Ito 25 3 4 Mumbai v. Shah Diam Mumbai

ITA 4013/MUM/2017 | 2007-2008
Pronouncement Date: 07-12-2017 | Result: Dismissed

Appeal Details

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RSA Number 401319914 RSA 2017
Assessee PAN xxxxxxxxxxx
Bench xxxxxxxxxxx
Appeal Number xxxxxxxxxxx
Duration Of Justice 6 month(s) 4 day(s)
Appellant xxxxxxxxxxx
Respondent xxxxxxxxxxx
Appeal Type Income Tax Appeal
Pronouncement Date 07-12-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 07-12-2017
Last Hearing Date 05-10-2017
First Hearing Date 05-10-2017
Assessment Year 2007-2008
Appeal Filed On 02-06-2017
Judgment Text
The Income Tax Appellate Tribunal Smc Bench Mumbai Before Shri B R Baskaran Am I T A No 4013 Mum 2017 Assessment Year 20 07 08 Ito 25 3 4 Room No 605 C 10 6 Th Floor Pratyakshakar Bhavan Bandra Kurla Complex Bandra East Mumbai 400 051 V S M S Shah Diam 701 Kalpasutra 7 Th Floor Sarojini Road Vile Parele W Mumbai 400 056 Pan Aaifs 7574 B Appellant Respondent C O No 149 Mum 2017 Assessment Year 2007 08 M S Shah Diam 701 Kalpasutra 7 Th Floor Sarojini Road Vile Parele W Mumbai 400 056 Pan Aaifs 7574 B V S Ito 25 3 4 Room No 605 C 10 6 Th Floor Pratyakshakar Bhavan Bandra Kurla Complex Bandra East Mumbai 400 051 Appellant Respondent Assessee By Shri K A Vidyalingan Department By Ms N Hemalatha Date Of Hearing 7 1 2 201 7 Date Of Pronouncement 7 12 201 7 O R D E R The Appeal Of The Revenue And The Cross Objection Of The Assessee Are Directed Against The Order Dated 02 03 2017 Passed By Ld Cit A 37 Mumbai And They Relate To The Assessment Y Ear 2007 08 The Revenue Is Aggrieved By The Decision Of Ld Cit A In Partially Confirming The Addition Relating To Bogus Purchases 2 In The Cross Objection The Assessee Is Aggrieved By The Decision Of Ld Cit A In Confirming The Validity Of Reas Sessment Proceeding And Also In Partially Confirming The Addition M S Shah Diam 2 3 The Assessee Is A Trader And Exporter Of Diamonds The Ao Received Information From Ddit Inv To The Effect That A Person Named M S Bhanwarlal Jain And His Group Of Companies Are Enga Ged In Providing Only Accommodation Entries Without Actually Supplying Materials It Was Noticed That The Assessee Has Purchased Diamonds To The Tune Of Rs 34 75 143 From A Concern Named M S Daksh Diamonds A Concern Belonging To M S Bhanwarlal Jain Gro Up Before The Ddit The Bhanwarlal Jain Appears To Have Conceded That He And His Group Was Providing Only Accommodation Entries Accordingly The Ao Re Opened The Assessment And Disallowed The Entire Purchase Amount Of Rs 34 75 143 4 Before Ld Cit A The Assessee Proved That The Diamonds Purchased From M S Daksh Diamonds Have Been Exported Hence The Ld Cit A Took The View That The Profit Element Embedded In The Transaction Alone Can Be Added The Ld Cit A Noticed That A Task Force Group Of Dia Mond Industry After Considering Benign Assessment Procedure Recommended Presumptive Tax Of 2 For Trading Activity And 3 For Manufacturing Activity The Ld Cit A Also Took Note Of The Fact That The Transfer Pricing Wing Determines The Profit Margin Of This Sector At Around 1 75 To 3 Accordingly The Ld Cit A Directed The Ao To Restrict The Addition To 3 Of The Value Of Purchases Made From M S Daksh Diamonds The Revenue Is Aggrieved By The Said Order 5 I Heard The Parties And Perused Th E Record There Is No Dispute With Regard To The Fact That The Assessee Has Correlated The Purchase Quantity With A Particular Sales Export Meaning Thereby The Goods Have Reached The Hands Of The Assessee When The Goods Have Reached It May Not Be Pro Per To Disallow Entire Amount Of Purchases Since The Assessee Could Not Have Sold The Goods Without Purchasing The Same The Ld Cit A Has Taken The Support Of The Decision Rendered By Honble Gujarat High Court In The Case Of Simit P Sheth 38 Taxmann Co M 385 And Also The Decision Rendered In The Case Of Sanjay Olicake Industries 316 Itr 274 To Come To The Conclusion That The Profit Element Embedded In The Purchases Could Be Assessed Since The M S Shah Diam 3 Purchases Have Been Made From A Group Which Had Taken A D Ifferent Stand The Ld Cit A Took The View That There Is Possibility Of Inflation Of Purchase Price From Which The Assessee Could Have Made Profit The Said Profit Was Estimated At 3 On The Basis Of Benign Assessment Procedure Guidelines And The Transf Er Pricing Adjustments Generally Made 6 From The Foregoing Discussions I Am Of The View That That The Decision So Reached By Ld Cit A Cannot Be Found Fault With In The Facts And Circumstances Of The Case It Is Also Pertinent To Note That The A Ssessing Officer Has Proceeded To Assess The Amount Of Rs 34 75 143 On The Impression That The Assessee Has Received The Above Said Amount From M S Daksh Diamonds Before Ld Cit A The Assessee Has Shown That It Has Purchased Diamonds From M S Daksh Di Amonds And Has Also Exported The Same This Fact Shows That The Ao After Reopening Of Assessment Has Misguided Himself During Assessment Proceedings The Ld Cit A Has Correctly Appreciated The Facts And Has Rendered His Decision Accordingly I Uphold The Order Passed By Ld Cit A On This Issue 7 The Assessee Has Challenged The Validity Of Reopening Of Assessment I Notice That The Ao Has Reopened The Assessment On The Basis Of Information Received Which Led Him To Believe That There Was Escapem Ent Of Income Hence I Am Of The View That The Reopening Was Valid In Law The Order Ground Raised By The Assessee Relates To The Addition Sustained By Ld Cit A Which We Have Confirmed In The Earlier Paragraphs 8 In The Result The Appeal Of The Revenue And The Cross Objection Of The Assessee Are Dismissed Order Has Be En Pronounced In The Court On 7 1 2 201 7 Sd B R Baskaran Accountant Member Mumbai Dated 7 1 2 20 1 7 M S Shah Diam 4 Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Mumbai 6 Guard File By Order True Copy Asstt Registrar Senior Ps Ps Itat Mumbai