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Dy. Cit vs Narendra Kumar Lunawat on 29 June, 2004
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precious stones. It is clear that the assessee did not have any other source of income. Therefore, manipulation of GP rate is not required by the assessee in order to reduce the incidence of tax. The assessee will be entitled to 100 per cent deduction on the profits computed as per provisions of law and even on the addition made on account of excess stock. Therefore, we find no infirmity in the order of the Commissioner (Appeals). We decline to interfere with his order. 7. Ground No. 2 is regarding addition of Rs. 81,379 on account of bogus purchases made by the assessing officer 8. This addition has been deleted by the learned Commissioner (Appeals) for the detailed reasons given in the case of M/s. Lunawat Gems Corporation, Jaipur. This ground will be decided while deciding the appeal of M/s. Lunawat Gems Corporation subsequently through this order. 9. CO No. 20/Jp/2003 is supportive of the order of the learned Commissioner (Appeals). The CO is also being decided accordingly. Now, we shall take up IT(SS)A No. 14/Jp/2003 and CO No. 21/Jp/2003. 10. Ground No. 1 of revenue is regarding deletion

The assessing officer made this addition on account of alleged bogus purchases from 4 concerns, mentioned at p. 4 of the order of the learned Commissioner (Appeals). These purchases have been treated as bogus by the assessing officer on the basis of statement of one Shri Subhash Daga, who has stated that the bogus purchase bills were supplied to the assessee. The assessing officer has also mentioned that the assessee did not furnish the details of purchases and sales, etc., which were required to be submitted in a prescribed proforma and the details of purchases and sales could

The learned Departmental Representative (IT) vehemently contended that Shri Subhash Daga cannot retract from his earlier statement and the affidavit filed subsequently cannot be relied upon in view of the decision of Hon'ble Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC). The learned Commissioner (Appeals) has totally ignored the basic fact that the investment in bogus purchases is considered unexplained and taxable. Moreover, the assessee also failed to correlate the nexus of the goods purchased from Daga group concerns with exports. He relied upon the decision of Hon'ble Delhi High Court in the case of CIT v. La Medica (2001) 250 ITR 575 (Del) and contended that the addition for bogus purchases has rightly been made.

(3) It is noticed that total purchases are vouched and all are through brokers, whose names are appearing in purchase invoices (pp. 107 to 196 of paper book). All the payments were through account payee cheques in the name of the parties who had issued the invoices to the assessee-firm. If one or few brokers had arranged goods from one and bill from others, assessee is not supposed to go into the depth to know the party/parties who had supplied the goods nor assessee could be doubted for making bogus purchases on the facts.