PREM RAJ RATHI, Jaipur V. ITO, Jaipur

ITA 129/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54167 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA

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. 129/ JP/2011 ASSESSMENT YEAR 2006-07 PAN: ADXPR 6513 K SHRI PRAM RAJ KHATRI VS. THE ITO 31, RASHTRADOOT PRESS BUILDING WARD- 2 (2) CHAMELIWALA MARKET, M.I. ROAD, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY: SHRI MANISH AGARWAL DEPARTMENT BY : SHRI D.K. MEENA DATE OF HEARING: 08-09-2011 DATE OF PRONOUNCEMENT: 16-09-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL FILED AGAINST TH E ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 25-11-2010 FOR THE ASSESSMEN T YEAR 2006-07. 2.1 IN GROUND NOS. 1 TO 2.1, THE ASSESSEE IS AGGRIE VED AGAINST CONFIRMATION OF ADDITION TO RS. 2.00 LACS BY THE LD . CIT(A) AFTER HOLDING THAT THE PROVISIONS OF SECTION 145(3) OF THE ACT ARE AP PLICABLE. 2.2 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRAD ING OF SILVER ITEMS AND JEWELLERY. THE AO HAS MENTIONED THAT THE ASSESSEE I S NOT MAINTAINING THE STOCK REGISTER. IT HAS ALSO BEEN STATED THAT THE CL OSING STOCK IS ALSO NOT SUBJECT TO VERIFICATION. THE ASSESSEE HAS MADE PURCHASES TO THE EXTENT OF RS. 16,21,084/- FROM SIX PARTIES. THE NAMES OF THESE PA RTIES ARE AVAILABLE AT PAGE 2 2 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS RECEIVE D INFORMATION FROM THE INVESTIGATION WING THAT SUCH PARTIES ARE INDULGIN G IN ISSUING THE BOGUS BILLS. THE AO IN HIS ORDER HAS MENTIONED THE NATURE OF INFORMATION AVAILABLE AND THE SOURCES FROM WHICH THE INVESTIGATION WING C OLLECTED THE INFORMATION. THE AO AFTER CONSIDERING VARIOUS DECIS IONS HELD THAT THE BOOKS OF ACCOUNTS ARE TO BE REJECTED AND THE AO APPLIED 2 5% GROSS PROFIT RATE ON UNVERIFIABLE PURCHASES. 2.3 THE LD. CIT(A) HAS UPHELD THE REJECTION OF BOOK S OF ACCOUNTS. THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS FAILED TO PRODUCE MONTHWISE DETAILS OF ALL TYPES OF STOCK. THE PAST HISTORY OF THE CASE IS NOT AVAILABLE AND COMPARABLE GROSS PROFIT RATE HAS BEEN SHOWN. THIS I S THE FIRST YEAR OF BUSINESS AND THEREFORE, THE COMPARISON OF GROSS PR OFIT RATE COULD NOT BE MADE. THE LD. CIT(A) THEREFORE, DIRECTED THE AO TO MAKE LUMPSUM ADDITION OF RS. 2.00 LACS.. 2.4 WE HAVE HEARD BOTH THE PARTIES. THE JAIPUR BENC H IS CONSISTENTLY HOLDING THAT THE BOOKS OF ACCOUNTS ARE TO BE REJECT ED IN CASE THERE ARE NON- VERIFIABLE PURCHASES. RELIANCE IS PLACED ON THE DEC ISION OF HON'BLE APEX COURT IN THE CASE OF KANCHWALA GEMS VS JCIT , 288 I TR 10. HENCE, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS. FROM THE INFORMATION WHICH INVESTIGATION WING COLLECTED, IT WAS FOUND THAT THE PARTIES WHICH WERE INDULGING IN ISSUING BOGUS BILLS WERE CH ARGING COMMISSION TO 3 THE EXTENT OF 0.2% TO 0.5%. SUCH COMMISSION IS NOT BEING REFLECTED IN THE BOOKS OF ACCOUNTS. HENCE THE TRADING ADDITION IS RE QUIRED TO BE ON ACCOUNT OF UNVERIFIABLE PURCHASES. LOOKING TO THE QUANTUM OF U NVERIFIABLE PURCHASES, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO REST RICT THE TRADING ADDITION TO RS. 50,000/- 3.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF EXPENSES TO THE EXTENT OF 10% FROM VEHICLE RUNNING & MAINTENANCE AND TELEPHONE EXPENSE S. 3.2 WE HAVE HEARD BOTH THE PARTIES. THE AO HAS MADE DISALLOWANCE OF 20% AND THE LD. CIT(A) HAS REDUCE IT TO 10%. WE FEE L THAT THE DISALLOWANCE RESTRICTED TO 10% BY THE LD. CIT(A) IS REASONABLE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-09 -2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 16 /09/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI PREM RAJ RATHI, JAIPUR 2. THE ITO, WARD- 2 (2), JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.129/JP /11) A.R., ITAT , JAIPUR 4 5 6