M/S KEDIA EXPORTS PVT. LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, JAIPUR

ITA 1047/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0484 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S R SHARMA
• Keywords: Bogus purchase; Audit objection; Accommodation entries; Tax effect
• Section: 143(3); 143(1); 143(2); 13; 145(3); 147; 148; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B (V.C) JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 1047, 1048, 1049 & 1050/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10, 2012-13, 2013-14 & 2014-15 M/S KEDIA EXPORTS PVT. LTD., JAIPUR CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-01, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACK7591B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 1066, 1067, 1068 & 1069/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10, 2012-13, 2013-14 & 2014-15 DY. COMMISSIONER OF INCOME TAX, CIRCLE-01, JAIPUR CUKE VS. M/S KEDIA EXPORTS PVT. LTD., JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACK7591B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. S. R. SHARMA & SH. RAJNIKANT BHATRA (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/06/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 19/06/2020 VKNS'K@ ORDER PER BENCH THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE AGAINST THE ORDER PASSED BY THE LD. CIT(A)-1, JAIPU R DATED 27/06/2019 ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 2 FOR A.Y 2009-10, 2012-13, 2013-14 & 2014-15 RESPECT IVELY. SINCE COMMON ISSUES ARE INVOLVED, ALL THESE APPEALS WERE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. FOR THE PURPOSES OF PRESENT DISCUSSION, WITH THE CONSENT OF BOTH THE PARTIES, MATTER PERTAINING TO A.Y 2009-10 WAS T AKEN AS A LEAD CASE WHEREIN THE RESPECTIVE GROUNDS OF APPEAL ARE AS UND ER:- ITA NO. 1047/JP/2019 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LAW IN NOT ACCEPTING PLEA OF THE APPELLANT THAT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S 148 OF THE INCOME TAX ACT, 1961 AND CON SEQUENT ASSESSMENT MADE U/S 147/143(3) IS WRONG AND BAD IN LAW. 2. THAT WITHOUT PREJUDICE TO THE GROUND NO. (1) ABO VE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A), IS WRONG, UNJUST AND HAS ERRED IN LAW IN UPHOLDING ADD ITION TO THE EXTENT OF RS. 4,62,549/- BY APPLYING G.P RATE OF 11 .50% ON DECLARED SALES WHICH ADDITION WAS MADE BY THE ASSES SING OFFICER ON ACCOUNT OF ALLEGED UNVERIFIABLE PURCHASES OF RS. 50,79,735/- AFTER REJECTING BOOKS OF ACCOUNTS OF THE APPELLANT UNDER SECTION 145(3) OF THE I.T. ACT, 1961. ITA NO. 1066/JP/2019 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION OF RS. 12,69,933/- TO RS. 4,62,549/- AGAINST THE BOGUS PUR CHASES DISALLOWED BY THE AO FOLLOWING HONBLE SUPREME COUR TS DECISION ON BOGUS PURCHASES IN THE CASE OF VIJAY PROTEINS PV T. LTD.? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE AD DITIONS MADE ON THE BASIS OF CORROBORATIVE INFORMATION RECEIVED FRO M INVESTIGATING ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 3 WING, MUMBAI WHICH IS A LAW ENFORCEMENT AGENCY UNDE R THE MINISTRY OF FINANCE AND ACCORDINGLY THE CASE FALLS UNDER EXCEPTION CLAUSE 10(E) OF CIRCULAR 03 OF 2018 DATED 20.08.201 8 ? 