Income Tax Appellate Tribunal - Mumbai
Acit 19(2), Mumbai vs L.S. Diamonds (India), Mumbai on 8 September, 2017
ITA No.2453 & 2454/M/2017 CO. NO.219 & 220/M/2017 L.S.Diamonds (India) Assessment Years-2007-08 & 2009-10 आयकर अपीलीय अिधकरण "बी" ायपीठ मुं बई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI ी महावीर िसंह, ाियक सद एवं ी मनोज कुमार अ वाल, लेखा सद के सम ।
BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./I.T.A. No.2453 & 2454/Mum/2017 & CO. No. 219 & 220/M/2017 (िनधा रण वष / Assessment Years: 2007-08 & 2009-10) L.S. Diamonds (India) Assistant Commissioner Of Income 4, Dharam Palace Tax 19(2) बनाम/ R.No.207 Huges Road Gamdevi Vs. Matru Mandir Mumbai - 400 007 Mumbai - 400 007 थायी ले खा सं . /जीआइआर सं ./PAN/GIR No. AABFL-0358-D (अ पीलाथ! /Appellant) : ("#थ! / Respondent) Assessee by : Vipul J. Shah, Ld.AR Revenue by : Suman Kumar, Ld. DR सुनवाई की तारीख / : 06/09/2017 Date of Hearing घोषणा की तारीख / : 08/09/2017 Date of Pronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. The captioned appeals by Revenue for Assessment Year [AY] 2007-08 & 2009-10 assails the common order of Ld. Commissioner of 2 ITA No.2453 & 2454/M/2017 CO. NO.219 & 220/M/2017 L.S.Diamonds (India) Assessment Years-2007-08 & 2009-10 Income Tax (Appeals)-30 [CIT(A)], Mumbai dated 19/01/2017 qua relief provided to assessee against certain bogus purchases. The assessee, in the cross-objections, assailed the additions sustained by Ld. CIT(A). First we take up revenue's appeal ITA No. 2453/Mum/2017 and assessee's cross objections CO. 219/M/2017 for AY 2007-08. 2.1 Facts leading to the same are that the assessee being resident corporate assessee engaged in the business of diamonds & jewellery, was subjected to an assessment u/s 143(3) read with Section 147 for impugned AY on 27/03/2015 at Rs.2,73,59,910/- after addition of certain bogus purchases for Rs.1,76,22,050/-. The original return was filed on 24/10/2007 at Rs.97,37,864/- which was assessed at same figures u/s 143(3) on 25/06/2009. The solitary addition of bogus purchases of Rs.1,76,22,050/- is the subject matter of this appeal. Notice u/s 148 dated 27/03/2014 was issued to the assessee which was followed by statutory notices u/s 143(2) & 142(1).
2.2 Pursuant to receipt of certain information from DGIT (Inv.), it was noted that the assessee made impugned purchases from three group concerns of one Bhawarlal Jain as per the following details:-
No. Name Amount (Rs.)
1. Little Diam 85,80,040/-
2. Daksh Diamonds 7,00,500/-
3. A2Jewels 83,41,510/-
Total 1,76,22,050/-
The search / survey actions on the said group revealed that the said group consisting of numerous business entities was engaged in providing accommodation purchases bills & accommodation loans & advances. Consequently, the assessee was called upon to substantiate 3 ITA No.2453 & 2454/M/2017 CO. NO.219 & 220/M/2017 L.S.Diamonds (India) Assessment Years-2007-08 & 2009-10 the purchase transactions with documentary evidences and by producing the respective parties for confirmation of transactions. In reply, the assessee contended that the purchases were genuine since the payments were made though banking channels. However, not convinced, Ld. AO rejected the various contentions of the assessee and concluded that the assessee failed to discharge the primary onus casted on him in this regard. Finally, the books were rejected and entire purchases were disallowed and added to the income of the assessee.
3. Aggrieved, the assessee contested the same on legal grounds as well as on merits with partial success before Ld. CIT(A) vide impugned order dated 19/01/2017 and reiterated its contentions and placed reliance on several judicial pronouncements on the matter. The Ld.CIT(A) after appreciating the same noted that the assessee made similar purchases in AY 2008-09 & 2010-11 where Ld. AO himself estimated the additions against the same @3% where one to one correlation was provided between alleged bogus purchases & sales and @5% where the correlation was not provided by the assessee. Relying on the same, Ld. CIT(A) restricted the impugned additions to the extent of 3% on Rs.1,29,80,200/- and 5% on balance Rs.46,41,830/-. Aggrieved the revenue is in further appeal before us.
4. The Ld. Departmental Representative [DR] placed reliance on the stand of Ld. AO and contended that the assessee could not produce any delivery challans etc. and also could not produce any of the party for confirmation. Further, the search / survey action on the concerned group clearly revealed that the transactions were merely accommodation 4 ITA No.2453 & 2454/M/2017 CO. NO.219 & 220/M/2017 L.S.Diamonds (India) Assessment Years-2007-08 & 2009-10 entries and therefore, Ld. CIT(A) erred in granting substantial relief to the assessee.
5. Per contra, Ld. AR contended that no additions were warranted since the assessee was in possession of purchase invoices and the payments were through banking channels. Our attention is drawn to high GP rate reflected by the assessee.
6. Heard and perused relevant material on record. We are of the considered opinion that there could be no sale without purchase of material keeping in view the nature of assessee's business. The turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee, to some extent, produced details of purchase and corresponding sales before Ld. CIT(A). At the same time, the assessee could not produce any of the suppliers before lower authorities and the search / survey action on the group casted a serious doubt on assessee's claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which Ld.CIT(A) has rightly done. We also note that the said estimation is in tune with estimated addition made by Ld. AO in AY 2008-09 & 2010-11, which assessee has accepted. Therefore, since estimated addition has already been accepted by the revenue as well as assessee in AY 2008-09 & 2010-11, we see no reason to interfere with the stand of Ld. CIT(A).
5ITA No.2453 & 2454/M/2017 CO. NO.219 & 220/M/2017 L.S.Diamonds (India) Assessment Years-2007-08 & 2009-10 Resultantly, the revenue's appeal as well assessee's cross objection stands dismissed.
7. The assessee, in similar circumstances, suffered addition of Rs.1,57,02,777/- in AY 2009-10 which has been restricted by Ld. CIT(A) to 3%. The order of Ld. CIT(A) is common order for AY 2007-08 & 2009-
10. Therefore, there being no change in facts or circumstances, taking the same stand, we dismiss revenue's appeal ITA No. 2454/M/2017 as well as assessee's cross objections CO. 220/M/2017.
8. Resultantly, the revenue's appeals as well as assessee's cross objections stands dismissed.
Order pronounced in the open court on 08th September, 2017.
Sd/- Sd/-
(Mahavir Singh) (Manoj Kumar Aggarwal)
ाियक सद / Judicial Member लेखा सद / Accountant Member मुंबई Mumbai; िदनां क Dated : 08. 09.2017 Sr.PS:- Thirumalesh आदे श की ितिलिप अ े िषत/Copy of the Order forwarded to :
1. अपीलाथ! / The Appellant
2. "#थ! / The Respondent
3. आयकर आयु*(अपील) / The CIT(A)
4. आयकर आयु* / CIT - concerned
5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai
6. गाड/ फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पं जीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai