SHRI RAVI KUMAR RAWAT, Jaipur V. INCOME TAX OFFICER, WARD-2-5, Jaipur

ITA 1013/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8697 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 31-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA JCIT DHK
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 1013/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2007-08 RAVI KUMAR RAWAT, 2238, HANDION KA RASTA, JOHARI BAZAR, JAIPUR-302003. C UKE VS. INCOME TAX OFFICER, WARD 2(5), JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AATPR 5739 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI SAURABH HARSH (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A.S. NEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11/07/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/07/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)- I, JAIPUR DATED 29/06/2018 FOR THE A.Y. 2007-08 IN THE MATTER OF ORDER PASSED U/S 148 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR REOPENING OF ASSESSMENT U/S 147 OF THE ACT AND ALSO ON MERIT OF TRADING ADDITION MADE TO THE EXTENT OF RS. 3,02,073/- AFTER REJECTING THE BOOKS OF ACCOUNT. ITA 1013/JP/2018_ RAVI KUMAR RAWAT VS ITO 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT OF PRECIOUS AND SEMI-PRECIOUS STONES. AFTER COMPLETING THE ASSESSMENT U/S 143(3) FOR THE YEAR UNDER CONSIDERATION, THE A.O. REOPENED THE ASSESSMENT BY ISSUANCE OF NOTICE U/S 148 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES IN THE FORM OF BOGUS PURCHASES BILLS OF RS. 23,60,295/- FROM M/S SPARSH EXPORTS, SURAT AND RS. 27,87,133/- FROM M/S VITRAG JEWELS, SURAT, ENTITIES CONTROLLED AND MANAGED BY SHRI RAJENDRA JAIN, AN ENTRY OPERATOR AT MUMBAI, IN WHOSE CASE A SEARCH WAS CONDUCTED BY THE INCOME TAX DEPARTMENT, WHEREIN IT WAS ADMITTED BY HIM THAT HE WAS IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. AFTER RECORDING THE REASONS FOR REOPENING, THE A.O. HAS ISSUED NOTICE U/S 148 OF THE ACT. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. AFTER DISCUSSING VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE WHEREIN REOPENING ON THE BASIS OF REPORT OF INVESTIGATION WING WAS HELD TO BE JUSTIFIED. WE ALSO FOUND THAT THERE WAS SUFFICIENT REASON TO BELIEVE THAT THERE WAS AN ESCAPEMENT OF INCOME, ACCORDINGLY, THERE IS NO INFIRMITY IN THE ORDER OF THE A.O. IN REOPENING THE ASSESSMENT U/S 147 OF THE ACT. ITA 1013/JP/2018_ RAVI KUMAR RAWAT VS ITO 3 4. IN SO FAR AS THE MERIT OF THE ADDITION IS CONCERNED, THE LD. CIT(A) AFTER COMPARING THE RESULTS OF THE EARLIER YEARS, TAKEN PROFIT RATE AT 10.80% IN PLACE OF PROFIT RATE OF 10.20% DECLARED BY THE ASSESSEE. AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 5. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF SHRI RAJENDRA PRASAD CHOUDHARY VS ACIT ORDER DATED 12/06/2019 IN ITA NO. 1495 & 1496/JP/2018. 6. WE HAD CAREFULLY GONE THROUGH THE ORDER OF THE COORDINATE BENCH AND FOUND THAT THE FACTS IN THE CASE OF SHRI RAJENDRA PRASAD CHOUDHARY VS ACIT ARE DIFFERENT FROM THE FACTS OF THE INSTANT CASE. HOWEVER, WE FOUND THAT IN ASSESSEES OWN CASE, THE TRIBUNAL HAVE PASSED THE ORDER FOR SIMILAR BOGUS PURCHASES AND UPHELD THE ADDITION BY TAKING G.P. RATE AT 10.28%. THE PRECISE OBSERVATION OF THE LD. CIT(A) WHILE UPHOLDING THE ADDITION BY ESTIMATING G.P. RATE OF 10.80% WHICH RESULTED INTO TRADING ADDITION OF RS. 3,02,073/- WAS AS UNDER: ( VII) IT IS TO BE NOTED THAT THE APPELLANT HAS DECLARED GP RATE OF 10.15% ON TURNOVER OF RS. 6,27,75,920/- IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR I.E. AY 2006-07, WHEREAS FOR THE YEAR UNDER CONSIDERATION, ON TURNOVER OF RS. 5,86,78,833/-, THE APPELLANT HAS DECLARED GP RATE OF 10.20%. IT MAY BE MENTIONED ITA 1013/JP/2018_ RAVI KUMAR RAWAT VS ITO 4 THAT IN THE ASSESSMENT ORDER FOR THE AY 2006-07 PASSED U/S 143(3) OF THE ACT, 25% OF BOGUS/UNVERIFIABLE PURCHASE WAS MADE, WHICH HAS BEEN REDUCED TO RS. 50,000/- BY THE HON'BLE ITAT WHICH WOULD GIVE GP RATE OF 10.28%. IT MAY BE MENTIONED THAT IN THE CASE OF CIT VS VAIBHAV GEMS LTD. [2014] 112 DTR 84 (RAJ), IT HAS BEEN HELD BY THE HON'BLE HIGH COURT OF RAJASTHAN THAT WHILE THE PAST HISTORY BECOMES THE RELEVANT BASIS BUT IF THE AO WISHES TO TINKER WITH THE BASIS OF PAST RECORDS, THEN SOME FLAW HAS TO BE FOUND BY THE AO IN MAKING SOME ADDITION AND, IN THE INSTANT CASE UNDER CONSIDERATION, THE PURCHASES TO THE TUNE OF RS. 27,87,133/- WERE FOUND TO BE BOGUS/UNVERIFIABLE. THEREFORE, IN VIEW OF THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED OPINION, IT WOULD BE APPROPRIATE TO TAKE GP RATE AT 10.80% ON THE TURNOVER OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION AGAINST GP RATE OF 10.20% DECLARED BY THE APPELLANT AND 10.28% AS SUSTAINED BY THE HON'BLE ITAT EARLIER. THUS, THE GROSS PROFIT OF THE APPELLANT IS ESTIMATED AT RS. 63,37,314/- AGAINST RS. 60,35,241/- FINALLY ASSESSED IN EARLIER PROCEEDINGS. HENCE, THE TRADING ADDITION OF RS. 6,96,783/- MADE BY THE AO IS HEREBY RESTRICTED TO RS. 3,02,073/- (63,37,314 - 60,35,241). 7. ON THE OTHER HAND, IT WAS CONTENDED BY THE LD DR THAT AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES AND THE PAST HISTORY OF THE ASSESSEE, THE LD. CIT(A) HAS VERY REASONABLY ESTIMATED THE G.P. RATE OF 10.80%, ACCORDINGLY, NO INTERFERENCE IS REQUIRED. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT UNDER SIMILAR FACTS AND ITA 1013/JP/2018_ RAVI KUMAR RAWAT VS ITO 5 CIRCUMSTANCES FOR THE A.Y. 2006-07, THE TRIBUNAL HAVE UPHELD THE ADDITION BY ESTIMATING G.P. RATE OF 10.28%. FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, THEREFORE, WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2006-07, WE DIRECT THE A.O. TO RESTRICT THE ADDITION BY ESTIMATING G.P. RATE OF 10.28% IN PLACE OF G.P. RATE OF 10.20% DECLARED BY THE ASSESSEE. WE DIRECT ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JULY, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS [KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12 TH JULY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAVI KUMAR RAWAT, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 2(5), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1013/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR