THE INCOME TAX OFFICER, WARD-2(3)(8), SURAT V. VINODKUMAR S. BOTHRA, SURAT

ITA 455/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1669 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 20-07-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 02-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Bogus purchase; Search and seizure; Principle of natural justice; Accommodation entries; Reason to believe; Set aside
• Section: 147; 131; 143(3); 142(1); 133(6); 73; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ITA Nos. 424 to 426/SRT/2019 Assessment Years: (2013-14 to 2015-16) (Virtual Court Hearing) Vinodkumar Shantilal Bothra, 330, Blue Diamond, Hath Falia, Mahidharpura, Surat-395003. Vs. The ITO, Ward-2(3)(8), Surat. (Appellant) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AIWPB3673J ITA Nos. 454 to 456/SRT/2019 Assessment Years: (2013-14 to 2015-16) (Virtual Court Hearing) The ITO, Ward-2(3)(8), Surat. Vs. Vinodkumar Shantilal Bothra, 330, Blue Diamond, Hath Falia, Mahidharpura, Surat-395003. (Revenue)/(Appellant) (Assessee)/(Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AIWPB3673J Assessee by Shri Rasesh Shah, CA Respondent by Shri H. P. Meena, CIT(DR) Date of Hearing 21/07/2022 Date of Pronouncement 19/09/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: This is a bunch of six appeals filed by the Assessee and Revenue, pertaining to Assessment Years (AYs) 2013-14 to 2015-16, 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 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 2. Since, the issues involved in all the appeals and Cross objections are common and identical; therefore, these appeals have been clubbed and 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.424/SRT/2019, for AY.2013-14, have been taken into consideration for deciding the above appeals en masse. 3. The Grounds of appeal raised by the assessee in the lead case (in ITA No.424/SRT/2019) are as follows: “On the facts and circumstances of the case and the law on the subject: 1. The learned CIT(A) has grossly erred in ruling out the Appellant’s contentions of Gross illegality in the Assessment Order on the excuse of “undue advantage”, even after having reached the conclusion of the re-assessment order suffering from serious irregularities, being fatal to the proceedings. 2. The reassessment order is in gross violation of principles of natural justice and equity and is liable to be quashed as bad in law and illegal on the ground inter-alia that in spite of specifically and categorically requested for by the Appellant:- a) The learned AO has miserably failed to furnish the Appellant copies of the documents and evidences relied upon by him for making the additions in Assessment. b) The learned AO has also failed to exercise his power u/s 131 and /or 133(6) of the Act. c) The learned AO has also failed to permit the cross-examination of the person concerned. 3. The addition by the learned AO of 100% of impugned purchases and the confirmation of 5% of the same by learned CIT(A) are grossly unjustified and unwarranted on the grounds inter-alia that:- a) The Appellant has produced the evidences like confirmation of accounts, invoice copy, bank statements, quantity tally etc. to establish the genuineness of the transaction. b) The very same goods have been resold within short time establishing beyond doubt the fact of purchase as there can’t be any sale without purchases. c) Not a single evidence has been led by the Department to prove the impugned transactions to be bogus. d) Above all, the impugned Supplier Party has, in Remand proceedings, appeared in person before the learned A.O & has confirmed on oath all the transactions with the Appellant as genuine. Page | 3 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 4. The Appellant craves the leave to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to another.” 4. Brief facts qua the issue are that assessee filed his return of income for assessment year 2013-14 declaring total income at Rs.4,07,180/- on 22.09.2013. Notice under section 142(1) calling for various details was issued on 10.08.2015 and served upon the assessee. During the year under consideration, the assessee was engaged in the business of Import, export, trading in all kinds of diamonds in the name & style of his proprietary concern viz. Meet Jewel. During the course of assessment proceedings, it was noticed that the assessee has made transactions with the entities of Rajendra Jain Group. This office is in possession of information that a search and seizure action has been carried out by the Investigation Wing, Mumbai on the Rajendra Jain Group which was indulged in providing of accommodation entries in the form of unsecured loans, bogus purchases / sales to the interest parties. During the course of search action, it was revealed that the said group is exclusively engaged in the business of issuing non genuine purchase bills and also unsecured loan accommodation entries to various parties. It is thus established from the search and seizure action that the alleged concerns of Rajendra Jain Group are all paper companies / proprietorships and with no real business activities, operating solely with the purpose of facilitation of fraudulent financial transactions which includes providing accommodation entries in the form of unsecured loans to the interested parties, issuing of bogus sale / purchase bills to various parties etc. During the course of search and seizure action in the case of Shri Rajendra Jain Group of cases on 03.10.2013 by the DGIT(Inv). Mumbai, it was found that there are namesake dummy directors / partners / proprietors / brokers, etc. These concerns were being actually managed by Shri Rajendra Jain & others. These group concerns were believed to be concerns actively involved in providing non-genuine purchase bills and also unsecured loan accommodation entries to various interested parties. As a result of the search and seizure action, it was conclusively proved that these diamond concerns are only on paper base with no real business activities. Findings of the search action on Shri Rajendra Jain & Others reveals that Shri Rajendra Jain and Page | 4 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra associates manage, control and operate numerous concerns in the name of various persons who are shown as name-sake directors, partners and proprietors through which they provide accommodation entries of loans and advances, purchase and sale & unsecured loans to various parties / beneficiaries. The name-sake / dummy Directors / proprietors / Partner of all these concerns admitted on oath that they were merely employees of Rajendra Jain and others and were looking after miscellaneous office work like depositing cheques in banks, handling over parcels to clients, making data entry etc. All the concerns are shown to be engaged in import of diamonds. However, when these name-sake directors / Partners/ Proprietors were specifically asked to explain as to how they contacted the parties from whom the imports have been made in the respective concerns, they were unable to comment on the same. They all admitted of not having any personal contact with any of the importers either through phone or email. 5. The facts mentioned above prove that these employees have never made any import on their own and all the imports in the concerns in which they are shown as directors, partners and proprietors and are made at the direction of Rajendra Jain. Shri Rajendra Jain, in his statement recorded under sec. 132(4) of the IT. Act, 1961, has admitted that he manage and controls the business affairs of all the concerns in which the persons who were his employees are also shown as directors, partners and proprietors. List of group concerns operated and managed by Rajendra Jain was obtained from him during the course of search. It must be mentioned at the outset, that all these group concerns were shown to be in the business of import and export of diamonds. All of them have license which make them eligible for importing diamonds. Further, data collected from customs department had revealed that all the said group concerns have genuinely been importing diamonds for last many years. The imported diamonds were also getting cleared by the CHAs. It prima facie gives an impression that all the group benami concerns were indeed in the business of import of diamond and its subsequent exports (which is a miniscule amount) and local sale. However, many evidences were found during the course of search which proved that these Page | 5 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra concerns were not into any genuine business. Such findings are enumerated below: (i) No Stock of diamond found: During the course of search, all the registered offices, business premises, business and residential premises of various dummy directors, partners and proprietors including that of Rajendra Jain, were covered. At none of these premises, any stock of diamond trade, at a given point of time would at least have some stock of diamond available. However, the fact that none of the group concerns had any stock of diamonds as on 03.10.2013 i.e. the day when search commenced raises a suspicion with regard to genuineness of business activity of these group concerns. (ii) Books of accounts not maintained at the respective registered offices: The registered offices and residential premises of the said group concerns and the Rajendra Jain and others in Mumbai and Surat were covered during the search action. However, the team of the Income Tax Authorities did not find any books of account of the said group benami concerns at any of the premises. 