DCIT, Jaipur V. M/S VISION JEWELLERS, Jaipur

ITA 1179/JPR/2010

• Counselvise Citation: 117923114 RSA 2010
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 131

Judgement Text

1 ITA 1179-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1179/JP/2010 ASSTT. YEAR : 2007-08. THE DCIT, CIRCLE-2, VS. M/S. VISION JEDWELLERS, JAIPUR. 4312, KASTURI PALACE, KGB KA RASTA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY KUMAR RESPONDENT BY : SHRI MAHENDRA GARGIEY A ORDER DATE OF ORDER : 24/06/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2007-08. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE TRAD ING ADDITION OF RS. 15,57,160/- BEING 25% OF UNVERIFIABLE PURCHASES OF RS. 62,28,64 2/-. 3. THE ASSESSEE DEALS IN GEMS AND JEWELLERY. BOOKS OF ACCOUNT WERE REJECTED BY THE AO ON ACCOUNT OF UNVERIFIABLE PURCHASES OF RS. 62,2 8,642/- FROM EIGHT PARTIES. THE AO NOTED THAT DAY TO DAY STOCK INVENTORY IN TERMS OF L OT WISE QUALITY AND QUANTITY OF VARIOUS ITEMS WERE NOT FURNISHED. HE FURTHER OBSERVED THAT IN A SEPARATE INVESTIGATION CARRIED OUT IN THE CASE OF HALDIA GROUP, IT WAS FOUND THAT LARG E NUMBERS OF BOGUS ENTITIES WERE CREATED TO ISSUE ACCOMMODATION BILLS WITHOUT MAKING ANY PURCHASE OR SALES. M/S. AMAR 2 GEMS, THE JEWELERS CREATION AND GLORIOUS GEMS HAVE BEEN SHOWN AS SUPPLIERS BY THE ASSESSEE AND THESE NAMES WERE FIGURING IN THE LIST OF SUCH BOGUS SUPPLIERS IN THE SEARCH CASE OF HALDIA GROUP. SUMMONS ISSUED UNDER SECTION 131 TO THESE PARTIES AT THEIR GIVEN ADDRESSES WERE RETURNED BACK UNSERVED. SIMILARLY S URVEY CONDUCTED BY BCTT WING OF THE DEPARTMENT IN CASE OF VARIOUS PARTIES IT WAS FO UND THAT THEY WERE ONLY ENTRY PROVIDER WITHOUT SUPPLYING ANY GOODS. THOUGH ASSESSEE HAS F ILED CONFIRMATIONS FROM THESE PARTIES TO PROVE THE PURCHASES MADE FROM THESE PARTIES, SAL ES TAX NUMBER AND PAN NUMBERS WERE ALSO FILED. THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE. HOWEVER, THE AO WAS NOT SATISFIED. THEREFORE, HE REJECTED THE BOOK S OF ACCOUNT PLACING RELIANCE ON THE DECISION IN THE CASE OF CIT VS. PRECISION FINANCE P VT. LTD., 208 ITR 465 (CAL.) AND ON THE DECISION IN THE CASE OF SHRI SRIKISHAN MALPANI, 32 TAX WORLD 122. 4. AFTER REJECTING THE BOOKS OF ACCOUNT, THE AO MAD E DISALLOWANCE OF 25% OF UNVERIFIABLE PURCHASES AFTER RELYING ON THE DECISIO N OF M/S. SANJAY OIL CAKE INDUSTRIES VS. CIT, 10 DTR 153 AND IN THE CASE OF M/S. VIJAY P ROTEINS LTD. VS. ACIT, 58 ITD 428 (ITAT AHMEDABAD). IT WAS CONTENDED BEFORE LD. CIT (A) THAT BY FILING CONFIRMATIONS, SALES TAX NUMBER, PAN AND BANK STATEMENT OF THE SUP PLIERS, PRIMARY ONUS WAS DISCHARGED. DATE-WISE STOCK REGISTER OF VARIOUS IT EMS WAS ALSO SUBMITTED. IT WAS SUBMITTED THAT NO STATEMENT IN RESPECT TO SUPPLIES MADE TO THE ASSESSEE WERE RECORDED. HOWEVER, THE AO HAS MADE RELIANCE ON THE SURVEY REP ORT CONDUCTED IN CASE OF HALDIA GROUP BY BCTT WING OF THE DEPARTMENT. IT WAS FURTH ER SUBMITTED THAT DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF M/S. SANJ AY OIL CAKE INDUSTRIES (SUPRA) WAS FOUND DISTINGUISHABLE BY THE TRIBUNAL IN THE CASE O F M/S. GEM PARADISE AND, THEREFORE, 3 THE ADDITION MADE @ 25% WAS NOT JUSTIFIED AND ALSO THE REJECTION OF BOOKS OF ACCOUNT WAS UNJUSTIFIED. 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, THE LD. CIT (A) NOTED THAT AO WAS NOT JUSTIFIED IN MAKING THE A DDITION @ 25% OF UNVERIFIABLE PURCHASES. REJECTION OF BOOKS OF ACCOUNT WERE HELD AS CORRECT AS ON ACCOUNT OF UNVERIFIABLE PURCHASES THE REJECTION OF BOOKS WAS H ELD BY THE BENCH IN VARIOUS CASES AS CORRECT. THEREAFTER, THE LD. CIT (A) NOTED THAT AD DITION, IF ANY, CAN BE MADE ON THE BASIS OF PAST HISTORY OF THE CASE. AFTER OBSERVING THESE OBSERVATIONS, THE LD. CIT (A) NOTED THAT THE ASSESSEE HAS DECLARED G.P. RATE OF 15.53% AGAIN ST 15.17% SHOWN IN THE IMMEDIATELY PRECEDING YEAR WHEN SALES WERE ONLY TO THE TUNE OF RS. 1,89,95,645/- WHEREAS SALES DURING THE YEAR UNDER CONSIDERATION ARE INCREASED T O RS. 3.34 CRORES OR ODD. ACCORDINGLY, HE WAS OF THE VIEW THAT G.P. RATE SHOWN BY ASSESSEE IS BETTER. THEREFORE, HE DELETED THE ENTIRE ADDITION. FOR DELETING THE ADDITION, THE LD. CIT (A) HAS TAKEN INTO CONSIDERATION THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF M/S. GOTAN LIME & KHANIZ UDYOG, 256 ITR 253 (RAJ.) AND IN CASE OF MALANI RAM JIVAN JAGANNATH VS. ACIT, 207 CTR 19 (RAJ.). 6. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 7. THE LD. D/R STRONGLY PLACED RELIANCE ON THE ORDE R OF THE AO. IT WAS FURTHER SUBMITTED THAT A RECENT DECISION IN THE CASE OF CIT VS. SUNIL TALWAR MURLIDHAR & PARTY, 151 TAXMAN 297 (RAJ.), THE HONBLE RAJASTHAN HIGH C OURT HAS SET ASIDE ;THE ORDER OF THE TRIBUNAL AND REMANDED THE MATTER BACK TO ITS FILE F OR DECIDING THE ISSUE AFRESH WHERE CERTAIN PURCHASES REMAINED UNVERIFIABLE. 4 8. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). FURTHER, RELIANCE WAS PLACED ON VARIO US CASE LAWS MENTIONED IN THE WRITTEN NOTE FILED HERE BEFORE THE TRIBUNAL WHICH INCLUDED THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF KANSARA BEARINGS PVT. LTD., 2 70 ITR 235 AND IN THE CASE OF CIT VS. SHRI SINDHUJA FOODS PVT. LTD., 16 DTR 278 (RAJ.). 9. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) AND THE SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT DEPARTMENT DESERVES TO SUCCEED IN ITS APPEAL IN PART. THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CONSIST ENT VIEW THAT WHERE PURCHASES REMAINED UNVERIFIABLE, THE REJECTION OF BOOKS OF AC COUNT ARE CORRECT. HOWEVER, SIMULTANEOUSLY THE JAIPUR BENCHES ARE ALSO TAKING A VIEW THAT ADDITION MADE @ 25% OF THE UNVERIFIABLE PURCHASES ARE ALSO NOT JUSTIFIED A S IF ANY ADDITION CAN BE MADE THAT CAN BE MADE TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND TAKING INTO CONSIDERATION THE CURRENT EVENTS OF THE CASE. IN THE PRESENT CAS E IT IS SEEN THAT THOUGH TURNOVER OF THE ASSESSEE HAS INCREASED FROM RS. 1.89 CRORES OR ODD TO RS. 3.34 CRORES OR ODD AND G.P. RATE IS ALSO BETTER. HOWEVER, THE FACT REMAINS THAT CER TAIN PURCHASES TO THE EXTENT OF RS. 62,00,000/- OR ODD REMAINED UNVERIFIABLE. THEREFORE , TO COVER UP THE LEAKAGE OF REVENUE, IF ANY, WE ARE OF THE VIEW THAT IF A TRADING ADDITI ON OF RS. 1,50,000/- IS SUSTAINED THAT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 10. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLO WED IN PART. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 .06.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, 5 D/- COPY FORWARDED TO :- THE DCIT CIRCLE-2, JAIPUR. M/S. VISION JEWELLERS, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1179/JP/2010) BY ORDER, AR ITAT JAIPUR.