M/S FRIENDS INTERNATIONAL, Jaipur V. ADDL. CIT, Jaipur

ITA 154/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99448 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH JCIT DHK
• Assessee Lawyers: MADHUKAR GARG
• Keywords: Bogus purchase; Rejection of books of accounts
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 154/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 . M/S. FRIENDS INTERNATIONAL, B-48, DEVI PATH, TAKHTE SHAHI ROAD, JAIPUR. CUKE VS. THE ADDITIONAL CIT, RANGE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAFF 8947 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MADHUKAR GARG (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH, (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12.10.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/10/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A)-II, JAIPUR DATED 23.01.2014 FOR THE A.Y. 2008-09. THE GROUNDS RAISED IN THE APPEAL ARE AS UNDER :- 1. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN PLACING RELIANCE ON THE CASE OF DEEPAK DALELA ITA NO. 13/JP/10 FOR ASSE SSMENT YEAR 2006-07 ORDER DATED 16.7.2010 WITHOUT GIVING A NY SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN THE SAME. T HE SAID ACTION IS ILLEGAL AND UNJUSTIFIED. 2. THAT EVEN OTHERWISE THE RELIANCE PLACED BY THE LEAR NED CIT (APPEALS) ON THE ABOVE MENTIONED CASE IS UNJUSTIFIE D AS THE FACTS WERE TOTALLY DIFFERENT IN THE CASE OF SHRI DE EPAK DALELA AS IN THE SAID CASE THE QUANTITATIVE DETAILS AND STOCK REGISTER WAS 2 ITA NO. 154/JP/2014 A.Y. 2008-09 M/S. FRIENDS INTERNATIONAL VS. ADDL. CIT, JAIPUR. NOT PRODUCED AND THE ASSESSEE WAS ALSO NOT ABLE TO GET THE CLOSING STOCK VERIFIED. THE ACTION OF THE CIT (APPE ALS) IS UNJUSTIFIED. 3. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRM ING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BO OKS OF ACCOUNTS OF THE ASSESSEE AND SUSTAINING ADDITION OF RS. 7,74,241/- MADE ON ACCOUNT OF UNVERIFIABLE PURCHASE S. THE ADDITION SUSTAINED IS ILLEGAL, UNJUSTIFIED AND EXCE SSIVE. 2. ALL THE ABOVE GROUNDS OF ASSESSEES APPEAL ARE A GAINST REJECTION OF BOOKS OF ACCOUNT AND CONFIRMING THE DISALLOWANCE OF RS. 7,74 ,241/- BEING 25% OF ALLEGED BOGUS PURCHASES OF RS. 30,96,965/-. THE AO OBSERVED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PRE CIOUS AND SEMI PRECIOUS STONE. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 13.10.20 08 DECLARING TOTAL INCOME OF RS. 18,08,070/-. THE CASE WAS SCRUTINIZED U/S 143(3) O F THE I.T. ACT, 1961. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DISCLOSE D GROSS PROFIT OF RS. 1,04,64,751/- ON TOTAL TURNOVER OF RS. 22,50,16,735/- WHICH GAVE A G.P. RATE OF 4.65%. HE FURTHER OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCE EDINGS IT WAS NOTICED THAT THE ASSESSEE HAD MAINTAINED THE STOCK REGISTER ONLY ON STONE-WISE WHICH WAS NOT VERIFIABLE IN RESPECT OF VARIOUS VARIETIES OF THESE STONES. T HE ASSESSEE HAD ALSO NOT MAINTAINED THE QUANTITATIVE, QUALITATIVE, RATE-WISE DETAILS. I T WAS ALSO NOTICED THAT IN THE CASE OF SEMI PRECIOUS STONES, PURCHASES HAVE BEEN MADE IN O NE BULK AND SALE HAVE BEEN MADE IN DIFFERENT QUALITIES AND AT DIFFERENT RATES. THER EFORE, BASED ON THE ABOVE DEFECTS, TRADING RESULTS OF THE ASSESSEE ARE NOT VERIFIABLE, AND THE AO BY INVOKING PROVISIONS OF SECTION 145(3) OF THE IT ACT, REJECTED THE BOOKS OF ACCOUNTS. MOREOVER, THE AO NOTICED 3 ITA NO. 154/JP/2014 A.Y. 2008-09 M/S. FRIENDS INTERNATIONAL VS. ADDL. CIT, JAIPUR. THAT ASSESSEE HAD MADE PURCHASES FROM FOLLOWING PAR TIES FOR A TOTAL AMOUNT OF RS. 30,96,965/- :- NAME OF PARTY AMOUNT IN RS. M/S. RANKA JEWELS & IMPEX 21,70,886/ - M/S. CENTURY GEMS 29,646/ - M/S. SUBH JEWELLERS 1,690/ - M/S. ASHU GEMS 23,534/ - M/S. S.K. BARADIA INTERNATIONAL 8,71,209/ - TOTAL 30,96,965/ - THE AO ASKED TO PRODUCE THESE PARTIES FOR VERIFICAT ION, WHICH ASSESSEE FAILED TO PRODUCE. IN ORDER TO FURTHER VERIFY THE GENUINENESS OF THE VARIOUS PURCHASES MADE BY THE ASSESSEE LOCALLY, INFORMATION CALLED FOR U/S 13 3(6) OF THE IT ACT WHICH WERE SENT TO THE ABOVE PARTIES THROUGH SPEED POST AT THE GIVEN A DDRESS. MOST OF THE LETTERS ISSUED TO THE ABOVE PARTIES WERE RECEIVED BACK WITH THE PO STAL REMARKS NOT KNOWN. HE FURTHER OBSERVED THAT HE DEPUTED WARD INSPECTOR TO FIND OUT THAT WHETHER ANY SUCH BUSINESS CONCERN EXIST AT THE GIVEN ADDRESS. THE IN SPECTOR REPORTED THAT NO SUCH BUSINESS CONCERN EXISTS ON THE GIVEN ADDRESSES. TH E AO AFTER CONSIDERING THE ASSESSEES REPLY AND RELYING UPON THE DECISION OF H ONBLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT, (2008) 10 DT R 153 (GUJ.) REJECTED THE BOOK RESULT U/S 145(3) OF THE ACT AND AFTER FOLLOWING TH E DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT (SUPRA) DISALLOWED 25% OF U NVERIFIABLE PURCHASES OF RS. 30,96,965/- AND MADE ADDITION OF RS. 7,74,241/- TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO HAD DISMISSED THE ASSESSEES APPEA L BY OBSERVING AS UNDER :- 4 ITA NO. 154/JP/2014 A.Y. 2008-09 M/S. FRIENDS INTERNATIONAL VS. ADDL. CIT, JAIPUR. CONSIDERING THE FACT THAT JURISDICTIONAL TRIBUNAL IN IDENTICAL FACTS CONFIRMED THE DISALLOWANCE OF 25% OF UNVERIFIABLE P URCHASE4S, THIS ISSUE IS COVERED AGAINST THE APPELLANT. APPELLANTS REPEA TED ARGUMENTS THAT BILLS WERE SUBMITTED AND PAYMENTS TO THESE PARTIES WERE M ADE BY CHEQUES ARE NOT RELEVANT SINCE THESE PARTIES WERE NOT AVAILABLE ON THE ADDRESS GIVEN BY APPELLANT. BY NOT PROVING THE GENUINENESS OF PUR CHASES ONUS WAS NOT DISCHARGED BY THE APPELLANT. RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL ITAT IN IDENTICAL FACTS, REJECTION O F BOOK RESULTS AND ADDITION OF BOGUS PURCHASES MADE BY THE AO ARE CONFIRMED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS FURNISHED THE CONFIRMED COPY OF ACCOUNTS OF THE ABOVE MENTIONED P ARTIES WHICH PROVES THAT THE ASSESSEE HAS GENUINELY PURCHASED THE GOODS AND REQU ESTED TO DELETE THE ADDITIONS MADE BY THE AO. 6. ON THE OTHER HAND, LD. D/R SUPPORTED THE ORDER O F THE LD. CIT (A) AND ARGUED THAT THE LD. CIT (A) HAD GIVEN DETAILED FINDINGS ON FACTS AND LEGAL PROPOSITION THIS ISSUE. HE ALSO CONFIRMED THE ADDITION REASONABLE ON THE BA SIS OF OVERALL SURROUNDING CIRCUMSTANCES OF THE CASE. THE ASSESSEE COULD NOT P RODUCE THESE PARTIES FOR VERIFICATION. NOTICES WERE ISSUED BY THE ASSESSING OFFICER, WERE NEITHER GOT SERVED BY ASSESSEE NOR WERE FOUND ON GIVEN ADDRESSES, THEREFO RE, DISALLOWANCE OF 25% ON UNVERIFIABLE PURCHASES MAY PLEASE BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. SIMILAR LINE OF CASES, THI S BENCH HAS DECIDED IN THE CASE OF SHRI 5 ITA NO. 154/JP/2014 A.Y. 2008-09 M/S. FRIENDS INTERNATIONAL VS. ADDL. CIT, JAIPUR. ANUJ KUMAR VARSHNEY VS. ITO AND OTHER CASES IN ITA NO. 187/JP/2012 ORDER DATED 22.10.2014 WHERE ON UNVERIFIABLE/BOGUS PURCHASES 15 % NET INCOME HAS BEEN DECIDED. ACCORDINGLY, WE ALSO APPLY 15% ON UNVERIFIABLE PURC HASES IN THIS CASE ALSO AS NET INCOME. THE AO IS DIRECTED TO RECALCULATE THE INCOM E AS PER ABOVE DIRECTION. 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/201 5. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/10/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S. FRIENDS INTRERNATIONAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ADDL. CIT, RANGE-5, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.154/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 6 ITA NO. 154/JP/2014 A.Y. 2008-09 M/S. FRIENDS INTERNATIONAL VS. ADDL. CIT, JAIPUR.