S R Jewels vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, S R Jewels, had filed its return of income declaring a total income of Rs. 60,050/-. During a search and seizure operation under section 132 of the Income Tax Act, it was found that the assessee was one of the beneficiaries of accommodation entries provided by Bhanwarlal Jain Group concern M/s. Impex Gems. Based on this information, the case of the assessee was reopened under section 147 of the Act. The Assessing Officer (AO) found that the assessee had obtained an accommodation loan entry from M/s. Impex Gems amounting to Rs. 49,21,400/-, which was treated as bogus purchases. The assessee appealed this decision before the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi, who restricted the addition to 3% of the alleged bogus purchases. The Revenue then appealed before the Tribunal, and the matter was restored to the file of the AO for de novo adjudication. After further proceedings, the AO held the purchases amounting to Rs. 49,21,400/- made from M/s. Impex Gems as non-genuine purchases and brought the amount to tax in the hands of the assessee. The assessee again appealed before the Tribunal.…

Legal Issues

• 1. Whether the addition of Rs. 49,21,400/- as bogus purchases should be deleted.
• 2. Whether the addition in respect of Rs. 49,21,400/- should be restricted to 3% of the alleged bogus purchases.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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