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME DECLARING LOSS OF RS. 6,51,298/- W HICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED ON 08.03.2016 AND IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING THE LOSS AS DECLARED IN THE ORIGINAL RETURN OF INCOME. SUBSEQUENTLY, NOTICE U/S 143(2) WAS ISSUED AND ASSESSMENT WAS COMPLETED U/S 147 READ WITH SECTION 143(3) DATE D 14.10.2016. AS PER THE AO, THE ASSESSEE HAS MADE BOGUS PURCHASES O F RS 50,79,735/- FROM M/S AADI, M/S AVI & M/S KERIYA WHICH ARE GROUP CONCERNS OF SH. RAJENDRA KUMAR JAIN AS PER THE INFORMATION GATH ERED BY INVESTIGATION WING, MUMBAI. ACCORDINGLY, THE ASSESS EES BOOKS OF ACCOUNTS WERE REJECTED U/S 145(3) OF THE ACT AND 25 % OF PURCHASES WERE DISALLOWED AND AN ADDITION OF RS. 12,69,933/- WAS MADE IN THE HANDS OF THE ASSESSEE COMPANY. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS UPHELD THE REJECTION OF BOOK S OF ACCOUNTS AND HAS ESTIMATED GP RATE OF 11.5% WHICH WOULD RESULT I N GROSS PROFIT OF RS. 36,49,755/- AGAINST GROSS PROFIT OF RS. 31,87,206/- SHOWN BY THE ASSESSEE COMPANY. HENCE, THE ADDITION WAS RESTRICTE D TO RS. 4,62,549/- AS AGAINST RS. 12,69,933/- MADE BY THE AO AND PARTI AL RELIEF WAS ALLOWED TO THE ASSESSEE. AGAINST THE SAID FINDINGS OF THE LD. CIT(A), BOTH THE REVENUE AND THE ASSESSEE ARE IN CROSS APPE AL BEFORE US. ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 4 5. FIRSTLY, REGARDING THE REVENUES APPEAL, THE TAX EFFECT INVOLVED IS RS. 1,42,928/- AND THUS QUESTION OF MAINTAINABILITY OF THE APPEAL OF THE REVENUE ARISES FOR CONSIDERATION. 6. THE LD DR HAS SUBMITTED THAT THE CASE FALLS UNDE R EXCEPTION AS PER CLAUSE 10(E) OF CIRCULAR NO. 03 OF 2018 DATED 2 0-08-2018 AS THE CASE WAS REOPENED U/S 148 BASIS INFORMATION RECEIVE D FROM INVESTIGATION WING, MUMBAI AND THEREFORE, THE PRESE NT APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AND THE SAME SHOULD THE REFORE BE HEARD ON MERITS AND NOT DISMISSED ON ACCOUNT OF LOW TAX E FFECT. 7. PER CONTRA, THE LD AR SUBMITTED THAT IN VIEW OF THE CIRCULAR NO. 3 OF 2018, THE APPEAL OF REVENUE IS NOT MAINTAINABLE AND THE SAME DOESNT FALL IN ANY OF THE EXCEPTIONS AS SO STATED IN THE SAID CBDT CIRCULAR. FURTHER, LD. AR HAS PLACED RELIANCE ON T HE DECISION OF THE CO-ORDINATE BENCH IN CASE OF DCIT VS M/S GEHLOT MOT ORS PVT LTD (ITA NO. 1165/JP/2019 DATED 29/11/2019). 8. HEARD BOTH THE PARTIES. IN THIS REGARD, WE REFER TO THE CBDT DIRECTIVE DATED 20TH AUGUST 2018 BY WHICH IT HAS CA RVED OUT SEVERAL EXCEPTIONS TO ITS CIRCULAR NO. 3 OF 2018 DATED 11TH JULY 2018 RELATING TO THE WITHDRAWAL/ NON-FILING OF APPEAL BY THE DEPARTM ENT IN LOW-TAX EFFECT APPEALS. THE CBDT HAS SPECIFIED SEVERAL INSTANCES W HERE APPEALS HAVE TO BE FILED AND PROSECUTED DESPITE THEIR LOW-TAX EF FECT. THE CONTENTS THEREOF READ AS UNDER: ALL THE PRINCIPAL CHIEF COMMISSIONERS OF INCOME TA X SUBJECT: AMENDMENT TO PARA 10 OF THE CIRCULAR NO. 3 OF 2018 DATED 11.07.2018-REG: MADAM/SIR, ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 5 KINDLY REFER TO THE ABOVE. 2. THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS A ND SLPS/ APPEALS BEFORE SUPREME COURT HAVE BEEN REVISED BY B OARDS CIRCULAR NO. 3 OF 2018 DATED 11.07.2018. 3. PARA 10 OF THE SAID CIRCULAR PROVIDES THAT ADVER SE JUDGMENTS RELATING TO THE ISSUES ENUMERATED IN THE SAID PARA SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EF FECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 T HEREOF OR THERE IS NO TAX EFFECT. PARA 10 OF THE CIRCULAR NO. 3 OF 2018 DATED 11.07.2018 IS HEREBY AMENDED AS UNDER: 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING IS SUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EF FECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 A BOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE ADDITION RELATES TO UNDISCLOSED FOREIGN I NCOME/ UNDISCLOSED FOREIGN ASSETS (INCLUDING FINANCIAL ASS ETS)/ UNDISCLOSED FOREIGN BANK ACCOUNT. (E) WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES S UCH AS CBI/ ED/ DRI/ SFIO/ DIRECTORATE GENERAL OF GST INTELLIGE NCE (DGGI). ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 6 (F) CASES WHERE PROSECUTION HAS BEEN FILED BY THE D EPARTMENT AND IS PENDING IN THE COURT. 4. THE SAID MODIFICATION SHALL COME INTO EFFECT FRO M THE DATE OF ISSUE OF THIS LETTER. 5. THE SAME MAY BE BROUGHT TO THE KNOWLEDGE OF ALL OFFICERS WORKING IN YOUR REGION. 6. THIS ISSUES WITH THE APPROVAL OF THE HONBLE FIN ANCE MINISTER. 9. THE EXCEPTION 10(E) WHICH HAS BEEN REFERRED BY T HE LD DR RELATES TO CASES WHERE ADDITION IS BASED ON INFORMATION REC EIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES S UCH AS CBI/ ED/ DRI/ SFIO/ DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI). THOUGH THE INVESTIGATION WING HAS ITS SEPARATE FUNCTIONS AND J URISDICTIONS, THERE CANNOT BE ANY DISPUTE THAT BOTH ADMINISTRATIVELY AN D FUNCTIONALLY, THE INVESTIGATION WING OF THE DEPARTMENT IS PART OF INC OME TAX DEPARTMENT AND IS THEREFORE CLEARLY NOT AN EXTERNAL LAW ENFORCEMENT AGENCY QUA INCOME TAX DEPARTMENT AND THAT TOO, AS SPECIFIED I N THE AFORESAID EXCEPTION. THEREFORE, IN THE INSTANT CAS E, WHERE THE MATTER HAS BEEN REOPENED BASED ON INFORMATION RECEIVED FRO M INVESTIGATION WING AND THE ASSESSMENT HAS BEEN COMPLETED BY THE A SSESSING OFFICER WHERE THE MATTER UNDER APPEAL HAS TAX EFFECT LESS T HAN THE PRESCRIBED LIMIT, IT WILL CONTINUE TO BE GOVERNED BY LOW TAX E FFECT CIRCULAR ISSUED BY THE CBDT WHICH IS BINDING ON THE REVENUE AND THE SA ME IS THE CONSISTENT POSITION OF THIS BENCH AND OTHER BENCHES OF THE TRIBUNAL. ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 7 10. IN LIGHT OF THE SAME, THE PRESENT APPEAL FILED BY THE DEPARTMENT IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT GIVEN THA T THE MATTER IS NOT COVERED BY ANY EXCEPTIONS SO SPECIFIED. 11. NOW COMING TO THE ASSESSEES APPEAL. DURING TH E COURSE OF HEARING, THE LD. AR SUBMITTED THAT NO BASIS HAS BEE N GIVEN BY THE ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUN TS AND INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. IT WAS SUB MITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED SAMPLE PURCHASE BILLS FOR THE SAID PURCHASES SO MADE BY TH E ASSESSEE AND HAS ALSO SUBMITTED THAT THE PAYMENT HAS BEEN MADE BY AC COUNT PAYEE CHEQUE. HOWEVER, BASED ON ALLEGED STATEMENT OF DIRE CTORS OF M/S RAJENDRA JAIN GROUP OF COMPANIES, THE ASSESSING OFF ICER HAS ALLEGED THAT THE ASSESSEE HAS OBTAINED BOGUS ACCOMMODATION ENTRY FROM THREE CONCERNED AS MENTIONED IN THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT THE ASSESSEES OBJECTION TO CROSS EXAMINE THE DIREC TORS OF RAJENDRA JAIN GROUP OF COMPANIES WAS NOT CONSIDERED BY THE AO AS WELL AS BY THE LD. CIT(A) AND MERELY BASIS THE STATEMENT RECORDED BY T HE THIRD PARTY, THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND ADDITION H AS BEEN MADE IN THE HANDS OF THE ASSESSEE COMPANY. 12. FURTHER, DURING THE COURSE OF HEARING, A CHART SHOWING THE TURNOVER AND GROSS PROFIT RATE FOR THE PAST YEARS D ECLARED BY THE ASSESSEE COMPANY WAS SUBMITTED BY THE LD AR AND THE CONTENTS THEREOF READ AS UNDER:- ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 8 ASSTT. YEAR TURNOVER (RS) GROSS PROFIT (RS) G.P. RATE 2006-07 22827562 2189727 9.59% 2007-08 24854921 2662725 10.71% 2008-09 29762344 3078965 10.35% 2009-10 31737004 3187206 10.04% 2010-11 33275606 3316481 9.97% 2011-12 40091039 4066802 10.14% 2012-13 37851082 4001432 10.57% 2013-14 43115259 3882876 9.01% 2014-15 52389998 4999500 9.54% IT WAS SUBMITTED THAT THE AVERAGE GP RATE OF LAST 3 YEARS COMES TO 10.22% WHICH IS VERY CLOSE TO GP RATE OF 10.04% DEC LARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND THE L D. CIT(A) HAS WRONGLY ESTIMATED THE GP RATE OF 11.5% IGNORING THE PAST HISTORY OF THE ASSESSEE COMPANY. FURTHER, LD. AR HAS PLACED RELIA NCE ON THE DECISION OF THE CO-ORDINATE BENCH IN CASE OF SH. SUNDER DAS SONKIA, JAIPUR VS. ITO, JAIPUR (ITA NO. 1126/JP/2018 DATED 15/04/2020). IT WAS ACCORDINGLY SUBMITTED THAT THE ADDITIONS SO SUSTAIN ED BY THE LD CIT(A) SHOULD BE DELETED AND NECESSARY RELIEF MAY BE GRANT ED TO THE ASSESSEE COMPANY. 13. PER CONTRA, THE LD. DR SUBMITTED THAT THE ASSE SSING OFFICER HAS CLEARLY RECORDED A FINDING THAT THE ASSESSEE HAS OB TAINED BOGUS ACCOMMODATION ENTRY FROM THREE CONCERNS OF RAJENDRA JAIN GROUP OF ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 9 COMPANIES AND THE SAID REASONING IS SUFFICIENT ENOU GH TO REJECT THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. IT WAS AC CORDINGLY SUBMITTED THAT THE CONTENTION OF THE LD. AR THAT NO BASIS HAS BEEN GIVEN BY THE AO WHILE REJECTING THE BOOKS OF ACCOUNTS IS NOT FACTUA LLY CORRECT AND THE FINDINGS OF THE LD CIT(A) WHERE HE HAS UPHELD THE R EJECTION OF THE BOOKS OF ACCOUNTS MAY BE CONFIRMED. AS FAR AS RELIANCE O N THE PAST HISTORY OF THE ASSESSEE IN ESTIMATING GP RATE IS CONCERNED, IT WAS FURTHER SUBMITTED THAT GIVEN THAT THE ASSESSEE COMPANY HAS OBTAINED ACCOMMODATION ENTRIES IN ALL THESE YEARS, THE PAST HISTORY IS NOT TOTALLY RELIABLE AND THE LD. CIT(A) IS MORE THAN REASONABLE IN ESTIMATING THE GP RATE AT 11.5% AND NO FURTHER RELIEF SHOULD BE GRANT ED TO THE ASSESSEE COMPANY. THE LD. DR FURTHER RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR THE YEAR UNDER CONSIDERATI ON, THE ASSESSEE HAS DECLARED TOTAL TURNOVER OF RS. 3,17,37,004/- WITH A GROSS PROFIT OF 10.04%. THE A.O. HAS CONSIDERED THE PURCHASES TO TH E TUNE OF RS. 50,79,735/- MADE FROM THESE THREE PARTIES AS UN VERIFIABLE. THE A.O. CONSEQUENTLY REJECTED THE BOOKS OF ACCOUNT OF THE A SSESSEE BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT AND MADE DI SALLOWANCE OF 25% OF THE AFORESAID PURCHASES. HENCE, THE A.O. HAS MAD E ADDITION OF RS. 12,69,933/-. THOUGH, THE ASSESSEE HAS CHALLENGE D THE ACTION OF THE A.O. BEFORE THE LD. CIT(A), HOWEVER, THE LD. CIT(A) HAS CONFIRMED/UPHELD THE DISALLOWANCE MADE BY THE A.O. BY OBSERVING THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES MADE FROM THESE PARTIES. IT IS PERTINENT TO NOTE THAT TH E EVEN IF THE A.O. HAS DOUBTED THE GENUINENESS OF THE PURCHASES FROM THESE PARTIES, ONCE THE ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 10 BOOKS OF ACCOUNT OF THE ASSESSEE ARE REJECTED BY IN VOKING PROVISIONS OF SECTION 145(3) OF THE ACT, THE A.O. IS BOUND TO FRA ME THE ASSESSMENT ON BEST ASSESSMENT AS PER PROVISIONS OF SECTION 144 R.W. SECTION 145(3) OF THE ACT. THEREFORE, AFTER REJECTION OF BOOKS OF ACCOUNT, THE A.O. IS REQUIRED TO ESTIMATE THE INCOME OF THE ASSESSEE ON SOME REASONABLE AND PROPER BASIS. IT IS A SETTLED PROPOSITION AS HE LD BY THE HONBLE RAJASTHAN HIGH COURT IN NUMBER OF CASES THAT FOR ES TIMATION OF INCOME OF ASSESSEE AFTER REJECTION OF BOOKS OF ACCOUNT, PA ST HISTORY OF THE ASSESSEE OR HISTORY OF THE SIMILARLY SITUATED OTHER BUSINESSMAN IS CONSIDERED AS A PROPER AND REASONABLE BASIS. IN THE CASE IN HAND, THE ASSESSEE HAS UNDISPUTEDLY DECLARED GP FOR THE YEAR UNDER CONSIDERATION AT 10.04% WHEREAS THE GP DECLARED BY THE ASSESSEE I N THE PRECEDING THREE YEARS IS AS UNDER: A.Y TURNOVER (IN RS.) GROSS PROFIT (IN RS.) GP (IN%) 2006-07 22827562 2189727 9.59% 2007-08 24854921 2662725 10.71% 2008-09 29762344 3078965 10.35% THE GP SO DECLARED IN THE EARLIER YEARS IS NOT IN D ISPUTE AS THERE IS NO FINDING THAT IN THE PAST, THE ASSESSEE HAS OBTAINED ANY ACCOMMODATION ENTRIES AS IN THE INSTANT YEAR AND THEREFORE, THE C ONTENTION OF THE LD DR THAT THE PAST HISTORY CANNOT FORM THE BASIS FOR EST IMATING CURRENT YEAR GP CANNOT BE ACCEPTED. ONCE THE PAST YEAR RESULTS HAVE ATTAINED FINALITY AND NOT IN DISPUTE, THE SAME CAN FORM THE BASIS FOR ESTIMATING THE GP RATE FOR THE CURRENT YEAR. IT IS CLEAR FROM THE DETAILS OF THE GP DECLARED BY THE ASSESSEE FOR THE PRECEDING THREE YE ARS THAT THE AVERAGE OF PAST THREE YEARS OF GP DECLARED BY THE ASSESSEE COMES TO 10.22%. ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 11 THUS, THE GP DECLARED FOR THE YEAR UNDER CONSIDERAT ION AT 10.04% IS LOWER THAN THE AVERAGE GP DECLARED BY THE ASSESSEE IN PRECEDING THREE YEARS BY 0.18%. THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT SHALL LEAD TO ESTIMATION OF INCOME OF THE ASSESSED BASED ON SOME REASONABLE AND PROPER CRITERIA. SINCE THE AVERAGE OF PAST HISTORY OF GP DECLARED BY THE ASSESSEE IS CONSIDERED AS A PROPER AND REASONABLE BASIS FOR EST IMATION OF INCOME FOR THE YEAR AFTER REJECTION OF BOOKS OF ACCOUNT, T HEREFORE, THE GP IS ESTIMATED AT 10.22% AS AGAINST GP DECLARED BY THE A SSESSEE AT 10.04% FOR THE YEAR UNDER CONSIDERATION AND DIFFERENTIAL T RADING ADDITION EQUIVALENT TO GP RATE OF 0.18% ON DECLARED TURNOVER IS UPHELD AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. NOW COMING TO APPEALS FOR OTHER YEARS, NAMELY, A.Y 2012-13, 2013-14, 2014-15, BOTH PARTIES FAIRLY SUBMITTED THA T FACTS AND CIRCUMSTANCES OF THE CASE ARE EXACTLY IDENTICAL TO FACTS AND CIRCUMSTANCES OF THE CASE IN A.Y 2009-10 AND SIMILA R CONTENTIONS HAVE BEEN ADVANCED BY BOTH THE PARTIES. 