ITO, Jaipur V. M/S RISHI EXPORTS, Jaipur

ITA 1443/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47924 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK

Judgement Text

1 ITA 1443-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1443/JP/2010 ASSTT. YEAR : 2006-07. THE INCOME-TAX OFFICER, VS. M/S. RISHI EXPORTS, WARD 2(1), 3621, PHOOL BHAWAN, KGB KA JAIPUR. RASTA, JOHARI BAZAR, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.R. PAREEK 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 2006-07. 2. THE DEPARTMENT IS OBJECTING IN REDUCING TRADING ADDITION TO RS. 1,00,000/- AGAINST ADDITION MADE BY THE AO AT RS. 11,52,912/-. 3. THE ASSESSEE DEALS IN PRECIOUS AND SEMI PRECIOUS STONES. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT PURCHASES OF RS. 46, 11,648/- MADE FROM 14 PARTIES ARE NOT GENUINE. AS PER THE INFORMATION RECEIVED FROM THE BCTT WING OF THE DEPARTMENT IT WAS NOTICED THAT THESE PARTIES ARE NOT SUPPLYING ANY MA TERIAL BUT ISSUING ONLY BILLS AGAINST WHICH THEY ARE CHARGING CERTAIN PERCENTAGE OF COMMI SSION. FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OI L CAKE INDUSTRIES, 10 DTR 153 AND IN THE CASE OF VIJAY PROTEINS LTD., 58 ITD 428 (ITA T AHMEDABAD), THE AO REJECTED THE 2 BOOKS OF ACCOUNT AND MADE AN ADDITION OF RS. 11,52, 912/- @ 25% OF UNVERIFIABLE PURCHASES OF RS. 46,11,648/-. IT WAS SUBMITTED BEFO RE LD. CIT (A) THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS I.E. PURCHASE BILLS, COP IES OF ACCOUNT, PAN AND SALES TAX NUMBER OF THE PARTIES FROM WHOM THE PURCHASES HAVE BEEN MADE. THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE. THE AO HELD THE SUPPLIERS AS BOGUS ON THE BASIS OF SEARCH AND SURVEY CONDUCTED IN OTHER CASES. NO OPPO RTUNITY WAS GIVEN TO THE ASSESSEE TO CROSS EXAMINE. COMPLETE BOOKS OF ACCOUNTS ARE MAIN TAINED WHICH ARE SUBJECT TO AUDIT. IN MOST OF THE CASES CONFIRMATIONS WERE ALSO FILED. EVEN THE FINDING OF THE ENQUIRY CONDUCTED BY INSPECTOR WAS NOT MADE AVAILABLE. THER EFORE, THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND MAKING ADDITION @ 25% OF UNVERIFIABLE PURCHASES. IT WAS FURTHER SUBMITTED THAT THE DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES (SUPRA) HAS ALREADY BEEN FOUND DISTINGUISHABLE BY THE TRIBU NAL IN THE CASE OF GEM PARADISE DECIDED IN ITA NO.700/JP/2009. 4. AFTER CONSIDERING SUBMISSIONS, PERUSING THE MATE RIAL ON RECORD AND THE REMAND REPORT WHICH WAS SOUGHT BY LD. CIT (A) BY SENDING T HE WRITTEN SUBMISSIONS ALONG WITH DETAILS FILED ON BEHALF OF THE ASSESSEE, THE LD. CI T (A) FOUND THAT SINCE CERTAIN PURCHASES REMAINED UNVERIFIABLE, THEREFORE, REJECTION OF BOOK S OF ACCOUNT ARE JUSTIFIED. HOWEVER, THE LD. CIT (A) ALSO NOTED THAT DECISION OF HONBLE GUJ ARAT HIGH COURT IN THE CASE OF M/S. SANJAY OIL CAKE INDUSTRIES, 10 DTR 153 IS NOT APPLI CABLE AS THE SAME WAS FOUND DISTINGUISHABLE IN THE CASE OF M/S. GEM PARADISE IN ITA NO. 700/JP/2009 BY THE JAIPUR BENCH. THEREAFTER, THE LD. CIT (A) HELD THAT ADDI TION MADE @ 25% OF UNVERIFIABLE PURCHASES ARE NOT CORRECT. HE HELD THAT IF ANY ADDI TION CAN BE MADE THAT CAN BE MADE ON THE BASIS OF PAST HISTORY. THE LD. CIT (A) NOTED T HAT IN IMMEDIATELY PRECEDING YEAR G.P. 3 RATE SHOWN BY ASSESSEE WAS 17.82% WHEREAS G.P. RATE SHOWN DURING THE YEAR UNDER CONSIDERATION WAS 16.67%. IN THE ASSESSMENT YEAR 2 005-06 ALSO THE LD. CIT (A) NOTED THAT G.P. RATE WAS 18.50%. KEEPING IN VIEW ALL THE SE FACTS AND CIRCUMSTANCES AND INCREASE IN TURNOVER, THE LD. CIT (A) WAS OF THE VI EW THAT IF A LUMP SUM ADDITION OF RS. 1,00,000/- IS MADE THAT WILL MEET THE ENDS OF JUSTI CE. ACCORDINGLY HE REDUCED THE ADDITION TO RS. 1,00,000/- AGAINST THE ADDITION MAD E BY AO. 5. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) ON WHICH RELIANCE HAS BEEN PLACED BY THE RESPECTIVE PARTY, WE FIND NO INF IRMITY IN THE FINDING OF LD. CIT (A). THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CON SISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAINED UNVERIFIABLE THE REJECTION OF BO OKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3) IS JUSTIFIED. HOWEVER, THE JAIPU R BENCHES OF THE TRIBUNAL ARE TAKING A CONSISTENT VIEW ALSO THAT WHERE BOOKS OF ACCOUNT AR E REJECTED ON ACCOUNT OF UNVERIFIABLE PURCHASES, THEN IN THAT CASE THE ADDITION SHOULD BE MADE AFTER TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND ALSO CURRENT EVENT S OF THE CASE. THE LD. CIT (A) HAS TAKEN INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND FOUND THAT G.P. RATE SHOWN BY ASSESSEE WAS ON LOWER SIDE. THEREFORE, KEEPING IN MIND THE G.P. RATE OF EARLIER YEAR AND IN UNVERIFIABLE NATURE OF PURCHASES, THE LD. CIT (A) H AS SUSTAINED AN ADDITION OF RS. 1,00,000/-, WHICH IN OUR CONSIDERED VIEW IS JUSTIFI ED. ACCORDINGLY WE CONFIRM THE ORDER OF LD. CIT (A). 6. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24. 6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER 4 D/- COPY FORWARDED TO :- THE ITO WARD 2(1), JAIPUR. M/S. RISHI EXPORTS, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1443/JP/2010) BY ORDER, AR ITAT JAIPUR.