6. During the course of search, evidences were found; persons were examined on oath which established that Rajendra Jain and others have been using group benami concerns to give accommodation entries in the nature of bogus purchase and bogus unsecured loans to various beneficiaries. Therefore, based on these facts, the Assessing Officer held that that the assessee had only obtained the bogus bills from the concerns of Shri Rajendra Jain; i.e. M/s. Kangan Jewels Pvt. Ltd. amounting to Rs.15,88,30,265/-, M/s. Maniprabha Impex Pvt. Ltd. amounting to Rs.24,44,81,461/- and M/s Dharam Impex amounting to Rs.4,99,430/- totalling to the tune of Rs.40,38,11,156/- without actually getting the material. Thus, the bill issued by the said group concern is nothing but accommodation entry. Hence, the accommodation entry received from bogus concerns of Shri Rajendra Jain group, totalling to the tune of Rs.40,38,11,156/- was treated by Assessing Officer as bogus purchases and added to the total income for the assessee. Page | 6 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 7. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has restricted the addition on account of bogus purchases to 5% observing as follows: “8.2.9 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, 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 and 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 dt 21.08.2018, Karamchandra Rubber Industries ITA No.6599/Del/2014 12.02.2018 M/s Vaman International Pvt. ITA 1040 & 1041/M/2017 dtd 27.09.2017, Fancy wear ITA No. 1596/M/2016 dtd. 20.09.2017, Suraj Jewells Co. ITA No. 1581/Kol/2016 dtd 05.05.2017). The AR also furnished copies of order of CIT(A) Valsad in the case of (1)Sahjanand Export CIT(A)/vis/236/2016- 17 dtd. 24.08.2017, (2)Rushabh International No. CIT(A)/vls/102/2016-17 dt.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. 8.3 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.40,38,11,156/- Rs.2,01,90,557/- 2014-15 Rs.7,10,69,545/- Rs.35,53,477/ 2015-16 Rs. 12,88,47,024/- Rs.64,42,351/- Hence, this ground for both the above years is partly allowed.” 8. Aggrieved by the order of the ld. CIT(A), the assessee as well as Revenue, both are in appeal before us. 9. The Assessing Officer made addition @ 100% of bogus purchases and on appeal the ld. CIT(A) restricted the addition to 5% of the bogus purchase, therefore the assessee is in appeal before us that 5% addition sustained by the ld. CIT(A) should also be deleted. On the other hand, the Revenue is in appeal before us that 100% addition sustained by the Assessing Officer must be upheld. Page | 7 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 10. Shri Rasesh Shah, Ld. Counsel for the assessee argued that assessee submitted bills, vouchers and all transactions were through banking channel, therefore, addition made by the Assessing Officer may be deleted. He further stated that even 5% of addition sustained by Ld. CIT(A) should be deleted, as the assessee is doing genuine business. 11. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 12. 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 in case of Rajendra Jain/Dharmchand Jain cases, the Co-ordinate Bench of Surat has sustained the addition at the rate of 6% of bogus purchases. Therefore, we note that these cross-appeals are squarely covered by the judgment of this Tribunal in the case of Pankaj K. Choudhary, in ITA No.1152/AHD/2017 for AY.2007-08 wherein the Tribunal 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 | 8 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 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: Page | 9 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 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 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 Page | 10 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 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 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 Page | 11 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra 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 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.” 13. Since the issue is squarely covered by the decision of the Co-ordinate Bench in the case of Pankaj K. Choudhary (supra) and there is no change in facts and law and Revenue is unable to produce any material to controvert the aforesaid findings of the Co-ordinate Bench (supra). We find no reason to interfere in the above said order of Co-ordinate Bench, therefore respectfully following the binding judgment of Co-ordinate Bench in the case of Pankaj K. Page | 12 ITA 424 to 426 & 454 to 456/SRT/2019/AY.2013-14 to 2015-16 Vinodkumar Shantilal Bothra Choudhary (supra), we dismiss the appeals of the assessees and we allow the appeals of the Revenue partly. 14. In the result, appeals filed by assessees (in ITA Nos.424 to 426/SRT/2019) are dismissed whereas the appeals filed by Revenues (in ITA Nos.454 to 456/SRT/2019) 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 19/09/2022 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: 19/09/2022 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