There were two Appeals filed. One by filed by the Assessee and another filed by the Department.

The Assessee has filed an appeal against the CIT(A) Order u/s 250 of the Act dated 24th February 2023 who has restricted the addition to 12.50% from the addition of 100% of alleged bogus purchases made in the Assessment Order dated 15th December 2019 passed u/s 143(3) r.w.s.147 of the Act by the ACIT-19(3), Mumbai.

The Department has also filed appeal against the CIT(A) Order for the same.

We have gone through the order of AO, order of the Ld.CIT (A) and submissions of the assessee along with grounds of appeal raised by both the sides. It is observed that books of the accounts of the assessee were not disturbed by the AO applying sec. 145 of the act. That means the figure of sales and closing stock were duly accepted by the revenue. The only challenge is the authenticity of amount of purchases debited to the profit and loss account. We haven’t found any remarks of the AO on quantity and value of closing stock items. As stated above, assessee is involved in the trading of diamond and doing the exports also of the same. 8. In view of above one thing is certain that assessee made sales in domestic and export market also and without purchase no sales can be made so the only question for our consideration is that how much saving assessee has made while dealing with the entities controlled and managed by the Bhanwarlal Jain Group. We have gone through the submissions of the assessee itself before the Ld.CIT(A) vide page no.6 of the Ld.CIT(A) order, para -5 where assessee confirmed that it’s a regular pattern of making bogus purchases since A.Y. 2010-11, 2011-12 and 2014-15 wherein additions on bogus purchase were restricted to 3% of the bogus purchase made. A peculiar point to be noted in this matter is that, a subsequent A.Y. i.e A.Y. 2014-15 Revenue itself in the assessment proceedings disallowed the bogus purchase to the extent of 3% only.

In view of the above facts on record and following the principle of consistency we set aside the order of Ld.CIT (A) and directed the AO to made addition restricting upto 3% only, following the assessment orders of A.Y. 2010-11, 2011-12 and subsequent A.Y. 2014-15. In view of this ground no. 2 raised by the assessee is allowed and rest of the grounds became academic and no specific adjudication is required.
Appeal filed by the revenue is dismissed in view of our finding in assessee’s appeal (supra).

In the Result appeal filed by the assessee is partly allowed and appeal of revenue is dismissed.