Rajmal Kakhichand Jewellers Pvt. Ltd., Ahmednagar V. Joint Commissioner of Income-tax, Ahmednagar

ITA 1093/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1918 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Rejection of books of accounts; Business income; Additional evidence
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, J UDICIAL MEMBER . / ITA NO.1093/PUN/2016 / ASSESSMENT YEAR : 2011 - 12 RAJMAL LAKHICHAND JEWELLERS PVT. LTD., 169, BALAJI PETH, JALGAON 425001 PAN : AAECS0061L ....... / APPELLANT / V/S. JT. COMMISSIONER OF INCOME TAX, RANGE 1, JALGAON / RESPONDENT . / ITA NO.1426/PUN/2016 / ASSESSMENT YEAR : 2011 - 12 DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON ....... / APPELLANT / V/S. M/S. RAJMAL LAKHICHAND JEWELLERS PVT. LTD., 169, BALAJI PETH, JALGAON 425001 PAN : AAECS0061L / RESPONDENT ASSESSEE BY : S HRI SUNIL PATHAK REVENUE BY : SHRI N. ASHOK BABU / DATE OF HEARING : 12 - 07 - 2019 / DATE OF PRONOUNCEMENT : 30 - 0 8 - 201 9 2 ITA NO S.1093 & 1426/PUN/2016, A.Y. 2011 - 12 / ORDER PER VIKAS AWASTHY, JM : TH ESE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, NASHIK DATED 13 - 04 - 2016 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE ASSESSEE IN APPEAL HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS/ADDITIONAL GROUNDS OF APPEAL : 1] G. P. ADDITION OF RS.5,14,78,214/ - . 1.1] THE LEARNED CIT(A) ERRED IN ENHANCING THE ASSESSMENT BY RS .5,14,78,214/ - AFTER ESTIMATING THE GP AT 2 % AGAINST GP RATE OF 1.51 % DECLARED BY THE APPELLANT THOUGH THE AO HAD NEITHER REJECTED THE BOOKS OF ACCOUNTS NOR MADE ANY ADDITION ON THIS SCORE . 1.2] T HE LEARNED CIT(A) WHILE ENHANCING THE ABOVE ADDITION HAS ERRED IN REJECTING THE BOOKS OF ACCOUNTS ON THE BASIS OF POSSIBILITY OF PURCHASING THE BULLION AND ORNAMENTS FROM THE GROUP CONCERNS AT HIGHER RATES AND AT THE SAME TIME ESTIMATING THE GP ON THE BASIS OF SALES AS SHOWN BY THE BOOKS OF ACCOUNTS. 1.3] IN THE ALTERNATIVE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE GP MARGIN BE ESTIMATED AT A REASONABLE PERCENTAGE OF TURNOVER FOLLOWING IT AT ORDER IN THE CASE OF A SISTER CONCERN VIZ. MLS. RAJMAL LAKHICHAND, JALGAON FOR AY 2009 - 10 AND THE ADDITION BE RESTRICTED ACCORDINGLY, AS AGAINST RS. 5,14,78,214/ - WHICH IS EXCESSI VE AND UNREASONABLE. 2] THE APPELLANT REQUESTS FOR ADMISSION OF ADDITIONAL EVIDENCES REQUIRED IN SUPPORT OF THE ABOVE GROUNDS OF APPEAL. 3] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. ADDITIONAL GROUND 1] THE LEARNED CIT(A) ERRED IN MAKING AN ENHANCEMENT BY WAY OF GP ADDITION OF RS.5,14,78,214/ - BY ESTIMATING THE GP AT 2% WITHOUT GIVING AN OPPORTUNITY OF HEARING TO THE APPELLANT AS REQUIRED U/S. 251(2) AND THUS, THE ADDITION IS BAD IN LAW AND SHOULD BE DELETED. 3 ITA NO S.1093 & 1426/PUN/2016, A.Y. 2011 - 12 3. THE REVENUE IN ITS APPEAL HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON FOLLOWING GROUNDS : 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 40A(2)(A), OF RS.L,02,08,687/ - RELYING UPON THE HON'BLE ITAT, PUNE'S DECISION IN THE CASE OF M/S RAJMAL LAKHICHAND FOR THE AY 2009 - 10 AND HAS NOT GIVEN ANY REASONING FOR ADOPTING THE GROSS PROFIT RATIO OF 2.00% AGAINST THE DISCLOSED GP RATIO OF 1.51%. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT - A HAS ERRED IN NOT APPRECIATING THE FACT THAT THE DISALLOWANCE U/S 40A(2)(A) ON THE EXCESS PAYMENT ON PURCHASES MADE FROM THE SISTER CONCERN WAS MADE AFTER CONSIDERING THE JALGAON(LOCAL) RATES OF GOLD AND SILVER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE LD. CIT(A) - 2, NASHIK BE CANCELLED ON THE ABOVE ISSUE AND THAT OF THE A.O BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE LD. PR. CIT, AS PER THE CIRCUMSTANCES OF THE CASE. 5. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONAL EVIDENCE, WITH THE PRIOR PERMISSION OF LD. PR.CIT, APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 4. SHRI SUNIL PATHAK APPEARING ON BEHALF OF THE ASS ESSEE SUBMITTED AT THE OUTSET THAT THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 OF THE APPEAL AND BY THE REVENUE IN GROUND NOS. 1 AND 2 OF THE APPEAL ARE INTER CONNECTED. THE LD. AR SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN IMMEDIATELY PREC EDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2010 - 11 HAS ADJUDICATED THIS ISSUE. THE FACTS GIVING RISE TO THE ISSUE ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2010 - 11. THE LD. AR POINTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE APPLYING GP RATE IN PARA 6.6 OF THE IMPUGNED ORDER HAS OBSERVED THAT THE TRIBUNAL IN THE CASE OF RAJMAL LAKHICHAND HAD ADOPTED GP RATE OF 1.58% AGAINST THE GP RATE OF 1.51% DISCLOSED BY THE ASSESSEE. HOWEVER, IN THE VERY NEXT LINE THE COMMISSIONER OF INCOME TAX (APPE ALS) ADOPTED GP RATE OF 2% OF THE TOTAL SALES THEREBY INCREASING GP SUBSTANTIALLY. THE LD. AR SUBMITTED THAT THE 4 ITA NO S.1093 & 1426/PUN/2016, A.Y. 2011 - 12 TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2010 - 11 HAS ENHANCED GP RATE BY 0.13%. THE LD. AR SUBMITTED THAT SIMILAR ENHANCEMENT CAN BE MADE IN THE IMPUGNED ASSESSMENT YEAR AS WELL. 4.1 WITH RESPECT TO GROUND OF APPEAL NOS. 1 AND 2 RAISED BY THE DEPARTMENT , THE LD. AR SUBMITTED THAT IDENTICAL GROUNDS WERE RAISED BY THE DEPARTMENT IN ASSES SMENT YEAR 2010 - 11 IN ITA NO.834/PUN/2015. THE TRIBUNAL VIDE ORDER DATED 07 - 03 - 2018 HAS DISMISSED THE SAME. 5. ON THE OTHER HAND SHRI N. ASHOK BABU REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDIN GS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION MADE BY ASSESSING OFFICER AFTER INVOKING THE PROVISIONS OF SECTION 40A(2)(A) OF THE ACT. THE LD. DR SUBMITTED THAT IT IS EVIDENT FROM THE RECORDS THAT THE ASSESSEE HAS ENTERED INTO TRANSA CTION S OF SALE AND PURCHASE OF GOLD/SILVER BULLION AND ORNAMENTS WITH ITS GROUP CONCERNS AT A RATE HIGHER THAN THE MARKET RATE. 6. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE OBSERVE THAT THE ISSUE RAISED BY THE ASSESSEE IN APPEAL ASSAILING ESTIMATION OF GP AT HIGHER RATE AND THE GROUNDS RAISED BY THE REVENUE AGAINST DELETING OF ADDITION MADE AFTER INVOKING THE PROVISIONS OF SECTION 40A(2)(A) BY THE ASSESSING OFFICER HAVE BEEN ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2010 - 11. SIMILAR GROUNDS WERE RAISED ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY BOTH THE SIDES IN THE CASE OF OTHER GROUP CONCERNS VIZ. RAJMAL LAKHICHAND AND M/S . R.L. GOLD PVT. LTD. VS. JCIT. THE GROUNDS RAISED BY THE DEPARTMENT IN DELETING 5 ITA NO S.1093 & 1426/PUN/2016, A.Y. 2011 - 12 THE ADDITION U/S. 40A(2)(A) AND THE GROUNDS RAISED BY THE ASSESSEE IN ESTIMATING GP AT HIGHER RATE WAS ADJUDICATED CONCURRENTLY BY THE CO - ORDINATE BENCH IN ASSESSEES OWN CAS E IN ASSESSMENT YEAR 2010 - 11. THE TRIBUNAL IN APPEAL BY ASSESSEE IN ITA NO. 672/PUN/2015 AND THE CROSS APPEAL BY THE DEPARTMENT IN ITA NO. 834/PUN/2015 FOR ASSESSMENT YEAR 2010 - 11(SUPRA) AFTER CONSIDERING THE ENTIRE GAMUT OF THE TRANSACTIONS BETWEEN THE A SSESSEE AND ITS SISTER CONCERNS CONCLUDED AS UNDER : 18. THE ASSESSEE HAS ASSAILED THE G.P. ESTIMATED BY COMMISSIONER OF INCOME TAX (APPEAL) BEING ON THE HIGHER SIDE. AS AGAINST THE GP OF 2.22% DISCLOSED BY ASSESSEE THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ESTIMATED GP AT 2.75%, THEREBY ENHANCING THE GP RATE BY 0.53%. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, WE ARE OF CONSIDERED VIEW THAT INCREASE IN G.P. RATE BY 0.13% WOULD MEET THE ENDS OF JUSTICE. THUS, G.P. IS ENHANCED FROM 2.22% TO 2. 35% OF THE TOTAL SALE OF RS.888,30,42,858/ - AS PER AUDIT ACCOUNTS. IN SO FAR AS DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S.40A(2)(A) IN RESPECT OF PURCHASE OF GOLD BULLION AND GOLD ORNAMENTS IS CONCERNED, THE SAME IS REJECTED FOR THE REASONS GIVEN BY THE TRIBUNAL IN THE CASE OF M/S. RAJMAL LAKHICHAND FOR ASSESSMENT YEAR 2009 - 10 (SUPRA). THUS, IN VIEW OF OUR ABOVE FINDINGS, THE GROUND NO. 3 RAISED IN APPEAL BY ASSESSEE IS PARTLY ALLOWED AND GROUND NO. 1 RAISED IN APPEAL BY DEPARTMENT IS DISMISSED. 7. IN THE PRESENT CASE FACTS BEING IDENTICAL , T HE FINDINGS GIVEN BY THE CO - ORDINATE BENCH ON THE ABOVE SAID ISSUE WOULD MUTATIS MUTANDIS APPLY IN THE PRESENT CASE. CONSEQUENTLY, THE GP DECLARED BY THE ASSESSEE IS ENHANCED BY 0.13%. IN THE RESULT, THE GR OUND NO. 1 OF THE APPEAL BY THE ASSESSEE IS PARTLY ALLOWED AND CORRESPONDING GROUND NOS. 1 AND 2 RAISED IN THE APPEAL BY THE DEPARTMENT ARE DISMISSED. 8. THE ASSESSEE HAS TAKEN ALTERNATE PLEA IN ADDITIONAL GROUND OF APPEAL , ON LEGAL ISSUE OF NOT ALLOWIN G PROPER OPPORTUNITY OF HEARING. SINCE, WE HAVE GRANTED PART RELIEF TO THE ASSESSEE ON THE MAIN GROUND OF APPEAL, THE ALTERNATE GROUND RAISED AS ADDITIONAL GROUND IS DISMISSED. THE GROUND NOS. 3, 4 AND 5 OF THE APPEAL BY THE REVENUE ARE GENERAL IN NATURE , HENCE 6 ITA NO S.1093 & 1426/PUN/2016, A.Y. 2011 - 12 REQUIRE NO ADJUDICATION. SIMILARLY, GROUND NOS. 2 AND 3 IN THE APPEAL BY ASSESSEE ARE GENERAL IN NATURE, HENCE, REQUIRE NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 30 TH DAY OF AUGUST, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 30 TH AUGUST, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, NASHIK 4. THE PR. COMMISSIONER OF INCOME TAX - 2, NASHIK 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE