M/S. JASMINE DESIGN PRIVATE LIMITED, JAIPUR V. ITO, WARD-5(1), JAIPUR

ITA 1286/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4995 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 19-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAUL
• Keywords: Valuation report
• Section: 133A; 13; 22

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B , JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1286/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 M/S. JASMINE DESIGN PVT. LTD. 50, SHAMBHA JI MARG INDERPURI COLONY, BRAHMPURI, JAIPUR CUKE VS. THE ITO WARD- 5 (1) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AADCJ 0715 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : SMT. RUNI PAUL, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/02/2020 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 18 /02/2020 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) -2, JAIPUR DATED 31-10-2019 FOR THE ASSESS MENT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. (1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE AO AS WELL AS THE LD. CIT(A) HAVE ERRED IN NOT ACCEPTING THE VALU ATION REPORT OF THE DEPARTMENTAL VALUER SHRI BALLABH MAYACH DATED 29-11 -2014 SUBMITTED BY THE ASSESSEE. ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 2 (2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE AO AS WELL AS THE LD. CIT(A) HAVE ERRED IN NOT MEETING OUT THE OB JECTIONS RAISED BY THE ASSESSEE FOR VALUATION MADE BY THE VALUER M/S. KANKANRIYA JEWELLERS FOR VALUATION DATED 25-11-2014 AND 27-11- 2014. (3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,30,46 ,608/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. (4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 12,66,5 40/- ON ACCOUNT OF UNVERIFIABLE PURCHASES. 2.1 THE GROUND NO. 1 TO 3 OF THE ASSESSEE ARE REGAR DING THE ADDITION MADE BY THE AO ON ACCOUNT OF EXCESS STOCK FOUND AS PER VALUATION MADE BY THE DEPARTMENTAL VALUER AT THE TIME OF SURVEY. 2.2 THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND E NGAGED IN THE BUSINESS OF GOLD/KUNDAN MEENA JEWELLERY. THERE WAS A SURVEY U/S 133A OF THE ACT ON 25-11-2014 AT THE BUSINESS PREMISES O F THE ASSESSEE. DURING THE COURSE OF SURVEY, THE STOCK OF THE ASSES SEE WAS VALUED BY THE DEPARTMENTAL APPROVED VALUER SHRI VIJENDRA KUMAR K ANKARIYA. THE DEPARTMENTAL APPROVED VALUER HAS VALUED THE STOCK A S ON THE DATE OF SURVEY AT RS. 2,73,01,637/-. THE ASSESSEE THEREAFTE R FILED ITS RETURN OF INCOME ON 30-09-2015 FOR THE YEAR UNDER CONSIDERATI ON DECLARING TOTAL INCOME AT RS. 14,77,100/-.DURING THE SCRUTINY ASSES SMENT, THE AO HAS MADE THE ADDITION OF RS. 1,17,80,068/- ON ACCOUNT O F EXCESS STOCK BASED ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 3 ON THE VALUATION OF THE STOCK AT THE TIME OF SURVEY . THE AO ALSO TREATED THE PURCHASES TO THE EXTENT OF RS. 12,66,540/- AS U NVERIFIABLE. HOWEVER, NO SEPARATE ADDITION WAS MADE AS THE SAID AMOUNT WA S CONSIDERED AS COVERED BY THE ADDITION MADE ON ACCOUNT OF EXCESS S TOCK. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT( A) BUT COULD NOT SUCCEED. 2.3 BEFORE US, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE VALUATION BY THE DEPARTMENTAL APPROVED VALUER IS BASED ON INCORR ECT FACTS AND ALSO INCORRECT RATES APPLIED FOR VARIOUS ITEMS OF JEWELL ERY. HE SUBMITTED THAT THE ASSESSEE VIDE LETTER DARTED 16-12-2014 POINTED OUT VARIOUS DEFECTS IN THE VALUATION DONE BY THE DEPARTMENTAL APPROVED VAL UER AND SPECIFICALLY HIGHLIGHTED THE FACTS THAT DEPARTMENTAL APPROVED VA LUER HAS ASSUMED THE CONTENTS/ PURITY OF THE GOLD IN ALL THE ARTICLES AT 22 CARAT WHEREAS MOST OF THE ARTICLES CONTAIN GOLD OF 4,9,17 CARAT AND ONLY VERY FEW ARTICLES CONTAIN 22 CARAT GOLD. HE FURTHER SUBMITTED THAT ASSESSEE H AS ALSO POINTED OUT THAT YELLOW SAPPHIRE OLKA I.E. PUKHRAJ HAS BEEN VALUED B Y THE DEPARTMENTAL APPROVED VALUER AS DIAMOND POLKA WHICH HAS RESULTED INTO HIGHER VALUATION. THE QUALITY OF THE DIAMOND IN THE JEWELL ERY WAS IN THE RANGE OF RS. 2,000/- TO RS. 3,000/- PER CARAT WHEREAS THE DE PARTMENTAL APPROVED ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 4 VALUER HAS TAKEN IT AT A HIGHER RATE OF RS. 4,000/- TO RS. 5,000/- PER CARAT. THUS THE ASSESSEE IMMEDIATELY AFTER SURVEY POINTED OUT THE DEFECTS IN THE VALUATION DONE BY THE DEPARTMENTAL APPROVED VALUER. FURTHER THE DIRECTOR OF THE ASSESSEE COMPANY SHRI UMESH SONI I N HIS STATEMENT RECORDED AT THE TIME OF SURVEY ALSO POINTED OUT THA T CERTAIN PURCHASE BILLS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. THIS FAC T WAS ALSO ACCEPTED BY THE AO WHILE PASSING THE ASSESSMENT ORDER AND GRANT ED THE CREDIT OF RS. 1,11,26,742/- ON THIS ACCOUNT. THEREFORE, THE VALUA TION DONE BY THE DEPARTMENTAL APPROVED VALUER IS NOT BASED ON CORREC T FACTS. THE LD.AR OF THE ASSESSEE FURTHER CONTENDED THAT AFTER CONSID ERING THE PURCHASE BILLS TO THE TUNE OF RS. 1,11,26,742/-, THERE WAS NO VARI ATION IN THE QUANTITY OF THE STOCK AS RECORDED IN THE BOOKS OF ACCOUNT AS WE LL AS FOUND DURING THE COURSE OF SURVEY ON PHYSICAL VERIFICATION. THUS THE LD.AR OF THE ASSESSEE CONTENDED THAT ADDITION WAS MADE MERELY BECAUSE OF HIGHER VALUATION DONE BY THE DEPARTMENTAL APPROVED VALUER. THE ASSES SEE IMMEDIATELY AFTER SURVEY HAS GOT THE STOCK VALUED BY THE REGIST ERED VALUER AND FILED THE VALUATION REPORT WITH THE DEPARTMENT. THE AO AS WELL AS LD. CIT(A) HAVE EVEN NOT CONSIDERED THE VALUATION REPORT FILED BY THE ASSESSEE FOR EXAMINATION OR CORRECTNESS OF THE VALUATION. THUS T HE VALUATION REPORT ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 5 FILED BY THE ASSESSEE OF THE REGISTERED VALUER WAS REJECTED OUT-RIGHTLY WITHOUT POINTING OUT ANY DEFECT OR ERROR IN THE VA LUATION. THE LD.AR OF THE ASSESSEE THUS SUBMITTED THAT AS PER THE VALUATI ON DONE BY THE REGISTERED VALUER, THERE IS NO VARIATION IN THE VAL UE OF THE STOCK FOUND AS PER THE BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY. IF THE VALUATION DONE BY THE REGISTERED VALUER IS TAKEN INTO CONSIDERATION T HEN THE DIFFERENCE BETWEEN THE BOOK POSITION AND PHYSICAL POSITION OF THE STOCK IS ONLY RS. 2,21,801/- WHICH IS VERY NEGLIGIBLE DUE TO ELEMENT OF ESTIMATE IN GOLD VALUATION. THE LD.AR OF THE ASSESSEE FURTHER SUBMIT TED THAT THE DEPARTMENTAL APPROVED VALUER HAS TAKEN THE RATE OF THE JEWELLERY AS PER SALE BILLS WHICH WERE FOUND DURING THE SURVEY OF JE WELLERY SOLD BY THE ASSESSEE IN THE EXHIBITION IN MUMBAI. THE SAID SALE BILLS WERE HAVING HIGH RATE DUE TO THE REASON THAT IT WAS SOLD IN THE EXHIBITION AND HIGH PRICE WAS CHARGED BY THE MANAGER OF THE EXHIBITION WHICH IS ALSO THE PART OF THE SALE BILLS. THUS IF THE VALUATION OF THE STO CK IS DONE AS PER THE PURCHASE BILLS THEN THERE WILL BE NO EXCESS STOCK. 2.4 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE VALUATION WAS DONE IN THE PRESENT OF THE DIRECTOR OF THE ASSESSEE COMPANY WHO HAS NOT OBJECTED OR RAISED ANY OBJECTIONS DURING THE COURSE OF SURVEY PROCEEDINGS ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 6 AGAINST THE VALUATION. ON THE CONTRARY, IN HIS STAT EMENT DURING THE SURVEY, SHRI UMESH SONI, DIRECTOR OF THE ASSESSEE, ACCEPTED THE VALUATION DONE BY THE DEPARTMENTAL APPROVED VALUER AND ALSO ACCEPTED THAT THE BOOKS OF ACCOUNT WERE NOT COMPLETE AS SOME ENTRIES OF PURCHA SES/SALES WERE NOT ENTERED. THE AO HAS GIVEN THE CREDIT OF PURCHASE BI LLS NOT ENTERED INTO THE BOOKS OF ACCOUNT AT THE TIME OF SURVEY AND THEREFOR E, THE BALANCE AMOUNT WAS FOUND TO BE EXCESS STOCK WHICH WAS NOT EXPLAINE D OR RECORDED IN THE BOOKS OF ACCOUNT. THE LD. DR HAS RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 2.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CO NSIDERED THE RELEVANT MATERIAL AVAILABLE ON RECORD. DURING THE C OURSE OF SURVEY ON 25-11-2014, THE STOCK OF THE ASSESSEE WAS VALUED BY THE DEPARTMENTAL APPROVED VALUER AT RS. 2,73,01,637/- AS AGAINST TH E STOCK AS PER BOOKS OF ACCOUNT AT RS. 33,06,724/- AND CONSEQUENTLY EXCESS STOCK OF RS. 2,39,94,913/- WAS FOUND. THE STATEMENT OF THE D IRECTOR OF THE ASSESSEE COMPANY SHRI UMESH SONI WAS RECORDED BY THE DEPARTM ENT WHO HAS POINTED OUT THAT SOME OF THE PURCHASE BILLS ARE YET TO BE RECORDED IN THE BOOKS OF ACCOUNT. SIMILARLY, SOME OF THE SALE BILLS ARE YET TO BE RECORDED IN THE BOOKS OF ACCOUNT. WE FURTHER NOTE THAT THE D EPARTMENT HAS ACCEPTED ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 7 THE PURCHASES TO THE TUNE OF RS. 1,11,26,742/- AS PURCHASE BILLS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT AT THE TIME OF SU RVEY AND CONSEQUENTLY THE AO HAS GIVEN THE CREDIT OF THE SAID AMOUNT OUT OF TOTAL EXCESS STOCK OF RS. 2,39,94,913/- . ACCORDINGLY, THE AO MADE ADDITI ON ON ACCOUNT OF EXCESS STOCK OF RS. 1,17,80,068/-. THERE WAS NO DIS CREPANCY FOUND SO FAR AS THE QUANTITY AND ARTICLES OF JEWELLERY PHYSICALL Y FOUND AT THE TIME OF SURVEY AND RECORDED IN THE BOOKS OF ACCOUNT AS WELL AS IN THE PURCHASE BILLS OF THE ASSESSEE YET TO BE RECORDED. THE ONLY DISPUTE REMAINS AFTER CONSIDERATION OF THE UNACCOUNTED PURCHASE BILLS IS ON ACCOUNT OF VALUATION DONE BY THE DEPARTMENTAL APPROVED VALUER. ONCE THE AO HAS ACCEPTED THESE PURCHASE BILLS TO THE TUNE OF RS. 1,11,26,742 /- THEN THE QUANTITY OF THE STOCK AS PER THESE PURCHASE BILLS SHOULD HAVE B EEN REMOVED FROM THE EXCESS STOCK AND NOT MERELY THE COST OF PURCHASE ST OCK AS SHOWN IN THE PURCHASE BILLS FOR WHICH THE AO HAS GRANTED THE CRE DIT. THEREFORE, THE VALUATION DIFFERENCE REPRESENTING THE QUANTITY OF S TOCK WHICH IS FOUND AS PER THE PURCHASE BILLS AS WELL AS QUANTITY FOUND RE CORDED IN THE BOOKS OF ACCOUNT CANNOT BE TREATED AS EXCESS STOCK. WE FURTH ER NOTE THAT THE VALUER HAS VALUED THE STOCK BY APPLYING CURRENT MARKET RAT E OR THE RATE AS FOUND RECORDED IN THE SALE BILLS INSTEAD OF COST PRICE OF THE STOCK WHICH IS THE ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 8 PRESCRIBED AND APPROPRIATE METHOD AS PER ACCOUNTING STANDARD. THE STOCK IS REQUIRED TO BE VALUED AT THE COST OR REALIZATION WHICHEVER IS LESS. THEREFORE, THE STOCK CANNOT BE VALUED MORE THAN THE COST PRICE IN ANY CASE. THE ASSESSEE VIDE LETTER DATED 16-12-2014 HAS SPECIFICALLY HIGHLIGHTED THE DEFECTS AND DISCREPANCIES IN THE VA LUATION DETERMINED BY THE DEPARTMENTAL APPROVED VALUER. NEITHER THE INVES TIGATION WING NOR THE AO IN THE ASSESSMENT PROCEEDING HAVE EVEN MADE AN ATTEMPT TO EXAMINE AND VERIFY THE CORRECTNESS OF THE FATS AS H IGHLIGHTED BY THE ASSESSEE. THE AO HAS MADE ADDITION BASED ON THE VAL UATION WHEREAS THE ASSESSEE TO COUNTER THE VALUATION DONE BY THE DEPAR TMENTAL APPROVED VALUER HAS FILED THE VALUATION REPORT OF REGISTERED VALUER DATED 29-11- 2014. THE LD. CIT(A) WHILE CONFIRMING THE ADDITION AND REJECTING THE VALUATION REPORT FILED BY THE ASSESSEE AND OBSERVE D IN PARA 2.3.3. AS UNDER:- 2.3.3. AS PER REGISTERED VALUERS VALUATION REPO RT, IT IS MADE ON 29-11-2014, THOUGH THE SAME WAS FILED WI TH ADIT ON 16-12-2014 AND NO EXPLANATION WAS TENDERED FOR SUCH DELAY. ALL THIS CREATES A DOUBT THAT IT IS AN AFTERTHOUGHT AND WHETHER THE ASSESSEE'S VALUER TRULY EXAMINED TH E SAME GOODS OR NOT. THE CONTENTION RAISED BY ASSESSEE SEE MS BASELESS AND THUS REJECTED AND ACTION OF ASSESSING OFFICER IS UPHELD. THESE GROUNDS OF APPEAL ARE DISMISSED. ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 9 THE ONLY REASON CITED BY THE LD. CIT(A) FOR REJECTI NG THE VALUATION REPORT OF REGISTERED VALUER IS DELAY IN SUBMITTING THE REP ORT . IT IS PERTINENT TO NOTE THAT SURVEY WAS CONDUCTED ON 25-11-2014 AND DE PARTMENTAL APPROVED VALUER HAS VALUED THE STOCK AS PER HIS VAL UATION REPORT DATED 25-11-2014 & 27-11-2014 WHEREAS THE ASSESSEE FILED THE VALUATION REPORT DATED 29-11-2014 WHICH IS AFTER TWO DAYS OF THE VAL UATION REPORT OF THE DEPARTMENTAL APPROVED VALUER, THOUGH THE SAME WAS S UBMITTED BEFORE THE ADIT ON 16-12-2014. IT IS NOT A DOCUMENT PREPAR ED BY THE ASSESSEE BUT IT IS A REPORT OF THE REGISTERED VALUER AND THE REFORE, IF THERE IS ANY DELAY IN FILING THE SAME WITH THE ADIT THEN IT WOUL D NOT CHANGE THE MATERIAL FACT AS POINTED OUT IN SUCH REPORT. ACCORD INGLY, WE DO NOT CONCUR WITH THE VIEW OF THE LD. CIT(A) TO REJECT THE VALUA TION REPORT OF THE REGISTERED VALUER FILED BY THE ASSESSEE. THE ASSESS EE HAS CLEARLY POINTED OUT THAT THE DEPARTMENTAL APPROVED VALUER HAS APPLI ED VERY HIGH RATE INSTEAD OF COST OF PURCHASE OF STOCK AND FURTHER TH E PURITY OF THE GOLD IN THE ARTICLES/ JEWELLERY WAS ALSO NOT CONSIDERED COR RECTLY BUT A STANDARD 22 CARAT PURITY WAS TAKEN BY THE DEPARTMENTAL APPROVED VALUER. THEREFORE, THESE FACTS AS POINTED OUT BY THE ASSESSEE HAVE SUB STANCE AND MERITS WHEN THERE WAS NO DISCREPANCY FOUND IN THE QUANTITY OF T HE STOCK AT THE TIME OF ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 10 SURVEY. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION IS BASED ONLY ON THE HIGHER VALUATION DON E BY THE DEPARTMENTAL APPROVED VALUER AS AGAINST THE VALUATION RECORDED B Y THE ASSESSEE IN THE BOOKS OF ACCOUNT AND PURCHASE BILLS. FURTHER, SOME OF THE STOCK IS ALSO FROM THE OPENING STOCK OF THE ASSESSEE AND TO THAT EXTENT NO ADDITION CAN BE MADE ON ACCOUNT OF HIGHER VALUATION AS THE UNDER VALUATION, IF ANY WOULD NOT AFFECT THE INCOME OF THE ASSESSEE BEING P ART OF BOTH SIDES OF PROFIT AND LOSS ACCOUNT. HENCE, THE ADDITION MADE B Y THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 3.1 THE GROUND NO. 4 OF THE ASSESSEE IS REGARDING C ERTAIN PURCHASES TREATED BY THE AO AS UNVERIFIABLE PURCHASES THOUGH NO SEPARATE ADDITION WAS MADE BY THE AO BEING PART OF THE AMOUNT OF EXCE SS STOCK. 3.2 DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO ASKED THE ASSESSEE TO PRODUCE THREE PARTIES/ SUPPLIERS FOR VE RIFICATION WITH THEIR BOOKS OF ACCOUNT/ BANK STATEMENTS NAMELY M/S. M.J. ENTERPRISES, M/S. PRINCE JEWELLERS AND M/S. V.R. ENTERPRISES FOR THE TOTAL PURCHASES OF RS. 12,66,540/-. THE ASSESSEE PRODUCED THE CONFIRMATION OF THESE PARTIES, THEIR BILLS AND PROOF OF PAYMENTS THROUGH CHEQUES. THE AO DID NOT ACCEPT THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE O N THE GROUND THAT ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 11 THE ASSESSEE HAS FAILED TO PRODUCE THESE PARTIES FO R VERIFICATION AND CONSEQUENTLY TREATED THE PURCHASES TO THE TUNE OF R S. 12,66,540/- AS UNVERIFIABLE PURCHASES. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 3.3 BEFORE US, THE LD.AR OF THE ASSESSEE HAS SUBMIT TED THAT THE ASSESSEE SUBMITTED THE CONFIRMATIONS OF THESE THREE PARTIES CONTAINING PAN AND FULL ADDRESSES. THE ASSESSEE ALSO SUBMITTED THE PRO OF PAYMENTS TO THESE PARTIES THROUGH BANKING CHANNEL. THE AO WITHOUT POI NTING OUT ANY DEFECTS IN THE EVIDENCE PRODUCED BY THE ASSESSEE, H AS TREATED THE PURCHASES AS UNVERIFIABLE ON THE GROUND THAT THE AS SESSEE HAS NOT PRODUCED THE PARTIES BEFORE HIM FOR VERIFICATION. T HE LD.AR OF THE ASSESSEE FURTHER CONTENDED THAT INSTEAD OF ASKING T HE ASSESSEE TO PRODUCE THE PARTIES FOR EXAMINATION OR VERIFICATION, THE AO OUGHT TO HAVE EXERCISED HIS POWERS TO SUMMON THEM OR TO VERIFY TH EIR EXISTENCE AND GENUINENESS THROUGH HIS INSPECTOR. THUS THE LD.AR O F THE ASSESSEE SUBMITTED THAT TREATING THE SAID PURCHASES AS UNVER IFIABLE BY THE AO IS UNJUSTIFIED AND UNCALLED FOR . THE LD.AR OF THE ASS ESSEE RELIED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F NIKUNJ EXIMP ENTERPRISES (P) LTD. AS WELL AS DECISION OF HON'BLE GUJARAT HIGH COURT IN ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 12 THE CASE OF CIT VS ADINATH INDUSTRIES (2001), 252 I TR 476 (GUJ.) AND THE SLP FILED BY THE DEPARTMENT WAS ALSO DISMISSED BY T HE HON'BLE SUPREME COURT IN THE CASE OF ADINATH INDUSTRIES,247 ITR (ST .35. 