ITO, Ward-2(3)(8), Surat V. Mukesh Babulal Parlecha, Surat

ITA 267/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1842 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 07-07-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 01-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 147; 143(3); 73; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA Nos.225 & 226/SRT/2019 Assessment Years: (2013-14 to 2014-15) (Virtual Court Hearing) Mukesh Babulal Parlechav, 201, Panchratna Appartment, Dalgiya Mohalla, Mahidharpura, Surat-395003. Vs. The ITO, Ward-2(3)(8), Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: APOPP4334F (Appellant) (Respondent) आयकर अपील सं./ITA Nos.266 & 267/SRT/2019 Assessment Years: (2013-14 to 2014-15) (Virtual Court Hearing) The ITO, Ward-2(3)(8), Surat. Vs. Mukesh Babulal Parlechav, 201, Panchratna Appartment, Dalgiya Mohalla, Mahidharpura, Surat-395003. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: APOPP4334F (Appellant) (Respondent) Assessee by Shri Mehul Shah, CA Respondent by Shri H. P. Meena, CIT(DR) and Shri Vinod Kumar, Sr. DR Date of Hearing 08/07/2022 Date of Pronouncement 25/07/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned cross appeals filed by the Assessees and Revenues, pertaining to the Assessment Years (AYs) 2013-14 to 2014-15, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-1, Surat [in short “the ld. CIT(A)”], which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Page | 2 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha 2. Since, these appeals pertains to same assessee, for different assessment years, and common and identical issues are involved, therefore these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.266/SRT/2019, for AY.2013-14, have been taken into consideration for deciding the above appeals en masse. 3. Grounds of appeal raised by the Revenue are as follows: “(i) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in restricted the addition made by the AO of Rs.6,68,91,952/- on account of bogus purchases to 5%. (ii) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in Law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A)-1, Surat may be set-aside and that of the Assessing Officer’s order may be restored.” 4. Brief facts qua the issue are that assessee filed his return of income for A.Y.2013-14 declaring total income at Rs.6,53,460/- on 01.10.2013. The Assessing Officer noticed that assessee has made transactions with the entities of Gautam Jain Group. The Assessing Officer was in possession of information that a search and seizure action has been carried out by the investigation Wing, Mumbai on the Gautam Jain Group which was indulged in providing of accommodation entries in the form of unsecured loans, bogus purchases/sales to the interested parties. Therefore, Assessing Officer made addition at the rate of 100% of bogus purchases to the tune of Rs.6,68,91,952/-. 5. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has restricted the addition at the rate of 5% of bogus purchases, observing as follows: “9.5 In the instant appeal, there is no such adverse finding as in the case of N K Proteins (supra). The facts in instant appeal are identical to Gangani Impex (supra) and the cases decided by the jurisdictional ITAT (supra). In view of this, Page | 3 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha respectfully following jurisdictional ITAT, the disallowance is restricted to 5%. The AR has furnished orders Hon'ble ITAT Mumbai, Delhi and Kolkata wherein, an identical circumstances & factual matrix involving the same accommodation entry providers the entire disallowance made by Ld. AO was deleted (Sanghvi Export International Ltd. ITA No.3305, 3375/Mum/2017 dated 21.08.2018, Karamchandra Rubber Industries ITA No.6599/Del/2014 dated 12.02.2018, M/s Vaman International Pvt. ITA 1040 & 1041/M/2017 dated 27.09.2017, Fancy Wear ITA No.1596/M/2016 dated 20.09.2017, Suraj Jewells Co. ITA No.1581/Kol/2016 dated 05.05.2017). The AR also furnished copies of order of CIT(A), Valsad in the case of (1) Sahjanand Export IT(A)/vls/236/2016-17 dated 24.08.2017, (2) Rushabh International No.CIT(A)/vls/102/2016-17 dated 14.02.2018, which in the disallowances is restricted to 2% of impugned purchases. However, since I have already taken a view of disallowing 5% of purchases and since it is confirmed by Hon'ble jurisdictional ITAT, Surat Bench as discussed in para above; the above decisions of ITAT Mumbai/Kolkata are not followed. 9.6 In view of above discussion the disallowance is restricted to 5% of the impugned purchases as under: A.Y. Unverified purchases Disallowance confirmed 2013-14 Rs.6,68,91,952/- Rs.33,44,598/- 6. Aggrieved by the order of the ld. CIT(A), the assessee as well as Revenue both are in appeal before us. 7. The Ld. Counsel for the assessee submitted before us that gross profit ratio and net profit ratio should not be applied to sustain the addition rather return on investment ratio (ROI) should be applied. The Ld. Counsel pointed out that assessee has opening capital of Rs.5,68,513/- and closing capital at Rs.4,07,815/- whereas net profit shown by the assessee is at Rs.5,75,839/- which gives ROI at the rate of 117.96%. The nature of business of the assessee is finance, that is, primary object of the assessee is to finance and in this finance business, the return on investment should be considered and not the percentage of bogus purchases. The Ld. Counsel presented before the Bench the theory of DuPont Analysis and its importance in finance business. In this regard, the Ld. Counsel has submitted the written submissions, which are reproduced below: “May It Please To Your Honour 1. The appeals filed by the assessee and revenue are directed against the order of Ld. CIT(A) passed in case of assessee on 08.02.2019 for A.Y. 2013-14 and 2014-15. The assessee is in appeal against the order of Ld. CIT(A) for 5% sustained out of the total additions made in the assessment order. The Page | 4 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha department is in appeal against the deletion of 95% of the additions made in the assessment order in the case of the assessee. 2. In this case, the Assessing Officer has made an addition amounting to Rs. 6,68,91,952/- and Rs. 1,90,61,000/- for A.Y. 2013-14 and A.Y. 2014-15 respectively on account of alleged bogus purchase. The Ld. CIT(A) has restricted the addition to 5% of the alleged purchases and addition of Rs. 33,44,598/- and Rs. 9,53,050/- for AY 2013-14 and AY 2014-15 respectively were sustained relying on various judicial pronouncements. 3. The assessee would like to highlight the following points to distinguish the case of the assessee against comparable case laws and in support of his argument that no addition ought to have been made in this case: a. The average capital of the proprietorship firm and the net profit on such sale is tabulated below. There are no unsecured loans in both the years. It gives an ROI which is reasonably high and hence no adverse view is called for. Particulars AY 2013-14 AY 2014-15 Opening Capital 5,68,513 4,07,815 Closing Capital 4,07,815 10,27,593 Average Capital 4,88,164 7,17,704 Net profit 5,75,839 7,34,387 ROI (NP / Average Capital) (%) 117.96% 102.32% b. The purchases have entered the stock register and if the impugned purchases are excluded then the closing stock results into negative balance which is not possible. c. It is pertinent to mention that the purchase invoices are paid by account payee cheques and there is no evidence that the amount paid to the creditors is returned back to the assessee in any form. 4. The Honourable Surat Bench in the case of Shri. Pankaj Kanwarlal Jain v. The Income Tax Officer [ITA No. 269/SRT/2017] dated 27.08.2019 deleted the entire additions instead of 5% estimated profits confirmed by Ld. CIT(A) and held that – “The entire addition is wholly unjustified and even it is not a fit case where Gross Profit rate of 5% be applied for sustaining the part addition. In this view of the matter, we set aside the Orders of the authorities below and delete the entire addition.” 5. Reliance is placed on the decision of Mumbai Tribunal in the case of M/s Mohammad Haji Adam & Co. vs. ITO vide ITA no. [4154 & 4155/ Mum/ 2010] dated 28.10.2015 wherein it was held that – “Accordingly, we direct the AO to calculate the GP on the undisputed purchase vis-à-vis GP in respect of purchase made from these parties and, if the AO finds that the GP disclosed in respect of purchases from these three parties is lower than the GP disclosed in respect of other undisputed purchase, addition should be made to that extent only. We direct accordingly. “ Page | 5 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha The above decision was confirmed by High Court of Bombay vide Income Tax Appeal No. 1004 of 2016 & others. 6. In view of the above and relying on the submissions filed before CIT (A) and case laws filed, the Honourable Tribunal is please requested to delete the addition or restrict the same to 5% of alleged purchases as sustained by Ld. CIT(A) and oblige. 8. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that assessee has taken bogus purchase bills to inflate expenses and thus reduced net taxable profits, therefore addition should be made at the rate of 100% of bogus purchase and return on investment ratio (ROI) should not be applied, as the transaction made by assessee is bogus. 9. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that issue under consideration, is squarely covered by the judgment of the Co-ordinate Bench of this Tribunal in the case of Pankaj K. Chaudhary (in ITA No.1379/AHD/2017 for AY. 2007-08), order dated 27.09.2021, wherein it was held as follows: “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 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. Page | 6 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha 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 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. 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: 1 M/s Andaman Timber industries VsCommissioner of Central Excise, CIVIL APPEAL NO. 4228 OF 2006 (Supreme Court) Page | 7 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha 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 Hon’ble 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 income and audit report. We have also gone through the documentary evidences furnished in all cases. Ground No.1 in assessee’s 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. Page | 8 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha 18. We find that the Hon’ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd Vs DCIT (supra) while considering the validity of 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 Hon’ble Jurisdictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon’ble 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 Hon’ble 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 assessee’s appeal is dismissed. 19. Ground No. 2 in assessee’s appeal and the grounds of appeal raised by the revenue are interconnected, which relates to restricting the 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 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 assessee’s are more than 5%. However, in the present case, the assessee has merely shown Gross Profit Rate only Page | 9 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha 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 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 Hon’ble 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 Hon’ble 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.” 10. Since, the issue is squarely covered by the judgment of the Co-ordinate Bench in the case of Pankaj C. Chaudhary (supra) and there is no change in facts and law, and Ld. DR for the Revenue and Ld. Counsel for the assessee did not controvert the findings of Co-ordinate Bench (supra), therefore, respectfully following the judgment of the Co-ordinate Bench, we direct the Assessing Officer to sustain the addition at the rate of 6% of bogus purchases. Therefore with above remarks, we partly allow all Revenue’s appeals and all assessee’s appeal are dismissed. 11. Before parting, we would like to make it clear that Ld. Counsel has submitted the written submissions wherein he argued that return on investment ratio may be applied as he stated that the assessee’s main business is to finance, therefore its net Page | 10 225 & 226, 266 & 267/SRT/2019/AYs.2013-14 to 2014-15 Mukesh Babulal Parlecha profit ratio on purchases should not be used but return of investment ratio should be worked out on the basis of average capital employed by the assessee. Therefore, Ld. Counsel prays before us that entire addition may be deleted as ROI ratio is very high. However, we note that in case of the Gautam Jain Group case, Rajendra Jain Group and Bhanwarlal Jain group cases, this Co-ordinate Bench has been taking consistent stand to disallow the bogus purchases at the rate of 6% of the total bogus purchases; therefore, we reject the additional arguments made by the Ld. Counsel of the assessee. 12. In the result, appeals filed by the assessees (ITA Nos. 225 & 226/SRT/2019 for AY.2013-14 to 2014-15) are dismissed and appeals filed by the Revenues (ITA Nos. 266 & 267/SRT/2019 for AY.2013-14 to 2014-15) are partly allowed. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order is pronounced in the open court on 25/07/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 25/07/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat