ITO, Jaipur V. SHRI SHYAM NATHANY, Jaipur

ITA 1169/JPR/2010

• Counselvise Citation: 116923114 RSA 2010
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Rejection of books of accounts; Tax effect
• Section: 68

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.1169/ JP/2010 ASSESSMENT YEAR: 2007-08 PAN: ABCPN 2721 J THE ITO VS. SHRI SHYAM NATHANY WARD- 2 (2) PROP. M/S. SIKKA INTERNATIONAL JAIPUR 246, GANPATI PLAZA, M.I. ROAD, JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.544/ JP/2010 ASSESSMENT YEAR: 2006-07 PAN: ABCPN 2721 J SHRI SHYAM NATHANY VS. THE ITO PROP. M/S. SIKKA INTERNATIONAL WARD- 2 (2) 246, GANPATI PLAZA, M.I. ROAD, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) DEPARTMENT BY : MISS. ROSHANTA MEENA ASSESSEE BY : SHRI MAHENDRA GARGIEYA ORDER PER N.L. KALRA, AM:- THE REVENUE AND THE ASSESSEE HAVE FILED TWO DIFFERE NT APPEALS AGAINST THE ORDERS OF THE LD. CIT(A)-I, JAIPUR DATED 06-0 7-2010 AND 12-03-2010 FOR THE ASSESSMENT YEARS 2007-08 AND 2006-07 RESPECTIVE LY. 2.0 FIRST OF ALL, WE TAKE UP THE APPEAL OF THE REVE NUE BEARING ITA NO. 1169/JP/2010 FOR THE ASSESSMENT YEAR 2007-08. 2 2.1 DURING THE COURSE OF HEARING THE LD. AR SUBMITT ED THAT THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS. 2.00 LACS. 2.2 WE HAVE NOTICED FROM THE GROUND OF APPEAL OF TH E REVENUE WHERE REVENUE IS AGGRIEVED AGAINST RELIEF OF RS. 4,91,445 /- IN RESPECT OF TRADING AND RS. 38,000/- IN RESPECT OF ADDITION U/S 68 OF THE ACT. 2.3 WE HAVE HEARD BOTH THE PARTIES. WE FEEL THAT TH E TAX EFFECT ON THE ABOVE ADDITIONS WHICH HAVE BEEN DELETED BY THE LD. CIT(A) IS LESS THAN RS. 2.00 LACS. THEREFORE, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE AS PER SECTION 268A OF THE ACT. 3.0 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE BEARI NG ITA NO. 544 JP/2010 FOR THE ASSESSMENT YEAR 2006-07. 3.1 THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3,30,825/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF GEMS AND JEWELLERY. THE AO NOTICED THAT THE ASSESSEE HAS SHOWN GROSS PR OFIT RATE OF 20.35% ON TURNOVER OF RS. 39.93 LACS. IN THE IMMEDIATELY PRE CEDING YEAR, THE GROSS PROFIT RATE WAS AT 28.63% ON SALES OF RS. 26.06 LAC S. THE AO NOTICED THAT THE ASSESSEE HAS MADE PURCHASES TO THE EXTENT OF RS.17, 85,072/- FROM SIX PARTIES AND NAMES AND QUANTUM OF PURCHASES MADE FROM THESE SIX PARTIES ARE AVAILABLE AT PAGE 2 OF THE ASSESSMENT ORDER. THE AO IN THE ASSESSMENT ORDER 3 HAS MENTIONED THAT THESE SIX PARTIES HAVE BEEN FOUN D TO BE INDULGING IN ISSUING BOGUS BILLS. THE AO FROM PAGES 2 TO 7 IN TH E ASSESSMENT ORDER HAS MENTIONED THE REASONS AS TO WHY SUCH PARTIES HAVE B EEN CONSIDERED TO BE INDULGING IN ISSUING BOGUS BILLS. THE ASSESSEE IN H IS REPLY BEFORE THE AO STATED THAT THE ASSESSEE HAS MADE PAYMENTS IN CHEQU ES AND THE PARTIES ARE HAVING THE PAN AND SALES TAX REGISTRATION. THE AO R EJECTED THE BOOKS OF ACCOUNTS AFTER REFERRING TO VARIOUS CASE LAWS INCLU DING THE DECISION OF HON'BLE APEX COURT IN THE CASE OF KANCHWALA GEMS VS JCIT , 288 ITR 10. WHILE REJECTING THE BOOKS OF ACCOUNTS, THE AO HAS A LSO MENTIONED THAT THE ASSESSEE IS NOT MAINTAINING THE STOCK REGISTER. THE AO ACCORDINGLY MADE THE TRADING ADDITION WHICH REPRESENTED 25% BOGUS PURCHA SES. 3.2 THE LD. CIT(A) AFTER CONSIDERING THE DECISIONS OF ITAT JAIPUR BENCH UPHELD THE REJECTION OF BOOKS OF ACCOUNTS. HOWEVER, CONSIDERING THE GROSS PROFIT RATE OF THE IMMEDIATELY PRECEDING YEAR, THE LD. CIT(A) DIRECTED THE AO TO APPLY THE GROSS PROFIT RATE OF 28.63%. 3.3 WE HAVE HEARD BOTH THE PARTIES. THE TRIBUNAL IS CONSISTENTLY HOLDING THAT IN CASE THE PURCHASES ARE NOT VERIFIABLE THEN THE BOOKS OF ACCOUNTS CAN BE REJECTED. IT IS THE TRUE THAT TURNOVER DURING T HE YEAR IS BETTER AS COMPARED TO PRECEDING YEAR. IN THE PRECEDING YEAR, THE GROSS PROFIT RATE WENT DOWN ON ACCOUNT OF INCREASE IN TURNOVER AS COMPARED TO EA RLIER PRECEDING YEAR. WE 4 THEREFORE, FEEL THAT IT WILL BE FAIR AND REASONABLE TO APPLY THE GROSS PROFIT RATE OF 25% . 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22-07 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 22 /07/2011 *MISHRA COPY FORWARDED TO :- 1. THE ITO, WARD- 2(2) JAIPUR 2. SHRI SHYAM NATHANI, JAIPUR 3. THE LD. CIT (A) JAIPUR 4. THE LD. CIT BY ORDER 5. THE LD.DR 6. THE GUARD FILE (ITA NO1169/JP /10) A.R, ITAT, JAIPUR 5 6