आदेश / ORDER

PER MAKARAND VASANT MAHADEOKAR, AM:

These matters consist of an appeal filed by the Revenue and Cross Objection filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-47, Mumbai [hereinafter referred to as "CIT(A)"]dated 05.03.2025 under section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"]for Assessment Year 2012-13, arising out of the assessment order passed by the Assessing Officer under section 143(3) read with section 147 of the Act dated 15.12.2019. Since both the appeal and the Cross Objection arise out of the same appellate order and involve common issues, they are being disposed of by this consolidated order.

Facts of the Case

2. The assessee is a firm engaged in the business of diamonds. It filed its original return of income on 26.09.2012 declaring total income at Rs. 75,62,080/-, which was processed under section 143(1) of the Act. Subsequently, information was received from the Directorate of Investigation, Mumbai, that a search and survey action carried out on 03.10.2013 in the case of Shri Bhanwarlal Jain group had revealed that the said group was engaged in providing accommodation entries through various benami concerns in the nature of bogus purchases and unsecured loans. Based on such information, the Assessing Officer formed a belief that income chargeable to tax had escaped assessment. Accordingly, after obtaining approval from the competent authority, notice under section 148 dated 15.03.2019 was issued. In response, the assessee filed return of income on 03.05.2019 declaring income at Rs. 75,62,080/-. Thereafter, notices under sections 143(2) and 142(1) along with questionnaire were issued and complied with.

3. During the course of assessment proceedings, the Assessing Officer observed that the assessee had obtained accommodation entries in the form of bogus purchases aggregating to Rs. 1,39,63,663/- from three parties, namely Daksh Diamonds, Impex Gems and Jewel Diam. The Assessing Officer relied upon the findings of the Investigation Wing, statements recorded under section 132(4), and the modus operandi of the Bhanwarlal Jain group to conclude that the said parties were merely entry providers and not genuine suppliers. The assessee submitted that it was engaged in the business of import, processing and export of diamonds, and that all purchases were duly recorded in the books of account, which were audited. It was contended that the purchases were supported by invoices, stock registers, quantitative details and banking transactions. The assessee also submitted that the goods purchased were duly consumed in manufacturing and corresponding sales/export were effected, thereby establishing the genuineness of transactions. The assessee further contended that the statements of third parties relied upon by the Assessing Officer were general in nature and not specific to the assessee, and no opportunity of cross-examination was provided. It was also submitted that confirmations, affidavits, bank statements and income tax returns of the suppliers were furnished, thereby discharging the primary onus.

4. The Assessing Officer, however, rejected the submissions of the assessee holding that mere documentary evidences such as invoices and bank payments do not establish genuineness when surrounding circumstances indicate otherwise. It was observed that the supplier concerns were part of a syndicate engaged in providing bogus bills and had no real business activity, no stock, and were controlled by Shri Bhanwarlal Jain. The Assessing Officer further held that the assessee failed to prove the genuineness of purchases with credible evidence and that the preponderance of probability was against the assessee. Accordingly, relying on the decision of the Hon’ble Supreme Court in the case of N.K. Proteins Ltd., the Assessing Officer treated the entire purchases of Rs. 1,39,63,663/- as bogus and made addition under section 69C. The total income was asses