESSEE FRO M BHANWARLAL JAIN/RAJENDRA JAIN GROUP CONCERNS @ 3% , THEREFORE, THE ADDITION IN ITS CASE IN RESPECT OF THE AFORESAID NON GENUINE PURCHASES MADE DURING THE YEAR UNDER CONSIDERATION ALSO MAY BE SUSTAIN ED TO THE EXTENT OF 3% OF THE AGGREGATE OF SUCH PURCHASES . THE CIT(A) ON A CUMULATIVE PERUSAL OF THE AFORESAID FACTS , THUS CONCLUDED THAT THE PROFIT ELEMENT INVOLVED IN THE TRADE LINE OF THE ASSESSEE COULD S AFELY BE TAKEN AT 2 % TO 3%. THUS, IN THE BACKDROP OF THE AFORESAID FACTS , THE CIT(A) CONCLUDED THAT THE AD DITION IN RESPECT OF THE AGGREGATE OF THE PURCHASES MADE BY THE ASSESSEE FROM THE AFOREMENTIONED FOUR PARTIES, VIZ. (I) PRIME STAR; (II) P A G E | 11 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI RAJAN DIAMONDS; (III) MAYUR EXPORTS; AND (IV) PARVATI EXPORTS, COULD FAIRLY BE TAKEN AT 3%. 7. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATER IN APPEAL BEFORE US. WE FIND THAT DESPITE HAVING BEEN PUT TO NOTICE AS REGARDS THE FIXATION OF THE HEARING OF THE APPEAL VIDE A NOTICE FORWARDED BY REGISTERED POST (RPAD), THE R ESPONDENT ASSESSEE HAD NEITHER PUT UP AN APPEARANCE BEFORE US, NOR ANY APPLICATION SEEKING AN ADJOURNMENT HAD BEEN FILED. WE THUS, IN THE BACKDROP OF THE AFORESAID FACTS PROCEED WITH THE HEAR ING OF THE APPEAL AS PER RULE 25 OF THE APPELLATE TRIBUNAL RULES , 1963, AFTER HEARING THE APPELLANT REVENUE. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R), PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD BY WAY OF A VERY WELL REASONED ORDER RESTRICTED THE ADDITION IN THE HANDS OF THE ASSESSEE T O THE EXTENT OF 3% OF THE AGGREGATE VALUE OF THE PURCHASES WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN M ADE FROM THE AFOREMENTIONED BOGUS PARTIES, VIZ. VIZ. (I) PRIME STAR; (II) RAJAN DIAMONDS; (III) MAYUR EXPORTS; AND (IV) PARVATI EXPORTS . WE ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE TRANS ACTIONS OF PURCHASE OF GOODS WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED BOGUS SUPPLIERS, THEREFORE, THE A.O DULY TAKING INTO CONSIDERATION THE STATEMENTS OF THE PERSONS IN CHARGE OF THE SAID BOGUS CONCERNS , AS WERE RECORDED UNDER OATH BY THE INVESTIGATION WING DURING THE COURSE OF THE S EARCH AND SURVEY ACTION, WHEREIN THEY HAD ADMITTED THAT THEY WERE ONLY DUMMIES AND THE CONCERNS OF WHICH THEY WERE PROJECTED AS THE DIRECTORS/PARTNERS/PROPRIETORS WERE AS A MATTER OF FACT MANAGED AND CON TROLLED BY SHRI. BHWARLAL JAIN AND HIS FAMILY MEMBERS, WERE P A G E | 12 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI ONLY PROVIDING ACCOMMODATION BILLS AND HAD NOT CARRIED OUT ANY GENUINE BUSINESS TRANSACTIONS, HAD THUS RIGHTLY CONCLUDED THAT THE PURCHASES CLAIMED BY THE ASSESSEE FROM THE SAID BOGUS PARTIES COUL D SAFELY BE CHARACTERIZED AS BOGUS TRANSACTIONS. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD RIGHTLY APPRECIATED THAT NOW WHEN THE ASSESSEE HAD ABSOLUTELY FAILED TO LEAD ANY PRIMARY EVIDENCE TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHAS ES TRANSACTIONS UNDER CONSIDERATION, THEREFORE, THERE REMAIN ED NO OCCASION FOR THE A.O TO HAVE HELD THE PURCHASE TRANSACTION S UNDER CONSIDERATION AS GENUINE. WE ARE FURTHER PERSUADED TO BE IN AGREEMENT WITH THE CIT(A) THAT NOW WHEN THE SALES OF THE ASSESSE E HAD NOT BEEN DOUBTED AND DISLODGED BY THE A.O, THEREFORE, IT COULD SAFELY BE GATHERED THAT THE ASSESSEE HAD PURCHASE D THE GOODS UNDER CONSIDERATION , THOUGH NOT FROM THE AFOREMENTIONED BOGUS PARTIES FROM WHOM BILLS HAVE BEEN TAKEN, BUT FROM CERTAIN UNIDEN TIFIED PARTIES OPERATING IN THE OPEN/GREY MARKET. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD RIGHTLY APPRECIATED THAT THE ADDITION IN THE HANDS OF THE ASSESSEE WAS LIABLE TO BE RESTRICTED ONLY AS REGARDS THE PROFIT ELEMENT WHICH WAS EMBEDDED IN MAKI NG OF PURCHASES BY THE ASSESSEE FROM THE OPEN/GREY MARKET. WE FIND THAT THE CIT(A) THOUGH WAS NOT OBLIVIOUS OF THE FACT THAT IN RESPECT OF BOGUS PURCHASES MADE IN A NORMAL BUSINESS , THE C OURTS HAD CONSISTENTLY ESTIMATED THE PROFIT MARGIN INVOLVED IN MAKING OF PURCHASES FROM THE OPEN/GREY MARKET AT 12.5% OF THE VALUE OF THE BOGUS PURCHASES , BUT THEN, NOT LOOSING SIGHT OF THE FACT THAT UNLIKE THOSE CASES , IN THE TRADE LINE OF DIAMOND BUSINESS THE PROFIT MARGIN THAT WOULD BE INVOLVED WOULD NOT EXCEED 3% , THUS FOR THE SAID REASON HAD RESTRICT ED THE ADDITION IN THE HANDS OF THE ASSESSEE @ 3% OF THE AGGREGATE VALUE OF THE BOGUS PURCHASES MADE BY THE ASSESSEE. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF P A G E | 13 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI THE CASE AND ARE PERSUADED TO BE IN AGREEMENT WI TH THE VIEW SO TAKEN BY THE CIT(A). WE THUS BEING OF THE CONSIDERED VIEW THAT THE CIT(A) HAD FAIRLY CONCLUDED THAT THE ADDITION IN RESPECT OF THE PURCHASES WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES, VIZ. (I) PRIME STAR; (II) RAJAN DIAMONDS; (III) MAYUR EXPORTS; AND (IV) PARVATI EXPORTS WAS LIABLE TO BE RESTRICTED TO 3% OF THE AGGREGATE VALUE OF THE PURCHASE S , THEREFORE, FIND NO RE A SON TO DISLODGE THE WELL REASONED ORDER OF THE CIT(A). WE THUS , IN THE BACKDROP OF OU R AFORESAID OBSERVATIONS , FINDING OURSELVES AS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) , THEREFORE , UPHOLD HIS ORDER. 8. THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 231/MUM/2017 AY: 200 9 - 10 9. WE NOW TAKE UP THE APPEAL OF THE REVENUE FOR A.Y 2009 - 10. WHEREIN THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, WHETHER, LD. CIT(A) WAS JUSTIFIED IN SUSTAINING ONLY AN ADDITION @ 3% PROFIT RATE ON TOTAL PURCHASES OF RS. 5 8,59,949/ - MADE FROM ONE PARTY I.E. M/S MEGHA GEMS. 2. THE APPELLANT PRAY S THAT THE ORDER OF THE LEARNED CI T(A) ON THE ABOVE GROUNDS BE SET SIDE AND THAT OF THE A.O BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 10. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR AY: 2009 - 10 ON 30.09.2009, DECLARING P A G E | 14 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI TOTAL INCOME OF RS.11,03,580/ - . THE RETURN OF INCOME WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. THE ASSESSMENT THEREAFTE R WAS COMPLETED U/S 143(3) AT A TOTAL INCOME OF RS.11,40,280/ - . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM D G IT (INV . ), MUMBAI , THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES FROM ONE M/S MEGHA GEMS (A BOGUS CONCERN OF BHANWARLAL JAIN GROUP ) , IN ORDER TO INFLATE ITS PURCHASES, THEREFORE, REOPENED THE CASE OF THE ASSESSEE UNDER SEC. 147 AND A NOTICE U/S 148 OF THE ACT WAS ISSUE D TO THE ASSESSEE ON 25.03.2014. THE A.O FRAMED THE ASSESSMENT VIDE HIS ORDER PASSED U/S 143(3) R.W.S 147, DATED 27 .03.2015, WHEREIN AFTER MAKING ADDITION OF THE ENTIRE PURCHASE S AGGREGATING TO RS. 58,59,949/ - WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFORESAID DUMMY CONCERN , VIZ. MEGHA GEMS, THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.70,00, 229/ - . 11 . TH E ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE CIT(A) . THE CIT(A) AGREED WITH THE OBSERVATIONS OF THE A.O AND CONCLUDED THAT THE ASSESSEE HAD NOT CARRIED OUT ANY GENUINE PURCHASE FROM THE BOGUS CONCERN, VIZ. MEGHA GEMS , BUT AS A MATTER OF FACT HAD MERELY OBTAINED ACCOMMODATION BILL S FROM IT . H OWEVER , THE CIT(A) BEING OF THE VIEW THAT AS THE ASSESSEE HAD PURCHASED THE GOODS UNDER CONSIDERATION, THOUGH NOT FROM THE AFOREMENTIONED BOGUS CONCERN, BUT FROM THE OPEN/GREY MARKE T, THEREFORE , CONCLUDED THAT NOW WHEN THE CORRESPONDING SALES OF THE GOODS UNDER CONSIDERATION WERE NOT DOUBTED BY THE A.O, THEREIN THE ADDITION IN THE HANDS OF THE ASSESSEE WAS LIABLE TO BE RESTRICTED ONLY TO THE EXTENT OF THE PROFIT ELEMENT INVOLVED IN M AKING OF SUCH PURCHASES FROM THE OPEN/GREY MARKET. THE CIT(A) ON THE BASIS OF HIS AFORESAID CONVICTION RESTRICTED THE ADDITION IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF 3% OF THE AGGREGATE VALUE P A G E | 15 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI OF THE PURCHASES WHICH WERE CLAIMED BY THE ASSESSEE TO HA VE BEEN MADE FROM THE AFOREMENTIONED BOGUS CONCERN , VIZ. MEGHA GEMS . 1 2 . THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT AS THE F ACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL ARE THE SA ME AS WERE THERE BEFORE US IN APPEAL OF THE REVENUE FOR AY: 2007 - 08 IN ITA NO. 230/MUM/2017, WHICH HAD BEEN ADJUDICATED BY US HEREINABOVE, THEREFORE , OUR ORDER PASSED WHILE DISPOSING OF THE APPEAL OF THE REVENUE FOR A.Y 2007 - 08 IN ITA NO. 230/MUM/2017 SHAL L APPLY MUTATIS MUTANDIS IN THE PRESENT APPEAL FILED BY THE REVENUE FOR AY: 2009 - 10, MARKED AS ITA NO.231/MUM/2017. 13 . THE APPEAL OF THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS . ITA NO. 232 /MUM/2017 AY: 20 1 2 - 1 3 14 . WE NOW TAKE UP THE APPEAL OF THE REVENUE FOR A.Y 2012 - 13. T HE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, WHETHER, L D . CI T(A) WAS JUSTI FI ED IN SUSTAINING ONLY AN ADDITION @ 3% PROFIT RATE O N TOTAL PURCHASES OF RS. 4,24,9 6,885/ - MADE FROM FIVE PARTIES. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT(A) ON THE ABOVE GROUNDS BE SET SIDE AND THAT OF THE A.O BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 1 5 . BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR A . Y 2012 - 13 ON 27.09.2012, DISCLOSING P A G E | 16 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI TOTAL INCOME OF RS.21,16,320/ - . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT U/S 143(2). THAT DURING THE COURSE OF THE A SSESSMENT PROCEEDINGS THE A.O OBSERVED THAT THE ASSESSEE HAD BOOKED BOGUS PURCHASES AGGREGATING TO RS. 4,24,96,885/ - WHICH WERE CLAIMED TO HAVE BEEN MADE FROM CERTAIN CONCERN S, WHICH WERE PROVED TO BE BOGUS CONCERN S BELONGING TO BHANW ARLAL JAIN GROUP, AS UNDER: SR. NO. NAME OF THE HAWAL PARTIES BILL AMOUNT 1. ANKITA EXPORTS 1498420 2. MEENAXI DIAMONDS PVT. LTD. 15337500 3. PARVATI EXPORTS 8220130 4. MALHAR EXPORTS 12407120 5. BALAJI IMPES 5033715 TOTAL 42496885 THE A.O FRAMED THE ASSESSMENT VIDE HIS ORDER PASSED U/S 143(3), DATED 27.03.2015, WHEREIN AFTER MAKING ADDITION OF THE ENTIRE PURCHASES AGGREGATING TO RS. 4,24,96,885/ - (SUPRA) CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED BOGUS CONCERN S, THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.4,46,13,210/ - . 16 . THE ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE CIT(A). THE CIT(A) AGREED WITH THE OBSERVATIONS OF THE A.O AND CONCLUDED THAT THE ASSESSEE HAD NOT CARRIED OUT ANY GENUINE PURC HASE FROM THE ABOVEMENTIONED DUMMY CONCERNS, BUT AS A MATTER OF FACT HAD MERELY OBTAINED ACCOMMODATION BILLS FROM THEM. HOWEVER, THE CIT(A) BEING OF THE VIEW THAT AS THE ASSESSEE HAD PURCHASED THE GOODS UNDER CONSIDERATION, THOUGH NOT FROM THE AFOREMENTION ED BOGUS CONCERNS, BUT FROM THE OPEN/GREY MARKET, THEREFORE, CONCLUDED THAT NOW WHEN THE CORRESPONDING SALES OF THE GOODS UNDER CONSIDERATION WERE NOT P A G E | 17 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI DOUBTED BY THE A.O, THEREIN THE ADDITION IN THE HANDS OF THE ASSESSEE WAS LIABLE TO BE RESTRICTED ONLY TO THE EXTENT OF THE PROFIT ELEMENT INVOLVED IN MAKING OF SUCH PURCHASES FROM THE OPEN/GREY MARKET. THE CIT(A) ON THE BASIS OF HIS AFORESAID CONVICTION RESTRICTED THE ADDITION IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF 3% OF THE AGGREGATE VALUE OF THE PUR CHASES WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED BOGUS CONCERNS. 17 . THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT AS THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL ARE THE SAME AS WERE THERE BEFORE US IN THE APPEAL OF THE REVENUE FOR AY: 2007 - 08 IN ITA NO. 230/M UM/2017, WHICH HAD BEEN ADJUDICATED BY US HEREINABOVE, THEREFORE, OUR ORDER PASSED WHILE DISPOSING OF THE APPEAL OF THE REVENUE FOR A.Y 20 07 - 08 IN ITA NO. 230/MUM/2017 SHALL APPLY MUTATIS MUTANDIS IN THE PRESENT APPEAL OF THE REVENUE FOR AY: 2012 - 13, MARKED AS ITA NO.232/MUM/2017. 1 8 . THE APPEAL OF THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. 19 . THE APPEAL S OF THE REVENUE FOR AY: 2007 - 08, 2009 - 10 AND 2012 - 13, MARKED AS ITA NO. 230/MUM/2017, 231/MUM/2017 AND ITA NO. 232/MUM/2017 ARE DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PR ONOUNCED IN THE OPEN COURT ON 13 .10.2017 SD/ - SD/ - ( RAJENDRA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 13 . 10 .2017 P A G E | 18 ITA NO. 230 TO 232/MUM/2017 MANEK GEMS VS. ACIT 19(1), MUMBAI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI