ACIT, Jaipur V. SHRI HARVINDER SINGH, Jaipur

ITA 1157/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54247 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 17-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: G M MEHTA
• Keywords: Bogus purchase; Rejection of books of accounts; Opportunity of being heard
• Section: 69C; 143(3); 143(2); 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH, A, JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1157/JP/10 ASSESSMENT YEAR : 2003-04 THE A.C.I.T., VS. SHRI HARVINDAR SINGH, CIRCLE-5, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH.D.K.MEENA RESPONDENT BY: SHRI G.M.MEHTA DATE OF HEARING : 03.10.2011 DATE OF PRONOUNCEMENT: 14.10.2011. ORDER DATE OF ORDER : 14.10.2011. PER R.K.GUPTA,J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE CIT(A) FOR THE ASSESSMENT YEAR2003- 04. 2. FOLLOWING GROUND HAVE BEEN TAKEN BY DEPARTMENT : - (I) DELETING THE BOTH ADDITIONS MADE BY THE AO U/S 69C AND PROVISO TO SECTION 69C OF THE I.T. ACT WITHOUT APPRECIATING TH E FACT THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS OF PROVING TH E GENUINENESS OF PURCHASES AND THE SOURCE OF EXPENDITURE INCURRED ON UNEXPLAINED PURCHASES. 3. LD.D/R PLACED RELIANCE ON THE ORDER OF A.O. ON T HE OTHER HAND THE COUNSEL OF THE ASSESSEE PLACED RELIANCE OF THE CIT(A). THE BRIEF F ACTS DISCUSSED BY CIT(A) ORDER ARE AS UNDER :- 2 THE ONLY ISSUE INVOLVED IN THE AFORESAID GROUNDS O F APPEAL IS THAT WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CASE T HE ASSESSING OFFICER WAS JUSTIFIED IN NOT ACCEPTING THE BOOK RESULTS AND IN MAKING ADDITION OF RS.6,73,692/- U/S 69C AND ANOTHER ADDITION OF SAME AMOUNT UNDER PROVISO TO S.69C OF I.T.ACT. IT IS SEEN THAT EARLIER IN THI S CASE THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 28.3.2006. SUBSEQUENTLY, TH E CIT(A) HAS DISPOSED OFF THE SAID APPEAL VIDE HIS ORDER DATED 0 2.01.2007. AGAINST THE SAID ORDER THE DEPARTMENT AND THE APPELLANT BOTH HA VE FILED THE APPEALS BEFORE ITAT JAIPUR BENCH AND ITAT JAIPUR BENCH IN I TA NO.281/JP/2007 AND IN ITA NO.397/JP/2007 DT. 19.9.2008 HAD RESTORE D THE MATTER OF REJECTING BOOKS OF ACCOUNTS BY CIT(A) TO THE FILE O F ASSESSING OFFICER SINCE CIT(A) HAS REJECTED BOOKS OF ACCOUNTS WITHOUT PROVI DING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO WAS DIRECTED TO DECIDE THE ISSUE OF GENUINENESS OF PURCHASES FROM M/S.GANPATI ART EMPOR IUM AND M/S.GANPATI JEWELLERS AND ART PALACE AND ALSO WITH REGARD TO REJECTION OF BOOKS OF ACCOUNTS AFTER PROVIDING ADEQUATE OPPORTUN ITY OF BEING HEARD TO THE APPELLANT. IN ACCORDANCE WITH THE AFORESAID DIR ECTION A NOTICE U/S 143(2) WAS ISSUED ON 14.7.2009. IN RESPONSE TO THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO FRESH EVIDENCE WHATSOEVE R COULD BE FURNISHED BY THE APPELLANT IN ORDER TO PROVE THE PURCHASES FR OM M/S.GANPATI ART EMPORIUM AND M/S.GANPATI JEWELLERS AND ART PALACE. THEREFORE, THE AO HAS DEPUTED THE CIRCLE INSPECTOR ON 18.12.2009 TO V ISIT THE PERSON AND RECORD THE STATEMENT U/S 131 OF I.T.ACT CONSIDERING THE ILLNESS OF SH.LALIT GUPTA PROP. OF BOTH THE CONCERNS. AT THE GIVEN ADDR ESS SH.RAJESH GUPTA, YOUNGER BROTHER OF SH.LALIT GUPTA WAS AVAILABLE AND CONVEYED THAT SH.LALIT GUPTA HAS LOST HIS VOICE AND IS UNABLE TO SPEAK. HOWEVER, HE HAS CATEGORICALLY ADMITTED THAT THE ABOVE FIRMS WERE IN VOLVED IN THE ACTIVITY OF ISSUING BOGUS BILLS AND THEREFORE, THE AO HAS HELD THAT AFORESAID PURCHASES SHOWN TO THE EXTENT OF RS.6K73,692/- WAS NOT VERIFI ABLE AND THEREAFTER, RELYING UPON VARIOUS JUDICIAL DECISIONS AS DISCUSSE D IN PARA 4 & 5 OF THE ASSESSMENT ORDER THE AO HAS HELD THAT THE PURCHASES SHOWNBY THE APPELLANT FROM M/S.GANPATI ART EMPORIUM AND M/S.GAN PATI JEWELLERS AND ART PALACE ARE NOT PROVED GENUINE. HOWEVER, HE HAS MADE THE ADDITION FOR ENTIRE SUCH PURCHASE AMOUNT OF RS.6,73,692/- U/S 69 C OF I.T.ACT AND ANOTHER ADDITION OF SIMILAR AMOUNT WAS MADE AS PER PROVISO TO S.69C OF I.T.ACT. 4. IT WAS SUBMITTED BEFORE CIT(A) THAT THE A.O. HAS ASSUMED JURISDICTION WRONGLY THERE AFTER HE RELIED UPON ITAT JAIPUR BENCH DECISI ON IN THE CASE OF ACIT V/S GEM STONES 22 TW 511 IN WHICH IT WAS HELD THAT THE ADDI TION FOR BOGUS PURCHASES CANNOT BE MADE WITHOUT REJECTING BOOKS OF ACCOUNTS AFTER INVO KING PROVISIONS OF S.145(3) OF I.T.ACT. MOREOVER, THE SELLER HAD LOST BOOKS OF ACC OUNT AND THEREFORE, THESE COULD NOT BE 3 PRODUCED. HE HAD FURTHER ARGUED THAT THE PAYMENT FO R BOTH THE PURCHASES WAS MADE BY ACCOUNT PAYEE CHEQUE AND THEREFORE, RELYING UPON VA RIOUS JUDICIAL DECISIONS A REQUEST WAS MADE TO DELETE SUCH ADDITION OF RS.6,73,792/- U/S 6 9C OF I.T.ACT AND TO FURTHER DELETE ANOTHER ADDITION OF RS.6,73,792/- UNDER PROVISO TO S.69C OF I.T.ACT. 5. AFTER CONSIDERING THE SUBMISSION AND PERUSING TH E MATERIAL ON RECORD. LD.CIT(A) HELD THAT NO CAN BE MADE U/S 69C AND UNDER PROVISO TO SECTION 69C. HOWEVER HE HELD THAT THOUGH G.P. RATE SHOWN BY ASSESSEE IS BETTER IN COM PARE TO EARLIER YEAR BUT AS CERTAIN PURCHASES MAINTAINED UNVERIFIED THEREFORE HE APPLIE D A G.P. RATE OF 35% ON DECLARED TURN OVER AGAINST G.P. OF 34.70% SHOWN IN EARLIER YEAR. WE HAVE GONE THROUGH THE ORDER OF A.O. & CIT(A) ON WHICH RELIANCE HAS BEEN PLACED BY THE RESPECTIVE PARTIES. WE FOUND NO INFIR MITY IN THE FINDING OF CIT(A) AS THE FINDING OF CIT(A) ARE IN CONSONANCE WITH THE CONSIS TANT FINDING OF TRIBUNAL ON SIMILAR FACTS. FINDING OF CIT(A) HAS BEEN RECORDED OF HIS O RDER 3 & 4 IS AS UNDER :- I HAVE CONSIDER FACTS OF THE CASE AND ARGUMENTS TA KEN BY SH.MEHTA QUITE CAREFULLY. IN THIS CASE DUE TO UNVER IFIABLE PURCHASES THE BOOKS OF ACCOUNTS WERE REJECTED BY CIT(A) BUT SINCE THE OPPORTUNITY WAS NOT GIVEN BEFORE REJECTING BOOKS OF ACCOUNTS THEREF ORE, THE MATTER WAS RESTORED TO THE FILE OF ASSESSING OFFICER WHO WILL DECIDE THE ISSUE OF GENUINENESS OF THE PURCHASES AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WITH REGARD TO REJECTION OF B OOKS OF ACCOUNTS ALSO. THE ASSESSING OFFICER HAS GIVEN PROPER OPPORTUNITY TO PROVE THE GENUINENESS OF THE SAID PURCHASES AND REGARDING REJ ECTION OF BOOKS OF ACCOUNTS AS PER DIRECTIONS OF HONBLE ITAT JAIPUR B ENCH BUT SUCH PURCHASES COULD NOT BE FOUND VERIFIABLE. EVEN IN TH E APPELLATE PROCEEDINGS, THERE WAS NO READINESS ON THE PART OF SH.MEHTA TO PROVE GENUINENESS OF THE AFORESAID PURCHASES. SINCE, THE OPPORTUNITY AS PER DIRECTIONS OF HONBLE ITAT HAS BEEN GIVEN THEREFORE , AS DECIDED IN NUMBER OF JEWELLERY CASES BY HONBLE ITAT JAIPUR BE NCH REGARDING UNVERIFIABLE PURCHASES THE BOOK RESULTS WERE REJECT ED BY INVOKING PROVISIONS OF S.145(3) OF I.T.ACT AND I HEREBY REJE CT SUCH BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF S.145(3) OF I.T. ACT. AFTER REJECTING BOOKS OF ACCOUNTS THE ISSUE ARISES THAT WHAT SHOULD BE GP RATE. THE APPELLANT HAS SHOWN GP RATE OF 34.70% AS AGAINST GP RATE OF 33% IN THE 4 IMMEDIATELY PRECEDING YEAR BUT CONSIDERING ANOTHER DECISION OF HONBLE ITAT JAILPUR BENCH IN THE CASE OF GEMS PARADISE IN MY CONSIDERED VIEW IT SHALL BE JUSTIFIABLE TO ADOPT GP RATE OF 35% ON DEC LARED TURNOVER AND A TRADING ADDITION IS ACCORDINGLY MADE TO THE DECLARE D GP. HOWEVER, NO ADDITION CAN BE MADE U/S 69C AND PROVISO TO S.69C O F I.T.ACT AND THEREFORE, SUCH ADDITION MADE BY AO OF RS.6,73,692/ - U/S 69C AND ANOTHER ADDITION OF RS.6,73,692/- UNDER PROVISO TO S.69C IS HEREBY DELETED. 6. THE ABOVE FINDING ARE FINDING OF FACT THEREFORE THE SAME IS CONFIRMED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. 8. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 14. 10.2011. SD/- SD/- (N.L.KALRA) (R.K.GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14.10.2011. *BASANT* COPY FORWARDED TO :- 1. THE A.C.I.T., CIRCLE-5, JAIUR. 2. SHRI HARVINDER SINGH, JAIPUR. 3. THE CIT, 4. THE CIT(A) 5. THE D.R.,ITAT, JAIPUR. 6. THE GUARD FILE IN ITA NO.1157/JP/10 BY ORDER A.R.,ITAT., JAIPUR