The assessee traded in diamonds. The assessment was reopened on the basis of information received from the Investigation Wing that the assessee was a beneficiary of accommodation entries provided by a group of companies of one Bhanwarlal Jain  wherein search under section 132 was conducted. The statement of Bhanwarlal Jain  had been recorded under section 132(4) wherein he had admitted that he and his family members managed various entities which provided accommodation entries and that the assessee was one of the beneficiaries of bogus purchases from three of their entities. The assessee filed copies of the audited accounts, the profit and loss account, the balance sheet, the contract note of purchase and sale of goods, debit and credit notes of alleged commission and the statement of commission received. The assessee requested to be furnished with a copy of the statement of BJ and his cross-examination. The Assessing Officer rejected the objections filed by the assessee. The Assessing Officer disallowed 25 per cent. of the purchases. The Commissioner (Appeals) restricted the disallowance to 12.5 per cent. The Tribunal found that the assessee had filed detailed evidence to prove that the purchases were genuine, that he was merely a commission agent and had provided complete details of purchases in the form of contract notes and sales of goods, ledger accounts of expenses, details of commission received, audited profit and loss account, that the Assessing Officer had made not a comment on the documentary evidence furnished by the assessee and did not dispute the sales of the assessee, and that the Assessing Officer had made the disallowance of 25 per cent. purchases without rejecting books of account. The Tribunal held that in similar cases, wherein the purchases were shown from the accommodation entry provider Banwarlal Jain  the disallowance had been restricted or enhanced to the extent of six per cent. of the disputed purchases. It accordingly reduced the disallowance to six per cent. High Court affirmed the order of the Tribunal (AY.2007-08)