Aashna Diamond Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that addition towards bogus purchases unwarranted as GP rate on sale of alleged bogus purchases is more than the GP rate of other purchases. Accordingly, appeal allowed the addition deleted.
Facts- The assessee is a trader, importer and exporter of diamonds. The Revenue carried out search and seizure operations in the hands of Shri Rajendra Jain/Sanjay Choudhary/Dharmi Chand Jain and his group of companies on 03-102013. It was noticed that the above said group were providing only accommodation entries, inter alia, in the form of bogus sales bills without actually supplying the goods. In the statement recorded from Shri Rajendra Jain and certain other employees, they admitted that they were providing accommodation bills.
Based on the information forwarded by investigation wing, AO reopened the assessment by considering the purchases as bogus in nature. Thereafter, AO disallowed the entire purchases. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- The report given by the Investigation Wing is a generalized report. Hence, it is the duty of the AO to conduct independent enquiry to disprove the claim of the assessee that the purchases were genuine. The onus on the AO further increases, when the supplier confirms the transactions. However, the AO did not conduct any such independent enquiry. He has simply placed reliance on the investigation report given by the Investigation Department.
