Gujarat HC Upholds 6% Addition as Bogus Purchase Estimation Was Based on Concurrent Findings

Dilkhush Annraj Babel Vs ITO (Gujarat High Court)

The Gujarat High Court dismissed a group of tax appeals filed by assessees engaged in the business of trading in diamonds, holding that no substantial question of law arose from the common order of the Income Tax Appellate Tribunal. The appeals challenged the reopening of assessments, rejection of books of account, estimation of profit on alleged bogus purchases, denial of cross-examination, applicability of Section 153C instead of Section 147, and the Tribunal’s confirmation of 6% addition on disputed purchases.

The assessments for the relevant years had been reopened under Section 147 on the basis of information received from the Director of Income Tax (Investigation), Mumbai, stating that the assessees were beneficiaries of bogus purchase bills provided by the Pravin Kumar Jain Group. The information originated from a search and seizure operation conducted on 1 October 2013, which allegedly revealed that the group operated various entities for providing accommodation entries through unsecured loans and bogus purchase and sale bills. After recording reasons for reopening, the Assessing Officer issued notices under Section 148 and, after considering the assessees’ replies, treated the purchases from entities managed by the group as bogus and disallowed the entire purchases.

Before the Commissioner of Income Tax (Appeals), the assessees challenged both the reopening and the additions on merits. They relied upon confirmations, ledger accounts, purchase bills, sale invoices and other documentary evidence, following which the Commissioner (Appeals) called for a remand report. The Commissioner (Appeals) upheld the validity of the reopening but observed that the Assessing Officer had not rebutted the documentary evidence produced by the assessees nor disputed the sales. Following earlier appellate decisions in similar matters, the Commissioner (Appeals) restricted the additions to 5% of the disputed purchases.

Both the assessees and the Revenue filed appeals before the Income Tax Appellate Tribunal. The assessees sought admission of additional grounds and additional evidence, contending, among other things, that they formed part of a syndicate providing accommodation entries. The Tribunal rejected these applications, holding that the additional grounds did not arise from the orders of the lower authorities, sought to introduce an entirely new case, and that the proposed additional evidence was irrelevant to the issues under consideration.

On the issue of reopening, the Tribunal relied on the jurisdictional High Court decision in Pass Industrial Engineers Pvt. Ltd., holding that reopening based on information received from the Investigation Wing regarding accommodation entries was valid. It also upheld the rejection of the books of account, observing that merely producing supporting documents and showing payments through account payee cheques was not conclusive where the genuineness of the transactions had been questioned.

While considering the additions, the Tribunal observed that the Commissioner (Appeals) had found that the Assessing Officer had not rebutted the material evidence furnished by the assessees, had not doubted the sales, and had not established that the purchases could be denied in quantitative terms. The Commissioner (Appeals) had relied upon earlier decisions, including Mayank Diamonds Pvt. Ltd., where the High Court had sustained a profit rate of 5%. However, after considering the overall facts and circumstances, the Tribunal held that disallowance of 6% of the disputed purchases would sufficiently meet the possibility of revenue leakage. Accordingly, it enhanced the addition from 5% to 6%, dismissing the assessees’ appeals and partly allowing the Revenue’s appeals.

The High Court noted that the Tribunal had followed its earlier decision in Navratan Gautam Singh Jain, and that the same issue had already been considered by the High Court in Tax Appeal Nos. 11 and 12 of 2023, where similar challenges had been rejected. The Court observed that there were concurrent findings of fact by the Commissioner (Appeals) and the Tribunal supporting estimation of the addition and that the Tribunal had assigned cogent reasons for enhancing the addition to 6%.

The assessees argued that their cases were distinguishable because the Tribunal had not considered their challenge regarding reopening of assessment, denial of cross-examination, and applicability of Section 153C instead of Section 147. They also pointed out that the Supreme Court had issued notice in Special Leave Petitions arising from the Navratan Gautam Singh Jain decision and requested that the present appeals be kept pending or admitted.

The High Court rejected these submissions. It held that no plea regarding Section 153C had been raised before the Commissioner (Appeals) or the Tribunal, and once reopening under Section 147 had been upheld, there was no material to show that any seized material belonging to the assessees had been found during the search. Therefore, the contention that proceedings ought to have been initiated under Section 153C was not tenable.

The Court further referred to its earlier decisions, including Principal Commissioner of Income Tax-1 v. Pankaj K. Choudhary and Principal Commissioner of Income Tax-1, Surat v. Surya Impex, where 6% estimated additions in similar accommodation entry cases involving the same group had been upheld. Emphasising consistency in such cases, the Court held that no interference was warranted with the Tribunal’s order, that no substantial question of law arose, and accordingly dismissed all the tax appeals.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

Heard learned advocate Mr.Shrey Lodha through video conference for learned advocate Mr.Pruthviraj Y. Gohil for the appellants.

1. Learned advocate Mr.Shrey Lodha for the appellants have tendered the draft amendment for substitution of substantial questions of law in paragraph No.14 of the Appeal Memo. The same is allowed in terms of the draft. To be carried out forthwith.

2. In the draft amendment, further grounds in paragraph No.13 are also sought to be amended. The same is also allowed.

3. In this group of Appeals, the appellants have challenged the order passed by the Tribunal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) raising the proposed questions of law. The facts relating to each of the Appeals are summarised in the chart below:

4. The proposed questions which are substituted by draft amendment are as under :

“(a) Whether in the facts and circumstances of the case and in law, reassessment of income relevant to AY 2008-09 in the case of Appellant u/ss. 147 read with 143(3) of the Income Tax Act, 1961 illegal, arbitrary, without jurisdiction, bad in law, and violative of rights guaranteed to the Appellant under Article 14, 19(1)(g), and 300A of the Constitution?

(b) Whether in the facts and circumstances of the case and in law, reassessment, if any, had to be framed u/s. 153C of the Income Tax Act, 1961?

(c) Whether under the facts and circumstances and in law, the Hon’ble Tribunal erred in confirming rejection of books of accounts and estimating profit of 6% on alleged purchases, though the transactions of purchases are genuine and supported by the stock register and the quantitative details and particularly there is no dispute about sales?

(d) Alternatively, whether under the facts and circumstances of the case and in law the Hon’ble Tribunal erred in confirming addition to the tune of 6% of the alleged purchases as against the comparable margin where books of accounts are rejected?

(e) Whether in the facts and circumstances of the case and in law, Section 153C of the Income Tax Act, 1961 supersedes Sections 147, 148, and 149 of the Income Tax Act, 1961?

(f) Whether in the facts and circumstances of the case and in law, the time limit prescribed in Section 153 of the Income Tax Act, 1961 vis-à-vis completion of assessment under Section 143 of the Income Tax Act, 1961 mandatory?

(g) Whether in the facts and circumstances of the case and in law, the Ld. Tribunal erred in not appreciating that owing to violation of principles of natural justice in the instant case, any addition to the total income of the Appellant is unsustainable in the eyes of law?

(h) Whether in the facts and circumstances of the case and in law, the Ld. Tribunal was justified in not appreciating that denial of opportunity to cross-examine the persons whose statements recorded u/s. 132(4) of the Act have been relied upon by Respondent despite a specific request thereto by the Appellant renders the assessment order dated 21.03.2016 unsustainable in the eyes of law for violation of principles of natural justice?”

5. The brief facts of the case are as under :

5.1. The appellants in all these Appeals are in business of trading in diamonds. For the relevant Assessment Years, the cases of the appellants-assessees were re-opened on the basis of the information received from DIT (Inv.), Mumbai that assessees are beneficiaries of bogus purchase bills provided by Pravin Kumar Jain Group. On Pravin Kumar Jain Group a search and seizure action was carried out by Investigation Wing on 01.10.2013 and during course of search, it was established that this group concern was managing various firms, companies, proprietorship firm with no real business and solely operating for the purpose of facilitation of fraudulent financial transaction providing accommodation entries in the form of unsecured loan to interested parties, issuing bogus sales and purchase bills and providing funds to concerns who do not want to import diamonds in their own hands. On the basis of such credible information, the Assessing Officer formed his opinion that income to the extent of purchases/sales shown from various concerns of Pravin Kumar Jain has estimated assessment. The Assessing Officer further noted that during the relevant period, the purchases made by the various appellants-assessees were bogus and after recording the modus-operandi and reasons for re-opening, notice under Section 148 of the Act was issued.

5.2. The Assessing Officer after providing the reasons recorded and considering the objections filed by the appellants-assessees, disposed of the same by speaking order. Thereafter, the Assessing Officer issued show-cause notice to the appellants and in the show-cause notice, the modus-operandi of Pravin Kumar Jain and his group concern was described stating that each of the appellants-assessees received accommodation entries to suppress the profit to that extent. The Assessing Officer also pointed out the names of various concerns from whom the appellants- assesees have shown such disputed/bogus transactions and show-cause notice as to why purchases made by the appellants-assesses should not be treated as bogus purchases was also issued.

5.3. The Assessing Officer after considering the reply filed by the appellants-assessees made addition of the entire purchases in the hands of the appellants treating the same as bogus purchases. The contention of each of the appellants-assessees was considered by the Assessing Officer and on the basis of the report of the Investigation Wing, it was held that during the search and seizure action, which was conclusive evidence in case of Pravin Kumar Jain and his Group that was engaged in the business of providing accommodation entries and considering the modus-operandi revealed during the course of search, the addition was made in the hands of the each of the assessees by dis-allowing the entire purchases shown from the entities managed by the Pravin Kumar Jain Group.

5.4. Being aggrieved, the appellants-assessees preferred the Appeal before the CIT(Appeals) challenging the validity of the reopening of assessment as well as the addition made on merit. Detailed written submissions were also filed before the CIT (Appeals). The CIT (Appeals) considering the confirmation and ledger accounts of the suppliers, purchase bills, correspondending sale invoices etc., called for the remand report from the Assessing Officer. After considering the remand report, the CIT (Appeals) relied upon the similar orders passed by its predecessors with regard to the validity of re-opening and came to the conclusion that quashing the reopening of assessment would mean to give undue benefit of mistake of individual officer which is neither fair nor equitable for the revenue. The CIT (Appeals) considering the addition on account of disputed bogus purchases shown from various entities managed by associates of Pravin Kumar Jain held that the Assessing Officer has not rebutted or discharged the material evidence furnished by the assessee nor doubted the sales and considering the documentary evidence produced on record by the assessee, the CIT (Appeals) followed its earlier order in case of Gangani Impex for Assessment Year 2013-14 and relying upon various other decisions of the Tribunal of the similarly situated appellents-assessees in whose case the additions were made due to the search operation in case of Pravin Kumar Jain Group restricted the addition to the extent of 5%.

5.5. Being aggrieved by the order of the CIT (Appeals), both the appellants-assessees and revenue preferred the Cross-Appeals before the Tribunal. The assessees were aggrieved by the addition of 5% of the disputed/bogus purchases whereas, the Revenue has filed the Cross-Appeals restricting such addition to 5%.

5.6. It was canvassed before the Tribunal that the case of the assessees are similar to that of the case of the Jitendra Kumar Jain where a survey was conducted under Section 133A of the Act on 31.03.2008. The Tribunal, however, considering the grounds mentioned in the Application for additional grounds of Appeal as well as producing the additional evidence by the appellants-assesses came to the conclusion that no specific submission was made by either of the parties for admission or non-admission of the additional grounds of Appeal. The Tribunal in rejecting such additional grounds as well as the Application for additional grounds and additional evidence in case of Navratan Jain in ITA No.105/SRT/ 2019 for Assessment Year 2008-09 which was treated as a lead case held as under and the decision arrived at by the Tribunal is followed in the cases of the appellants-assessees:

“12. We have considered the rival submission of both the parties and have gone through the order of authorities below. We find that the assessee has also filed application for additional ground of appeal. First, we are taking the additional ground of appeal raised by assessee. We find that no specific submission was made by either of the parties for admission or non-admission of additional ground of appeal. It is the settled law that additional ground of appeal may be admitted by the Appellate Authorities if no new facts are required to be brought on record and that the facts related to additional ground of appeal are emanating from the orders of the lower authorities. We find that the assessee has raised first additional ground of appeal that assessee’s statement was recorded on oath and material found during the survey under section 133A of the Act revealed that assessee was engaged in proving accommodation bills. We find that there is no such fact that in the assessment order, or in the order of First Appellate Authority. However, we find that Ld. AR of the assessee is trying to bring this fact on the basis of survey conducted at the premises of Jitendra Kumar Jain and the Assessing Officer of Jitendra Kumar Jain for AY 2007-08 and 2008-09 respectively. We find that this fact referred in case of Jitendra Kumar Jain are not emanating from the order of lower authorities in the present case. Moreover, the stand of assessee, throughout the proceeding before lower authorities are that assessee is a trader and the purchases shown by him are genuine. The assessee is nowhere pleaded that he is a part of syndicate who are engaged in providing accommodation entries. The assessee for the first time after more than ten years has raised this plea that assessee is a part of syndicate of operator who were earning commission by providing entries. At the time of hearing, we are specifically asked Ld. AR of the assessee to show if such plea was ever raised before lower authorities or any statement of facts filed before Ld. CIT(A) while hearing submission of admission of additional evidence. The Ld. AR of the assessee submits that these facts were nowhere pleaded; however, the assessee came to know about the facts only on when the assessee lays his hand on the assessment order of Jitendra Kumar Jain. In our considered view, the fact required for adjudication of additional ground of appeal are not emanating from the order of lower authorities, therefore the additional ground of appeal raised by assessee are not admitted.”

5.7. With regard to the admission of additional evidence in case of Navratan Jain, the Tribunal held as under :

“13. Now adverting to the admission of additional evidence, the assessee is seeking permission to file the assessment order of Jitendra Kumar Jain for assessment years 2007-08 and 2008-09 respectively and balance-sheet for assessment year 2007-08. We find that these documents have no relevance with the facts of the present case of the assessee for the year under consideration. For the year under consideration, the case of assessee was re-opened on the basis of information that assessee was one of the beneficiaries who have shown purchases from Pravin Kumar Jain Group. The assessee neither before the Assessing Officer nor before First Appellate Authority or in any correspondence ever claimed that he is a part of syndicate of bogus hawala trader and his income should be assessed as assessed in case of hawala trader. In our considered view, these documents have no relevancy with the grounds of appeal raised by assessee. Even otherwise, assessee in his application under Rule 29 of the Income Tax Appellate Rule, 1963 nowhere pleaded that assessee was not given sufficient opportunity by the Income Tax Authority to adduce such evidence by filing the additional evidence, the assessee wanted to set up a new case without bringing such fact on the record, which is not permissible under the law. The assessee by filing these documents are taken as diagnosis root, which in our considered view is not permissible. In the result, application for admission of additional evidence is rejected.”

5.8. While adjudicating on the main ground of the Appeal raised by the assessees as well as the Revenue, the Tribunal considered the evidence on record and observed as under :

“The Assessing Officer made re-opening by recording thereasons on the basis information received from Investigation Wing about the syndicate being operated by Pravin Kumar Jain and his group for providing accommodation entry. The Hon’ble jurisdictional High Court in the case of Pass Industrial Engineers Pvt. Ltd. vs. DCIT 77 taxman.com 185 (Guj) held that when the Assessing Officer received information from Investigation Wing, that hawala entry operator provided bogus entries to beneficiary and assessee was one of such beneficiary. The Assessing Officer was justified in re-opening assessment. Considering the decision of Hon’ble jurisdictional High Court in the case of Pass Industrial Engineering Pvt. Ltd. (supra), the ground Nos.1 & 2 raised by assessee are dismissed.”

5.9. With regard to the grounds of rejection of books of accounts, the Tribunal has held as under :

“15. Ground No.3 relates to rejection of books of account under section 145 of the Act as recorded above that no submission was made by either of the parties on this ground as well. During assessment the assessing officer held that the purchase shown by assessee in the books of account is bogus. Mere filing evidence in support of purchase and showing payments through account payee cheque cannot be a conclusive in case where genuine of transaction is doubted to the payments made by account payee cheques are not sacrosanct. On the basis of aforesaid observation, the Assessing Officer held that the purchases made by assessee from the said disputed parties and claim expenses in his profit and loss account are not genuine and rejected the books result of assessee. The Id CIT(A) upheld the action of assessing officer. In absence of any specific submission, we do not find any reason to deviate from the order of Ld. CIT(A). This ground of assessee’s appeal is dismissed.”

5.10. With regard to the grievance raised by both the appellants-assessees and revenue for restricting the addition to 5% of the purchases, the Tribunal enhanced the same to 6% by observing as under :

“16. Ground No.4 in assessee’s appeal and Ground No.1 raised by Revenue are inter-connected. The assessee has filed appeal against sustained of being 5%. Similarly, the Revenue has filed its appeal against sustaining the addition to the extent of 5% only. During assessment the Assessing Officer rejected books of account by taking view that mere filing evidence in support of purchase and showing payments through account payee cheque cannot be a conclusive in case where genuine of transaction is doubted to the payments made by account payee cheques are not sacrosanct. On the basis of aforesaid observation, the Assessing Officer held that the purchases made by assessee from the said disputed parties and claim expenses in his profit and loss account are not genuine and rejected the books result of assessee. The Assessing Officer disallowed the entire purchases shown from the seven entities allegedly managed by Pravin Kumar Jain. The Id CIT(A) upheld the addition of the disputed / bogus purchases to the extent of 5%.

17. The Ld. CIT(A) held that the Assessing Officer has not rebutted or discarded the material evidence furnished by assessee nor doubted the sales. Further, the Assessing Officer has not made any efforts to find out whether Pravin Kumar Jain is a proprietor / partner or director of the concern from whom the assessee made purchases. The assessee claimed that purchases in quantity are duly entered in the stock register and corresponding sales have been made. It is settled position that sale could not be made in absence of purchases. The Id CIT(A) concluded that the impugned purchases cannot be denied in the quantitative terms. The Ld. CIT(A) held that on identical issue in his earlier order in case of Gagnani Impex for A.Y. 2013-14 Appeal No.CAS-3/512/2015-16 dated 24.11.2016, Ld. CIT(A), he by relying various other decisions of Tribunal restricted the addition to the extent of 5%. The Ld. CIT(A) restricted the addition to the extent of 5% of such disputed / impugned purchases. We also find that the Id.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 Id 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.

18. We find that considering the aforesaid 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. 4 raised by the assessee is dismissed and that of ground of appeal raised by Revenue are partly allowed.”

5.11. The aforesaid observations were made in case of the Navratan Jain in ITA No.105/SRT/2019 by the Tribunal which were also decided by the common order passed by the Tribunal along with the cases of the appellants-assessees.

5.12. This Court by order dated 17.04.2023 in Tax Appeal Nos.11 and 12 of 2023 arising out of the ITA No.105 of 2019 in case of Navratan Gautam Singh Jain considered the above proposed questions of law in these Appeals while dismissing the Appeals as under :

“4. The facts are that the appellant is engaged in the business of trading in diamonds which is a proprietorship firm in the name of ‘Sai Krupa Trading Co.’ The appellant assessee filed his return of income in respect of Assessment Year 2008-2009 declaring Rs. 2,89,947/- to be the income on as 25.9.2008. It appears that the case of the appellant wasreopened on the ground that the appellant was one of the beneficiary of bogus purchase bills provided for by Pravin Kumar Jain group. Against the Pravin Kumar Jain group, a search and seizure action was carried on by the investigation wing on 1.10.2013, wherein it was found that the said group was managing various firms which had been operating only for the purpose of providing accommodation entry to the interested parties in form of unsecured loan and by issuing bogus sales/purchase bills.

4.1 While undertaking assessment of the return of income of the appellant, it was noted by the Assessing Officer that during the relevant period the appellant, had shown purchases from certain parties who belonged to the said Pravin Kumar Jain group and thus bogus transactions were entered into. The Assessing Officer noticed that the appellant received accommodation entry to the tune of Rs. 25.62 crores.

4.2 The appellant preferred appeal against the order of the Assessing Officer. The Commissioner of Income Tax (Appeals) passed order on 30.9.2019 partly allowing the contentions of both the sides. Thereafter, the appellant assessee filed the appeal before the Income Tax Appellate Tribunal, which passed order on 13.4.2022 holding that 6% of the disputed purchase would be sufficient to meet the revenue leakage. The said order is impugned in this proceedings.

5. Learned advocate for the appellant has submitted with reference to the above questions that the impugned order is bad in law as the learned Tribunal did not admit the additional grounds of appeal as well as did not admit the additional evidence submitted under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. Learned advocate for the appellant has further submitted that the Assessing Officer as well as the Commissioner of Income Tax (Appeal) did not consider the case of ShriJitendra Kumar Jain, whose income was estimated at 0.50% of transaction value.

5.1 The Tribunal has observed that so far as the additional grounds of appeal are concerned, the same are not emanating from the order either Assessing Officer or from the Commissioner of Income Tax (Appeal), hence, the same were rejected. So far as the admission of additional evidence is concerned, the learned Tribunal has observed that the said documents have no relevance with the facts of the case. On perusal of the decision rendered by the Assessing Officer, it is found that the Assessing Officer received information from DIT (Inv.), Mumbai that the appellant is one of the beneficiaries of bogus purchase bills provided by one Pravin Kumar Jain Group. Upon investigation, it was found that the assessee was one of the beneficiaries for providing accommodation entries in the form of bogus sales/purchase bills and thereby assessed theincome on account of bogus purchases at Rs.25,65,84,238/-.

5.2 Both the Assessee as well as the Revenue preferred respective appeals before the Income Tax Appellate Tribunal challenging the order of CIT(Appeals)-1.

The Tribunal partly allowed the appeal of the Revenue and the appeal of the assessee came be to dismissed. The Tribunal after taking into consideration all the materials available on record and after considering the overall facts and circumstances of the case directed the disallowance at 6% of the impugned purchases/disputed purchases and also observed that this would meet the possibility of Revenue leakage.

6. On considering the totality of facts, there is a concurrent finding of fact that the assessee was involved in providing accommodation entries of bogus sale and purchases. The observations and findings of the Tribunal do not require to be interfered with and the proposed substantial questions of law are meritless.

7. No interference is called for. It cannot be said that any question of law, much less any substantial question of law proposed as above arise. No other substantial question of law arises. The appeal is meritless and the same is dismissed.”

6.1. Learned advocate Mr.Shrey Lodha for the appellants tried to distinguish the facts of the case of the appellants-assessees from that of the Navratan Jain by making submissions that the CIT (Appeals) and the Tribunal ought to have considered the aspect of challenge to the reopening of the assessment as well as not providing the opportunity of hearing to cross-examine which goes to the root of the cases of validity of the assessment and therefore, these Tax Appeals of the appellants-assessees stand on a different footing in view of the submissions made by the learned counsel for the appellants-assessees as the same were not considered by the Tribunal in case of Navratan Jain and this Court while dismissing the Appeal filed by the said assessee had no occasion to deal with such submissions and therefore, it was submitted that the facts of the cases of the appellants-assessees are therefore distinguishable from the facts of the case relied upon by the Tribunal in case of the Navratan Jain and therefore, these Appeals are required to be treated on a different footing than that of the aforesaid case.

6.2. It was submitted by learned advocate Mr.Shrey Lodha for the appellants-assesses that the Hon’ble Apex Court has issued notice in Special Leave Petition (Civil) Diary No(s).42860 of 2023 and 42862 of 2023 filed by Navratan Gautam Singh Jain arising out of the Tax Appeal Nos.11 and 12 of 2023. It was therefore submitted that as the Hon’ble Supreme Court has already issued the notice, these Appeals are required to be kept pending at the admission stage or it may be admitted on the proposed questions of law.

6.3. It was further submitted that these are the cases of the appellants-assessees that the Assessing Officer ought to have invoked the provisions of Section 153C of the Act instead of reopening the assessement under Section 147 of the Act as the Assessing Officer has relied upon the material seized during the course of search for making addition in the hands of the appellants-assessees.

7. Having heard the learned advocate for the appellants-assessees, it is not in dispute that the Tribunal has followed its decision in case of Navratan Gautam Singh Jain in ITA No.105/SRT/2019 which has been considered by this Court while dismissing the Tax Appeals being Tax Appeal Nos.11 and 12 of 2023 as stated herein above. Therefore, in the facts of the cases when both the CIT (Appeals) and the Tribunal have not given any independent finding while exercising the jurisdiction under Section 260A of the Act which is akin to Section 100 of the Code of Civil Procedure, 1908, in order to maintain the consistency and in absence of any finding arrived at by the Tribunal or the CIT (Appeals) in the order pertaining to the grounds raised by the assessees before us with regard to the proposed questions, as both the CIT (Appeals) and the Tribunal has given cogent reasons for making addition on estimate basis at 5% by the CIT (Appeals) which was increased to 6% by the Tribunal and such estimated addition is confirmed by this Court arrived at by the fact finding authority being CIT (Appeal) and Tribunal, in such circumstances, we are in agreement with the decision rendered in Tax Appeal Nos.11 and 12 of 2023 of this Court.

8. It is also pertinent to note that in similar group of cases in case of Principal Commissioner of Income Tax 1 Versus Pankaj K. Choudhary in Tax Appeal No.617 of 2022 it was held as under :

“6. The view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court.

6.1 The another weighing aspect is that the Tax Appeal No. 674 of 2022 in Principal Commissioner of Income Tax 1, Surat vs. M/s. Surya Impex which came to be decided by the co-ordinate Bench on 16.1.2023 dealt with the very issue of accommodation entries provided by Bhanwarlal Jain Group. The group involved in the said case is the same group who is saddled with allegations of providing accommodation entry to the assesse. In M/s. Surya Impex (supra) the court held in favour of the assessee. The questions of law involved in the said case were of the same nature and were in the context of similar facts involving the same group.

7. For all the above reasons, substantial questions of law proposed by the appellant in this appeal stands already answered. No question of law much less any substantial questions of law arise in the facts of the present case. No other substantial question of law arises. The appeal is meritless. It is summarily dismissed.”

9. With regard to the contention of learned advocate for the appellants-assessees of invoking Section 153C of the Act instead of taking recourse to reopening under Section 147 of the Act is concerned, both the CIT (Appeals) and the Tribunal have not taken into consideration and no such plea was raised before the CIT (Appeals) and the Tribunal and once the reopening is held to be valid, there is no material on record to show that the Assessing Officer has found any seized material pertaining to or belonging to the assessees during the course of search and therefore, we are of the opinion that the reopening under Section 147 of the Act as held by both the CIT (Appeals) and the Tribunal to be valid and the contention raised by the appellants-assessees at this stage is not tenable.

10. This Court has confirmed the addition of 6% of the purchases on estimate basis arrived at by the Tribunal and the Tax Appeals preferred by the Revenue are also dismissed by this Court in number of similarly situated assessees. Therefore, in order to maintain the consistency of addition of 6% in cases of the assessees who have been found taking accommodation entries during the course of search in case of Pravinkumar Jain Group/Bhavarlal Jain Group, no interference is required to be made in the impugned order. Hence, we are of the opinion that no question of law, much less any substantial question of law arises from the impugned order of the Tribunal and the Appeals are accordingly dismissed.