3.4 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE AO HAS SPECIFICALLY ASKED THE ASSESSEE TO PRODUCE THE PART IES FOR VERIFICATION BUT THE ASSESSEE HAS FAILED TO PRODUCE THESE PARTIES. T HEREFORE, THE PURCHASES WERE RIGHTLY TREATED AS UNVERIFIABLE PURCHASES BY T HE AO. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 3.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE AO HAS DOUBTED T HE GENUINENESS OF THE PURCHASES TO THE TUNE OF RS. 12,66,540/-, THE DETAI LS OF WHICH ARE AS UNDER:- 1. M/S. M.J. ENTERPRISES RS. 2,16,540/- 2. M/S. PRINCE JEWELLERS RS. 5,50,000/- 3. M/S. V.R. ENTERPRISES RS. 5,00,000 TOTAL RS.12,66,540 THE AO ASKED THE ASSESSEE TO PRODUCE THESE PARTIES FOR VERIFICATION ON TEST CHECK BASIS. THE ASSESSEE PRODUCED THE CONFIRM ATION FROM THESE PARTIES ALONGWITH PAN AND THEIR ADDRESSES. THE ASSE SSEE ALSO PRODUCED THE RECORD OF PROOF THAT PAYMENTS WERE MADE TO THES E PARTIES AGAINST THE ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 13 PURCHASE THROUGH BANKING CHANNEL. THE AO INSTEAD OF POINTING OUT ANY DEFECT IN THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE TREATED THESE PURCHASE AS UNVERIFIABLE PURCHASES FOR WANT O F THESE PARTIES PRODUCED BEFORE HIM. IT IS PERTINENT TO NOTE THAT O NCE THE ASSESSEE HAS PRODUCED THE DOCUMENTARY EVIDENCE THEN THE ASSESSEE CANNOT BE FORCED BY THE AO TO PRODUCE THE SUPPLIERS/ PARTIES FOR THEIR VERIFICATION AND EXAMINATION AS SUPPLIERS/ PARTIES ARE NOT IN THE DI RECT CONTROL OF THE ASSESSEE. IF THE AO DESIRES TO EXAMINE AND VERIFY T HE PARTIES THEN THE SUPPLIERS/ PARTIES SHOULD HAVE BEEN SUMMONED BY THE AO OR GOT THEM EXAMINED AND VERIFIED THROUGH HIS INSPECTOR OR BY I SSUING COMMISSION. NON-PRODUCTION OF PARTIES CANNOT BE A REASON FOR HO LDING THE TRANSACTION AS UNVERIFIABLE. EVEN OTHERWISE THE AO HAS NOT GIVE N THE CONCLUSIVE FINDINGS THAT THESE PURCHASES ARE NOT GENUINE. IT I S ONLY A SUSPICION AND DOUBT ABOUT THE GENUINENESS OF PURCHASES THAT TOO F OR WANT OF NON- PRODUCTION OF PARTIES. FURTHER, ONCE THE DEPARTMENT HAS EXAMINED THE STOCK OF THE ASSESSEE AND NO DISCREPANCY WAS FOUND AS FAR AS QUANTITY ON ACCOUNT OF OPENING STOCK, CLOSING STOCK AND SALES THEN THE PURCHASES OF THE ASSESSEE CANNOT BE DOUBTED. ACCORDINGLY, IN THE FACTS AND ITA NO.1286/JP/2019 M/S. JASMINE DESIGN PVT. LTD. VS ITO,WARD- 5 (1), JAIPUR 14 CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE AO IS HIGHLY ARBITRARY AND UNJUSTIFIED WHICH IS DELETED. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 /02/2 020. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18 /02/ 2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. JASMINE DESIGN PVT.LTD. , JAIP UR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 5(1),JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO1286/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR