DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, Jaipur V. GEM CRAFT ENTERPRISES P LTD., Jaipur

ITA 1080/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7954 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 30-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Bogus purchase; Tax effect

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA - @ ITA NO. 1080/JP/2019 FU/KZKJ.K O'KZ @ ASSESSMENT YEAR : 2007-08. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2, JAIPUR. CUKE VS. M/S. GEM CRAFT ENTERPRISES P. LTD., 295, MOOKIM HOUSE, DARIBA PAN, SUBHASH CHOWK, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO. AACCG 3517 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : MS CHANCHAL MEENA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15.01.2020. ?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/01/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 26.06.2019 OF LD. CIT (A)-I, JAIPUR FOR THE ASSESSMENT YEAR 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THESE APPEALS :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN RESTRICTING THE ADDITION OF RS. 9,12,082/- TO RS. 3,80,796/- AGAINST THE BOGUS PURCHASES DISALLOWED BY THE AO FOLLOWING HONBLE SUPREME COURTS DECISION ON BOGUS PURCHASES IN THE CASE OF VIJAY PROTEINS PVT. LTD. ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITIONS MADE ON THE BASIS OF CORROBORATIVE INFORMATION RECEIVED FROM 2 ITA NO. 1080/JP/2019 M/S. GEM CRAFT ENTERPRISES PVT. LTD., JAIPUR. INVESTIGATING WING, MUMBAI WHICH IS A LAW ENFORCEMENT AGENCY UNDER THE MINISTRY OF FINANCE AND ACCORDINGLY THE CASE FALLS UNDER EXCEPTION CLAUSE 10(E) OF CIRCULAR 03 OF 2018 DATED 20.08.2018 ? 2. AS IT IS CLEAR FROM THE DISPUTE RAISED IN THE GROUNDS THAT THE TAX EFFECT IN THE APPEAL OF THE REVENUE IS ONLY RS. 2,16,766/-. THUS QUESTION OF MAINTAINABILITY OF THE APPEAL OF THE REVENUE ARISES IN VIEW OF THE CIRCULAR NO. 3 OF 2018 DATED 11.07.2018. THE LD. D/R HAS SUBMITTED THAT SINCE THE AO HAS MADE THE ADDITION BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT, THEREFORE, THIS CASE FALLS IN THE EXCEPTION AS PROVIDED IN CLAUSE 10(E) OF CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018 AND SUBSEQUENT CIRCULAR NO. 23 OF 2019 DATED 6 TH SEPTEMBER, 2019. THE LD. D/R HAS ALSO REFERRED TO THE CBDT INSTRUCTION DATED 20.08.2018 AND SUBMITTED THAT WHERE THE ADDITION IS BASED ON THE INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DG OF GST INTELLIGENCE, THE CASE SHALL BE DECIDED ON MERITS INSTEAD OF REJECTING THE APPEAL ON BELOW TAX EFFECT GROUND. THE LD. D/R HAS VEHEMENTLY CONTENDED THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING FALLS IN THE CATEGORY OF EXCEPTION PROVIDED IN CLAUSE (E) OF PARA 10 OF THE CIRCULAR NO. 3 OF 2018. THUS THE LD. D/R HAS SUBMITTED THAT THE APPEAL OF THE REVENUE IS MAINTAINABLE. 3. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT UNDER CLAUSE (E) THE INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES HAS BEEN SPECIFIED BEING CBI/ED/DRI/SFIO/DG OF GST INTELLIGENCE AND, THEREFORE, THE EXCEPTION CLAUSE CAN BE INVOKED ONLY WHEN THE 3 ITA NO. 1080/JP/2019 M/S. GEM CRAFT ENTERPRISES PVT. LTD., JAIPUR. ADDITION IS BASED ON THE INFORMATION RECEIVED FROM EXTERNAL SOURCES BEING THE LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DG OF GST INTELLIGENCE. THEREFORE, WHEN THE ADDITION MADE IN THE CASE OF ASSESSEES IS NOT BASED ON THE INFORMATION RECEIVED FROM THESE EXTERNAL AGENCIES SPECIFIED IN THE AMENDED PARA 10 OF THE CIRCULAR NO. 3 OF 2018, THEN THESE CASES DO NOT FALL IN THE EXCEPTION. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RELEVANT RECORD. THERE IS NO DISPUTE ABOUT THE FACT THAT THE TAX EFFECT IN THE CASE OF THE REVENUE IS VERY LESS BEING RS. 2,16,766/-. THEREFORE, THE APPEAL OF THE REVENUE IS HIT BY THE CIRCULAR NO. 3 OF 2018 DATED 11.07.2018 AS WELL AS CIRCULAR NO. 23 OF 2019 DATED 6 TH SEPTEMBER, 2019. AT THE OUTSET, IT IS TO BE NOTED THAT UNDER CLAUSE (E) OF PARA 10 OF THE CIRCULAR NO. 3 OF 2018 THE ADDITION BASED ON THE INFORMATION RECEIVED FROM THE EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DG OF GST INTELLIGENCE ETC. SHALL BE DECIDED ON MERITS AND NOT ON MONETARY LIMITS SPECIFIED IN PARA 3 OF THE CIRCULAR ISSUED BY THE CBDT. IN THE CASE IN HAND, UNDISPUTEDLY THE INFORMATION RECEIVED BY THE AO IS NOT FROM EXTERNAL SOURCES BUT FROM THE INVESTIGATION WING OF THE DEPARTMENT ITSELF. FURTHER ONCE THE CIRCULAR ITSELF HAS SPECIFIED THE EXTERNAL LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DG OF GST INTELLIGENCE ETC., THEN IN VIEW OF THE DOCTRINE OF EJUSDEM GENERIS, THE GENERAL TERM TAKES THE COLOUR AND MEANING FROM THE SPECIFIC TERMS. THEREFORE, THE EXTERNAL SOURCES AS REFERRED IN THE CIRCULAR NO. 23 OF 2019 MUST BE THE LAW ENFORCEMENT AGENCY OTHER THAN THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT ITSELF. HENCE, THE APPEAL OF THE REVENUE DOES NOT FALL IN ANY OF THE EXCEPTION PROVIDED IN THE CBDT CIRCULAR. 4 ITA NO. 1080/JP/2019 M/S. GEM CRAFT ENTERPRISES PVT. LTD., JAIPUR. ACCORDINGLY, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN VIEW OF THE CBDT CIRCULAR. 5. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/01/2020. SD/- FOT; IKY JKWO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/01/2020. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-M/S. GEM CRAFT ENTERPRISES PVT. LTD., 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. 1080/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR