ORDER : Bhargav D. Karia, J. 1. By this Tax Appeal under Section 260A of the Income- Tax Act, 1961 (for short ‘the Act’), the Appellant – Revenue has proposed the following questions of law arising from the Judgment and Order dated 21.12.2023 passed by the Income- Tax Appellate Tribunal, Surat (for short ‘the Tribunal’) in ITA No.520/SRT/2023 for Assessment Year 2017-18 : “A. Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT has justified in agreement with the view of Ld. CIT(A) in this case without appreciating the facts that the assessee has failed to prove the genuineness of transaction made with M/s.Dhaval Gems and M/s.Veer Corporation which were identified as bogus entry providers, completely controlled by Shri Chetan Kantilal Shah ? B. Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT has justified in restricting the addition from 100% to 13.05% of the bogus purchases made by the AO ignoring the fact that Shri Chetan K. Shah has admitted in his statement u/s.131(1A) given during the survey proceedings conducted by the investigating wing of department that he has engaged in the business of accommodation entries and hence AO was correct in concluding that the assessee was a beneficiary of the accommodation entry in guise of purchase?” 2. Heard learned Senior Standing Counsel Mr.Karan Sanghani for learned advocate Mrs.Kalpana Raval for the Appellant – Revenue. 3. Brief facts of the case are that the respondent – Assessee is a HUF. It filed the return of income for Rs.9,64,960/- on 01.10.2017 for Assessment Year 2017-18. The case of the respondent was selected for scrutiny, and during the course of regular assessment, an addition was made on two counts; (i) on bogus purchases of Rs.75,10,503/- and (2) cash deposit of Rs.80,00,000/-, by the Assessing Officer while finalizing the total income of Rs.1,64,75,460/-. 4. Being aggrieved, the respondent preferred an Appeal before the CIT (A), who, by order dated 02.06.2023, partly allowed the Appeal of the assessee restricting the addition made on account of bogus purchase of Rs.75,10,503/- to 13.05% of the gross profit for the year under consideration. Further, the CIT(A) deleted the addition of Rs.80,00,000/- in view of disclosure made by the assessee under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) and the same money was deposited during the demonetization. 5. Further, the CIT(A) deleted the addition of Rs.80,00,000/- in view of disclosure made by the assessee under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) and the same money was deposited during the demonetization. 5. Being aggrieved, the Appellant – Revenue preferred an Appeal before the Income-Tax Appellate Tribunal, Surat (for short ‘the Tribunal’). With regard to Question No.1, the Tribunal, after considering the submissions made by both the sides, held as under : “10. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In our considered view, it was wholly erroneous on the part of the assessing officer to make addition of 100% of purchases. Only a profit element embedded in the purchases may be added in the hands of the assessee. Based on information received from Investigation wing the learned assessing officer contested that these two parties viz. Veer Corporation and Dhaval Gems, are engaged in business of providing accommodation entries and thus the underlined purchases are not genuine. The assessing officer disallowed the entire purchases claiming them to be bogus. Before, ld CIT(A), the assessee filed supporting documents containing ledger extracts of parties, vat returns, excise returns, Payment details, bank statement reflecting such payment details, copy of invoices, purchase register, stock register, bank statements, audited books of accounts etc. The learned assessing officer has not questioned the sales made by the assessee and has accepted the sales amount as appearing in the financial statements. The assessing officer has also not provided any adverse finding on inventory appearing in the books of account of the assessee. However, ld CIT(A) noted that in absence of visibility on correctness of the amount paid/ payable to creditors, the possibility of purchasing the goods from grey market at lower rates and recording the same at inflated price in books of accounts cannot be ruled out. However, if the entire purchases are disallowed, the corresponding sales also need to be ignored but the assessing officer has not done so. Therefore, this leaves with unjustified adjustment in case of the assessee. Therefore, ld CIT(A) noted that many high courts and tribunals have dealt with this issue of bogus purchases in greater details and have upheld that certain gross profit shall be added to total income instead of adding entire purchases (especially when corresponding sales are not challenged)…. 11. Therefore, this leaves with unjustified adjustment in case of the assessee. Therefore, ld CIT(A) noted that many high courts and tribunals have dealt with this issue of bogus purchases in greater details and have upheld that certain gross profit shall be added to total income instead of adding entire purchases (especially when corresponding sales are not challenged)…. 11. The assessee has also submitted before ld CIT(A) that the entire amount should not be treated as bogus and reasonable gross profit at the rate of 5% shall be added to the total income of assessee in wake of various judicial precedence pronounced by ITAT. However, it was observed by ld CIT(A) that the assessee's business is recently started and it is into second year of its operations. During the year under consideration the gross profit earned by assessee is 13.05%. Therefore, ld CIT(A) restricted the addition to Rs. 9,80,121/- (Rs.75,10,503/- X 13.05%). We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.” 6. With regard to Question No.2, the Tribunal has held as under : “18. We have heard the rival parties and have gone through the material placed on record. We note that assessing officer has carried out addition of Rs.80,00,000/- on account of cash deposited during demonetization. The assessing officer has observed that the assessee has not submitted any documentation to substantiate its claim that the underlined money was disclosed under Pradhan Mantri Garib Kalyan Yojana and the same money was deposited into bank account during demonetization. We note that before ld CIT(A), during the appellate proceedings, the assessee had submitted copy of letter which was filed with Assistant Director of Income Tax (Investigation) intimating for option to disclose amount of Rs.1.1 crore. On perusal of said letter it was observed by ld CIT(A) that the assessee has suo -moto intimated to the Income Tax Department regarding such cash deposit during the demonetization which was declared by the assessee in PMGKY amnesty scheme. It is also observed that the assessee has paid due taxes as per the PMGKY amnesty scheme. On perusal of said letter it was observed by ld CIT(A) that the assessee has suo -moto intimated to the Income Tax Department regarding such cash deposit during the demonetization which was declared by the assessee in PMGKY amnesty scheme. It is also observed that the assessee has paid due taxes as per the PMGKY amnesty scheme. The assessing officer has mentioned in the Assessment Order that assessee was not able to substantiate its claim, however on perusal of the supporting documentation, the claim of assessee is found to be acceptable and therefore the addition made by learned assessing officer for sum of Rs.80,00,000/- was deleted by ld CIT(A). 19. We note that in this nature of assessee`s business, normally the sales are made in cash and the parties do not give any identification. However, the assessee had filed the details of customers with address and PAN to the tune of Rs.39,61,223/-. The sales of jewellery / bars were through counters in shop and most of the customers pay the bills in cash. The receipts and accumulation of cash on hand, as per accounts, is quite obvious and the same ought to be accepted more particularly when books of accounts are not rejected. The quantum of sales depends on marriage / Diwali and such auspicious days. If we look into the monthly sales lying on page 34 of the paper book, there was huge sales in April, 2016 and September, 2016 though there was less sale during demonetization. The assessee had cash on hand of Rs.61,19,899/- as per the cash book on 29.09.2016 and the same was further increased to Rs.83,03,182/- on 08.11.2016. The assessee had sufiicient cash on hand of Rs. 83,03,182/- on 08.11.2016 out of which Rs.80/- lacs were deposited during the demonetization period. The assessee used to maintain quantity details/ account and the same was filed alongwith tax audit report which lies on page 31 to 33 of the paper book. We note that assessee has already covered huge amount of Rs.1.10 crores under PMGKY scheme against the doubtful transactions. The assessee urges that the said disclosure covers all the irregularities and, therefore, further addition of Rs.80/- lacs being the amount of cash deposit in the demonetization period is unjustified. We note that assessee has already covered huge amount of Rs.1.10 crores under PMGKY scheme against the doubtful transactions. The assessee urges that the said disclosure covers all the irregularities and, therefore, further addition of Rs.80/- lacs being the amount of cash deposit in the demonetization period is unjustified. We note that amount of Rs.80,00,000/-(being cash deposited during demonetization) is a part of disclosure of 1.10 Crores by the assessee, in the scheme of Pradhan Mantri Garib Kalyan Yojana, hence further addition should not be made. The said fact has been examined by the ld CIT(A) also. Therefore, we find that there is no infirmity in the order of ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the grounds (2 to 6) raised by the Revenue.” 7. Learned advocate Mr.Karan Sanghani appearing for the Appellant – Revenue submitted that the Tribunal has not appreciated the fact that the deposit of Rs.80,00,000/- made by the assessee in the bank account during the demonetization period was over and above the disclosure made of Rs.1,10,00,000/- under the PMGKY Scheme. It was submitted that the assessee has not discharged the burden of showing the sales of jewellery or bars and has provided only the details of customers with address and PAN number to the tune of Rs.39,61,223/-. 8. Learned advocate Mr.Sanghani invited the attention of the Court to the findings arrived at by the Assessing Officer for not believing the explanation tendered by the assessee in Para.2.3 of the order, which reads as under : “2.3 The contention of the Assessee with regards to the cash sales is also not backed up with complete details and evidences. The Assessee has claimed to have such huge sales from address: 201, Nalanda Residency, Vesu Main Road, Surat-395007 which is a residential premises. The assessee has shown same apartment as residential one. The claim of the assessee of making a huge turnover from a residential flat is without supporting evidence. Even the alleged purchase bills submitted by the assessee are pf address: 101, Mahadev Nagar, GhodDod Road, Surat. The assessee furnished details viz. names only of the alleged cash sales shown against the customers to the tune of Rs. 39,61,223/- with amount. No verification could have been made with details provided by the assessee. Even the alleged purchase bills submitted by the assessee are pf address: 101, Mahadev Nagar, GhodDod Road, Surat. The assessee furnished details viz. names only of the alleged cash sales shown against the customers to the tune of Rs. 39,61,223/- with amount. No verification could have been made with details provided by the assessee. Further, it is noticed that cash book of the assessee is being credited against certain person's name. The assessee could not submit any details with respect to these credits. The Assessee could not provide quantitative and qualitative details of stock as well as details of goods/ornaments which are claimed to be sold against cash sales. The Assessee was requested to furnish comparative figures of cash deposited in its bank accounts in reference to the period under consideration as well as for the immediately preceding year. The assessee has cash balance of Rs. 59,553/- only and has shown cash balance of Rs. 83,02,552/-on 08/11/2016. The assessee could not sources of credits in the cash book. Therefore, in absence of any concrete details or evidences with respect to the so-claimed cash sales/cash deposits made by the Assessee, the same cannot be accepted. It has to be construed that the Assessee has not been able to substantiate with cogent details and evidences, the genuineness of its claim with respect to cash deposits amounting to Rs. 80,00,000/- and therefore, this amount requires to be brought within the ambit of taxation. 2.4 2.4 The Assessee had deposited cash amounting to Rs. 80,00,000/- (a part form amount disclosed in PMGKY) in its bank accounts maintained with ICICI Bank Ltd. during the Demonetization period (09/11/2016 to 30/12/2016). Repeated notices have been issued to the Assessee however, the Assessee had not been able to substantiate its claim. Inquiries have been undertaken to gather and collection information pertaining to the income and transactions of the Assessee. The statement of the bank accounts maintained with ICICI Bank Ltd. during the Demonetization period (09//11/2016 to 30/12/2016) held by the Assessee has been called for and analyzed. xxx xxx xxx In light of the above, the aggregate of cash deposits amounts are liable to be deemed to be the income for relevant financial year u/section 69A of the Act as unexplained money. Therefore, the cash deposits are taken as deemed income u/s. 69Aof the Income Tax Act, 1961 for the relevant financial year. Such amount of Rs. xxx xxx xxx In light of the above, the aggregate of cash deposits amounts are liable to be deemed to be the income for relevant financial year u/section 69A of the Act as unexplained money. Therefore, the cash deposits are taken as deemed income u/s. 69Aof the Income Tax Act, 1961 for the relevant financial year. Such amount of Rs. 80,00,000/- is added to taxable income u/s. 69A of the Act. The income assessed u/s. 69A of the Act is taxed u/s 115BBE at the rate of 60%. Further, penalty equal to a sum computed at the rate of ten per cent of the tax payable under clause (i) of section (1) of section 115BBE is also liable to be levied on the Assessee u/s. 271AAC of the Act since addition is envisaged to be made u/s. 69A of the Act. Hence, se. 271AAC penalty amount i.e. 10% of tax u/s. 115BBE is due in the case of Assessee.” 9. Referring to the above findings recorded by the Assessing Officer, it was submitted that both the CIT(A) and the Tribunal have committed an error by ignoring the fact of deposit made by the assessee in the bank account, over and above the disclosure made by the assessee under the PMGKY Scheme. 10. Considering the submissions made by learned advocate Mr.Sanghani as well as the finding of facts recorded by the CIT(A) and the Tribunal, it appears that so far as the Question No.1 is concerned, the CIT(A) has noted the fact that the Assessing Officer while making addition of the entire purchases has accepted the sales. Therefore, the CIT(A) considering the fact that the Assessing Officer could not have disallowed the entire purchases in absence of any finding on correctness of the amount paid/payable to creditors, the possibility of purchasing the goods from grey market at lower rates and recording the same at inflated price in books of account cannot be ruled out and hence, made an addition of gross profit @ 13.05%. The CIT(A), in support of its findings, relied upon the following decisions : ‘(i) The Commissioner of Income-tax vs. Simit P. Sheth reported in [2013] 38 taxmann.com 385 (Gujarat) (ii) Nickunj Eximp Enterprises Pvt. Ltd Vs CIT [Bombay HC WRIT PETITION NO.2860 OF 2012] (iii) A decision of the Hon’ble Bombay High Court in the case of PCIT vs. Pinaki D. Panani vide order dated January 18, 2020 (iv) A decision of the Hon'ble Bombay High Court in the case of Usha Exports vs. ACIT vide order dated December 21, 2019. 11. In view of the concurrent finding of facts arrived at by both CIT(A) and the Tribunal, we are of the opinion that no question of law, much less any substantial question of law arises from the impugned Judgment and Order of the Tribunal. The appeal, therefore, fails and is accordingly dismissed.