ACIT, Jaipur V. SHANTI KUMAR VIPUL KUMAR (HUF), Jaipur

ITA 166/JPR/2011

• Counselvise Citation: 16623114 RSA 2011
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Gross profit estimation

Judgement Text

1 1 ITA 166-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 166/JP/2011 ASSTT. YEAR : 2007-08. THE ACIT, CIRCLE-1, VS. M/S. SHANTI KUMAR VIPUL KUMAR JAIPUR. CHORDIA (HUF), 1632, SONTHLIWALON KA RASTA, CHAURA RASTA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH CHANDRA RESPONDENT BY : NONE DATE OF HEARING : 10.10.2011 DATE OF PRONOUNCEMENT : 21.10.2011. ORDER DATED : 21/10/2011. 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 RESTRICTING THE A DDITION TO RS. 47,73,765/- AS AGAINST RS. 2,11,89,134/- MADE BY AO ON ACCOUNT OF UNVERIFIABLE PURCHASES AND LOW GP RATE. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION ON SALES OF RS. 24,93,16,692/- THE DECLARED G.P. RATE IS 2.78% WHICH IS LOWER THAN 3.29% ON SALES OF RS. 25.06 CRORES IN THE IMMEDIATELY PRECEDING YEAR. 2 2 3.1. THE AO HAS OBSERVED THAT THE ASSESSEE HAD MADE PURCHASES OF RS. 6,32,27,378/- FROM M/S. MAN IMPEX, DIANISH EXPORTS, BRIGHT JEWELL ERS AND RISHAB INTERNATIONAL WHICH REMAINED UNVERIFIABLE. SUMMONS ISSUED TO THE PARTIE S REMAINED EITHER UNSERVED OR UNCOMPLIED WITH. IN ASSESSMENT YEAR 2007-08 PURCHAS ES FROM THESE CONCERNS WERE HELD AS UNVERIFIABLE IN THE CASE OF M/S. GEMS EXPORTS. I NSPITE OF PROVIDING ENOUGH OPPORTUNITIES, CONFIRMATIONS FROM THE SUPPLIERS COU LD NOT BE FILED. THE ASSESSEE THUS FAILED TO DISCHARGE ITS INITIAL ONUS. FURTHER, PURC HASES OF RS. 2,15,29,161/- FROM NINE PARTIES REMAINED UNVERIFIABLE. AS NAMES OF THOSE C ONCERNS APPEARED AS BOGUS IN THE CASE OF HALIDA GROUP AND SANJEEV PRAKASHAN GROUP, AT LEA ST IN FIVE CASES. IN REMAINING THREE CASES, SUMMONS REMAINED UNSERVED OR UNCOMPLIED WITH . THE 9 TH CASE OF TIRUPATI STONES WAS ALSO FOUND BOGUS DURING SURVEYS CONDUCTED BY TH E BCTT WING OF THE DEPARTMENT. 3.2. AS THE PURCHASES REMAINED UNVERIFIABLE AND CON FIRMATIONS COULD NOT BE FILED, THE AO INVOKED PROVISIONS OF SECTION 145(3) AND HELD UN VERIFIABLE PURCHASES AS A DEFECT IN MAINTENANCE OF ACCOUNTS. AFTER REJECTING BOOKS OF ACCOUNTS TO ESTIMATE G.P. THE AO DISALLOWED 25% OF UNVERIFIABLE PURCHASES OF RS. 8,4 7,56,539/- WHICH IS RESULTED INTO TRADING ADDITION OF RS. 2,11,89,134/-. FOR THIS, R ELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS :- (1) M/S. SANJAY OIL CAKE INDUSTRIES VS. CIT, 10 DT R 153 (GUJ.) (2) M/S. VIJAY PROTEINS LTD. VS. ACIT, 158 ITD 428 (ITAT AHMEDABAD) 4. IT WAS ARGUED BEFORE LD. CIT (A) THAT ASSESSEE H AS FILED COMPLETE DETAILS ALONG WITH TIN AND PAN. THE PAYMENTS WERE MADE THROUGH A CCOUNT PAYEE CHEQUE. HOWEVER, THE LD. CIT (A) WAS NOT SATISFIED WITH THE EXPLANAT ION THAT THE SUPPLIERS ARE IN EXISTENCE 3 3 BECAUSE OF NONE OF THE SUPPLIERS WERE PRODUCED AND SUMMONS ISSUED TO SUPPLIERS REMAINED EITHER UNSERVED OR UNCOMPLIED WITH. THERE FORE, INVOCATION OF PROVISIONS OF SECTION 145(3) WAS UPHELD. THEREAFTER, THE LD. CIT (A) OBSERVED THAT DECISION OF HONBLE GUJARAT HIGH COURT AND THE DECISION OF AHMEDABAD BE NCH OF THE TRIBUNAL CONSIDERED BY AO HAVE BEEN FOUND DISTINGUISHABLE BY THE JAIPUR BE NCH OF THE TRIBUNAL IN THE CASE OF GEM PARADISE IN ITA NO. 700/JP/2009 AND, THEREFORE, IT WAS HELD THAT ADDITION MADE @ 25% OF UNVERIFIABLE PURCHASES WAS NOT JUSTIFIED. A S HELD BY VARIOUS BENCHES OF THE TRIBUNAL AND IN VIEW OF THE DECISION OF HIGH COURT, THE LD. CIT (A) WAS OF THE VIEW THAT THE BEST COURSE TO DEDUCE PROFIT IS TO CONSIDER PAS T HISTORY OF THE CASE. IT WAS SEEN THAT IN THE IMMEDIATELY PRECEDING YEAR THE GP RATE IF 4.57% WAS CONFIRMED. THE ASSESSEE HAD DECLARED GP RATE @ 2.78% AS AGAINST 3.29% SHOWN IN THE IMMEDIATELY PRECEDING YEAR. SINCE IN THE IMMEDIATELY PRECEDING YEAR THE GP RATE OF 4.5% WAS CONFIRMED, THEREFORE, IN VIEW OF THE PAST HISTORY OF THE CASE, THE LD. CIT ( A) APPLIED A GP RATE OF 4.7% ON THE DECLARED SALES WHICH RESULTED IN A TRADING ADDITION OF RS. 47,73,765/-. ACCORDINGLY TO THIS EXTENT THE ADDITION WAS SUSTAINED AND THE REMAINING ADDITION WAS DELETED BY LD. CIT (A). 5. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6. LD. CIT D/R HAS RELIED ON THE ORDER OF AO. IT W AS FURTHER SUBMITTED THAT THE AO WAS VERY MUCH REASONABLE WHO DISALLOWED 25% OF UNVE RIFIABLE PURCHASES ONLY AND TO THIS EXTENT THE ADDITION WAS MADE. NEITHER ANY PAR TY WAS PRODUCED NOR ANY OTHER EVIDENCE WAS FILED FROM WHICH IT CAN BE ESTABLISHED THAT PURCHASES SHOWN BY ASSESSEE ARE NOT GENUINE. ACCORDINGLY IT WAS SUBMITTED THAT THE ORDER OF AO IS LIABLE TO BE SUSTAINED. 4 4 7. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF ISSUE OF NOTICE THROUGH REGISTERED A/D. THE APPEAL IS DISPOSED OFF AFTER C ONSIDERING THE SUBMISSIONS OF LD. D/R AND OTHER MATERIAL AVAILABLE ON RECORD. 8. AFTER CONSIDERING THE WRITTEN SUBMISSIONS AND TH E ORDERS OF THE AUTHORITIES BELOW, WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A) WHO HAS SUSTAINED THE ADDITION OF RS. 47.73 LACS OR ODD BY APPLYING GP RATE AT 4.7%. THE GP RATE SHOWN BY ASSESSEE AT 2.78% IS LOWER THAN THE GP RATE OF 3.29% SHOWN IN THE IMM EDIATELY PRECEDING ASSESSMENT YEAR. IN THE IMMEDIATELY PRECEDING ASSESSMENT IN FIRST AP PEAL THE GP RATE OF 4.5% WAS CONFIRMED. NOTHING IS AVAILABLE ON RECORD WHETHER A NY SECOND APPEAL WAS FILED BEFORE THE TRIBUNAL BY THE ASSESSEE OR BY THE DEPARTMENT. THE LD. CIT (A) BASED ON THE GP RATE APPLIED IN THE IMMEDIATELY PRECEDING YEAR HAS APPLI ED A GP RATE OF 4.7% WHICH, IN OUR VIEW, ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS A REASONABLE GP RATE. IT IS WORTH NOTING HERE THAT THE BENCHES OF THE TRIBUNAL HERE A T JAIPUR IS TAKING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAINED UNVERIFIABLE THEN BEST COURSE IS TO DEDUCE THE PROFIT ON THE BASIS OF PAST HISTORY AND TAKING INTO CONSIDERA TION THE CURRENT EVENTS OF THE CASE. AS STATED ABOVE, LD. CIT (A) HAS APPLIED GP RATE OF 4. 7% ON THE BASIS OF PAST HISTORY, THEREFORE, WE CONFIRM THE FINDING OF LD. CIT (A). 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 .10.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ 5 5 COPY FORWARDED TO :- THE ACIT, CIRCLE-1, JAIPUR. M/S. SHANTI KUMAR VIPUL KUMAR CHORDIA (HUF), JAIPUR . THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 166/JP/2011) BY ORDER, AR ITAT JAIPUR.