Trustar Diamond Vs ACIT (ITAT Mumbai)
The case of Trustar Diamond involves cross-appeals between the Assessee and the Revenue concerning alleged bogus purchases during Assessment Year 2012-13.
The dispute revolves around the addition of 12.5% of alleged bogus purchases totaling Rs. 6,62,48,443/- made by the Assessee from several entities, including Navkar Diamonds, Milan Co., Mukti Exports, and others. The Assessing Officer (AO) initially added the entire amount as income, which was contested by the Assessee before the Commissioner of Income Tax (Appeals) [CIT(A)].
The CIT(A) partially allowed the Assessee’s appeal, restricting the addition to Rs. 82,81,055/- (12.5% of the total amount). The Assessee argued for consistency in treatment, citing previous years where additions were restricted to 3% of alleged bogus purchases. The ITAT Mumbai examined these contentions and upheld the principle of consistency, directing the AO to restrict the addition to 3%, following precedents from earlier assessments.
The Tribunal considered the nature of the diamond industry, its profit margins, and the specifics of the modus operandi unearthed by the Investigation Wing in Mumbai. It emphasized that while payments were made through banking channels, the authenticity of purchases was under scrutiny due to lack of supporting documentation and the involvement of entities linked to accommodation entries.