16. FIRSTLY, WE FIND THAT ALL THE APPEALS FILED BY THE REVENUE ARE BELOW THE PRESCRIBED THRESHOLD FOR FILING THE APPEALS AND ARE NOT COVERED IN THE EXCEPTION CATEGORY, HENCE, ALL THESE APPEALS FI LED BY THE REVENUE FOR RESPECTIVE ASSESSMENT YEARS ARE DISMISSED ON AC COUNT OF LOW TAX EFFECT FOR DETAILED REASONING GIVEN SUPRA IN CONTEX T OF A.Y 2009-10. 17. IN RESPECT OF ASSESSEES APPEALS, FOR A.Y 20 12-13, THE ASSESSEE HAS DECLARED GP OF 10.57%. IF WE CONSIDER THE AVER AGE GP FOR PAST 5 YEARS WHICH HAS BEEN DECLARED AND ACCEPTED BY REVEN UE AND HAS ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 12 ATTAINED FINALITY, EXCLUDING A.Y 2009-10 WHERE GP S O DECLARED HAS NOT BEEN ACCEPTED BY THE REVENUE ON ACCOUNT OF ACCOMMOD ATION ENTRIES, IT COMES TO 10.15%. THUS, THE GP DECLARED BY THE ASSE SSEE IS MORE THAN THE AVERAGE GP OF PAST YEARS AND EVEN WHERE THE BOO KS OF ACCOUNTS ARE REJECTED, NO TRADING ADDITION IS CALLED FOR AND THE APPEAL OF THE ASSESSEE IS THUS ALLOWED. 18. IN RESPECT OF ASSESSEES APPEAL FOR A.Y 2013-1 4, THE ASSESSEE HAS DECLARED GP OF 9.01% WHICH IS LOWER THAN THE AVERAG E GP FOR PAST 5 YEARS WHICH COMES TO 10.15%, COMPUTED AFTER EXCLUDI NG GP DECLARED FOR A.Y 2009-10 AND A.Y 2012-13, THE GP IS THUS EST IMATED AT 10.15% AS AGAINST GP SUSTAINED BY THE LD CIT(A) AT 11.50% AND GP OF 9.01% DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION AND DIFFERENTIAL TRADING ADDITION EQUIVALENT TO GP RATE OF 1.14% ON DECLARED TURNOVER IS UPHELD AND THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. 19. IN RESPECT OF ASSESSEES APPEAL FOR A.Y 2014- 15, THE ASSESSEE HAS DECLARED GP OF 9.54% AND WE CONSIDER THE AVERAGE GP FOR PAST 5 YEARS, IT COMES TO 10.15%, COMPUTED AFTER EXCLUDING GP DEC LARED FOR A.Y 2009-10 AND A.Y 2012-13 AND A.Y 2013-14, THUS THE G P FOR THE YEAR IS ESTIMATED AT 10.15% AS AGAINST GP SUSTAINED BY THE LD CIT(A) AT 11.50% AND GP OF 9.54% DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND DIFFERENTIAL TRADING ADDITION EQU IVALENT TO GP RATE OF 0.61% ON DECLARED TURNOVER IS UPHELD AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 20. IN THE RESULT, RESPECTIVE APPEALS OF THE REV ENUE ARE DISMISSED, AND THE APPEAL OF THE ASSESSEE FOR A.Y 2012-13 IS A LLOWED AND FOR OTHER YEARS, THE APPEALS ARE PARTLY ALLOWED IN LIGHT OF A FORESAID DIRECTIONS. ITA NO. 1047 & OTHERS /JP/2019 M/S KEDIA EXPORTS PVT. LTD., JAIPUR VS. ACIT, JAIPU R 13 ORDER PRONOUNCED IN THE OPEN COURT ON 19/06/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19/06/2020. * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S KEDIA EXPORTS PVT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-01, 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. 1047, 1048, 1049, 1050, 1066, 1067, 1068 & 1069/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR