ACIT Vs Romil Diam (ITAT Mumbai)
The Revenue filed appeals for Assessment Years 2010–11 and 2011–12 challenging the orders of the CIT(A) restricting additions on alleged bogus purchases to 8% of the total purchases, as against the Assessing Officer’s (AO) addition of 100%. The AO had treated purchases of ₹2,14,04,724 from entities such as Aadi Kalash Enterprises, Rare Demands, and Millenium Stars as entirely bogus. These entities were identified by the Investigation Wing as part of a network of accommodation entry providers associated with the Rajendra Jain Group. Investigations revealed that these concerns issued invoices without supplying goods, were controlled by Rajendra Jain, and maintained employees with no knowledge of the diamond trade. During search proceedings, Rajendra Jain admitted to providing bogus entries through multiple concerns.
The AO held that the assessee, a trader of cut and polished diamonds, failed to discharge the onus of proving the genuineness of these purchases. He considered that payments through banking channels and invoices alone could not validate transactions when the suppliers themselves were proved to be non-genuine. The reopening of the assessment under section 147 was based on specific information establishing that the assessee had availed accommodation entries. Relying on the Supreme Court’s decision in N.K. Proteins Ltd., the AO concluded that the entire purchase amount should be disallowed.
