DEEPAK DALELA, Jaipur V. ITO, Jaipur

ITA 1027/JPR/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4872 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH CIT DHK
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 1027/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 DEEPAK DALELA, C-28, PEEYUSH PATH, BAPU NAGAR, JAIPUR. CUKE VS. I.T.O., WARD-6(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAOPD 6587 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MUKESH KHANDELWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA SINGH (ADDL.CIT) LQUOKBZ DH RKJH[K @ DATE OF HEARING : 07/12/2016 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 22/12/2016 VKNS'K@ ORDER PER: KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES AGAI NST THE ORDER DATED 18/11/2013 PASSED BY THE LD. CIT(A)-II, JAIPU R PERTAINING TO THE A.Y. 2006-07, WHEREIN THE ASSESSEE HAS RAISED SOLE G ROUND OF APPEAL, WHICH IS AS UNDER: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED SERIOUSLY IN LAW AND ON THE FACTS IN CONFIRMING THE PENALTY AMOUNTING TO RS. ITA 1027/JP/2013_ DEEPAK DALELA VS ITO 2 3,31,411/- LEVIED U/S 271(1)(C) OF THE IT ACT, 1961 BY THE LD. A.O. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE CA SE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESS MENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/12/2008. WHILE FRAMING T HE ASSESSMENT, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND APPLIED GROSS PROFIT @ 25% ON THE BASIS OF UNVERIFIABLE PURCHASES. THE A.O . ALSO INITIATED PENALTY U/S 271(1)(C) OF THE ACT FOR FURNISHING INA CCURATE PARTICULARS/CONCEALING TRUE PARTICULARS OF INCOME. 3. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IN QUANTUM PROCEEDINGS REACHED UP TO THE HONBLE TRIBUN AL AND THE TRIBUNAL WAS PLEASED TO MODIFY THE ESTIMATION OF PROF IT AND ADOPTED GP RATE @ 15% IN PLACE OF 25% AS APPLIED BY THE A.O.. L D. COUNSEL FURTHER SUBMITTED THAT THE PENALTY PROCEEDINGS OF THE QUANT UM PROCEEDINGS ARE TWO DIFFERENT AND DISTINCT PROCEEDINGS. IN THE PENAL TY PROCEEDINGS, THE A.O. HAS TO DEMONSTRATE WITH A SPECIFIC INSTANCE OF CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCO ME, IN CASE IN HAND THE ASSESSING OFFICER HAS MERELY ESTIMATED THE GP R ATE. THEREFORE, HE SUBMITTED THAT THE PENALTY CANNOT BE SUSTAINED WHERE THE ADDITION WAS ITA 1027/JP/2013_ DEEPAK DALELA VS ITO 3 MADE ON THE BASIS OF ESTIMATION. IN SUPPORT OF THIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION S OF THE HONBLE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF SHIV L ALA TAK VS CIT 251 ITR 373 (RAJ), ADDL. CIT VS. AGARWAL MISTHAN BHANDAR 1 31 ITR 619 (RAJ). HE ALSO RELIED UPON THE DECISIONS OF THE HON BLE ITAT JAIPUR BENCHES IN THE CASE OF SHRI KAMLESH DANGAYACH VS. A CIT-1, JAIPUR IN ITA NO. 18 & 19/JP/2012 ORDER DATED 16/05/2012 AND ACIT-7, JAIPUR VS M/S DWARKA GEMS LTD. IN ITA NO. 549/JP/2010 ORDER DA TED 28/4/2011. 4. ON THE CONTRARY, THE LD SR. DR HAS STRONGLY OPPO SED THE SUBMISSIONS OF THE ASSESSEE AND PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE KERELA HIGH COURT IN THE CASE OF KALPAKA BA ZAR VS CIT 313 ITR 414. IN SUPPORT OF THE CONTENTION THAT THE EXPENDIT URE IN THE NATURE OF BOGUS PURCHASES HAS ACCOUNTED BY THE ASSESSEE WHICH MEANS CONCEALMENT OF INCOME, THEREFORE, IT WAS HELD THAT T HE PENALTY PERTAINING TO INFLATION OF PURCHASES ARE RIGHTLY LE VIED. HE ALSO RELIED ON THE DECISION OF THE HONBLE ITAT CHANDIGARH BENCH DE CISION IN THE CASE OF ITO VS. SRU KNITTERS (P) LTD. 110 TTJ 671. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THROUGH THE ORDERS OF ITA 1027/JP/2013_ DEEPAK DALELA VS ITO 4 THE LOWER AUTHORITIES. THE COORDINATE BENCH IN THE ID ENTICAL CASE I.E. IN THE CASE OF ITO VS. M/S BHANSALI TRADING CORPORATION , HAS HELD AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. TH E ADDITION MADE BY THE ASSESSING OFFICER WAS SPECIFIC ON ACCOUNT OF UNVERIFIABLE PURCHASES ON WHICH G.P. @ 2 5% WAS APPLIED AND ADDED IN THE INCOME. HOWEVER, THE SAM E WAS REDUCED BY THE LD CIT(A) AND APPLIED DIFFERENT G. P. RATE. HOWEVER, THE ADDITIONS WERE SPECIFIC. THE ASSESS EE HAS NOT BEEN ABLE TO PRODUCE THESE PARTIES FOR VERI FICATION AND ALSO SUMMONS WERE RETURNED BACK TO THE OFFICER UNSERVED. THIS BENCH RECENTLY DECIDED THIS ISSUE IN DETAIL IN THE CASE OF SHRI ANUJ KUMAR VARSHNEY VS. I.T.O. AND OTHER CASES IN ITA NO. 187/JP/2012 ORDER DATED 22/10/2014 AND GAVE DETAIL FINDINGS ON UNVERIFIABLE PURCHASES IN N UMBER OF CASES. THE DEPARTMENT HAS BEEN ABLE TO PROVE THAT IN GEMS AND JEWELLERY BUSINESS, SOME OF THE PARTIES WERE GIVING ACCOMMODATION ENTRY AND SOME OF THEM ACCEPTI NG THE ACCOMMODATION BILL TO REDUCE THE PROFIT. THE PAR TIES NAMES FIGURED IN THIS CASE ALSO WERE SIMILAR TO THOS E CASES, THEREFORE, WE HOLD THAT THE ADDITION MADE BY THE ASS ESSING OFFICER WAS SPECIFIC AND ASSESSEE HAD CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS OF INCO ME. FURTHER THE ASSESSEES EXPLANATION IS NOT BONAFIDE. THE CASE LAWS REFERRED BY THE ASSESSEE ARE NOT SQUARELY ITA 1027/JP/2013_ DEEPAK DALELA VS ITO 5 APPLICABLE. IN THIS CASE, THE ADDITION WAS SPECIFIC WITH REFERENCE TO UNVERIFIABLE PURCHASES. THEREFORE, WE RE VERSE THE ORDER OF THE LD CIT(A). LD. AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE D ECISION IN THE CASE OF SHIV LAL TAK VS CIT (SUPRA) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IN MAKING COMPUTATION OF TOTAL INCOME WHERE THE INCO ME RETURNED HAS BEEN REJECTED BY REJECTING THE TRADING RESULTS, FINDING SOME DISCREPANCY IN THE BOOKS OF ACCOUNT AND SUBSTITUTIN G THE SAME BY AN ESTIMATED FIGURE, IN THE STRICT SENSE, CAN NEITHER BE SAID TO BE ADDITION OF ANY AMOUNT IN THE RETURNED INCOME NOR DISALLOWANC E OF ANY AMOUNT AS DEDUCTIONS CLAIMED. THE WORD AMOUNT OF WHICH A DDITIONS MADE OR DEDUCTIONS DISALLOWED ALSO DENOTES REFERENCE TO SPEC IFIC ITEM OF AMOUNT ADDED OR DISALLOWED AS DEDUCTION IN CONTRAST TO SUBS TITUTION OF ALTOGETHER A NEW ESTIMATED SUM IN PLACE OF THE INCOM E RETURNED. IT IS A CASE NEITHER OF ADDITION OR DISALLOWANCE BUT A CASE OF SUBSTITUTION. IN VIEW THEREOF, THE HON'BLE HIGH COURT HAS UPHELD THE DECISION OF THE TRIBUNAL FOR DELETING THE PENALTY. IN THE LIGHT OF T HE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE HEREBY DI RECT THE ASSESSING OFFICER TO DELETE THE PENALTY AS IN THE PRESENT CAS E ALSO THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT BY REJECTING THE B OOKS OF ACCOUNT. ITA 1027/JP/2013_ DEEPAK DALELA VS ITO 6 ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY THE ASS ESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2016. SD/- SD/- FOE FLAG ;KNO DQY HKKJR (VIKRAM SINGH YADAV) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 ND DECEMBER, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI DEEPAK DALELA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE I.T.O., WARD-6(3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1027/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR