ANIL KUMAR CHORDIA, Jaipur V. DCIT, Jaipur

ITA 184/JPR/2011

• Counselvise Citation: 18423114 RSA 2011
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: M L BORAD
• Keywords: Depreciation; Rule of consistency
• Section: 2

Judgement Text

1 ITA 184(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 184/JP/2011 ASSTT. YEAR : 2006-07. SHRI ANIL KUMAR CHORDIA, VS. THE DCIT, CIRCLE-2, PROP. M/S. ANIL EXPORTS, JAIPUR. 4459, KGB KA RASTA, JOHARI BAZAR, JAIPUR. ITA NO. 185/JP/2011 ASSTT. YEAR : 2006-07. M/S. CHORDIA GEMS, VS. THE DCIT, CIRCLE-2, 4459, KGB KA RASTA, JOHARI BAZAR, JAIPUR. JAIPUR. (APPELLANTS) (RESPONDENTS) APPELLANT BY : SHRI M.L. BORAD RESPONDENT BY : SHRI D.K. MEENA ORDER DATE OF ORDER : 22/07/2011. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY TWO DIFFERENT ASSESSEES A GAINST THE ORDERS OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. SIMILAR FACTS ARE INVOLVED IN BOTH THE APPEALS, THEREFORE, THEY ARE DISPOSED OFF TOGETHER. 3. FIRST ISSUE IN THESE APPEALS IS AGAINST SUSTAINI NG THE REJECTION OF BOOKS OF ACCOUNT BY INVOCATION OF PROVISIONS OF SECTION 145(3). 2 4. CERTAIN PURCHASES WERE FOUND UNVERIFIABLE, THERE FORE, PLACING RELIANCE ON VARIOUS CASE LAWS, THE AO INVOKING PROVISIONS OF SECTION 14 5(3) MADE ADDITION @ 25% OF UNVERIFIABLE PURCHASES. 5. IN CASE OF SHRI ANIL KUMAR CHORDIA, UNVERIFIABLE PURCHASES WERE FOUND TO THE TUNE OF RS. 5,35,955/- AND BY DISALLOWING 25% OF UN VERIFIABLE PURCHASES, AN ADDITION OF RS. 1,33,988/- WAS MADE. 6. IN CASE OF M/S. CHORDIA GEMS, UNVERIFIABLE PURCH ASES WERE FOUND TO THE EXTENT OF RS. 2,62,573/- AND @ 25% OF THESE UNVERIFIABLE PURC HASES, THE ADDITION OF RS. 65,643/- WAS MADE BY THE AO. 7. THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE AO REJECTING THE BOOKS OF ACCOUNT IN BOTH THESE CASES AS CERTAIN PURCHASES REMAINED U NVERIFIABLE. THE LD. CIT (A) ALSO CONFIRMED THE ADDITIONS MADE BY THE AO, HOWEVER, ON A DIFFERENT REASONING. THE ADDITIONS WERE SUSTAINED BY LD. CIT (A) THAT G.P. R ATE SHOWN BY ASSESSEE ARE LOWER AS COMPARED TO G.P. RATE IN EARLIER YEAR IN CASE OF BO TH THE ASSESSEES. THEREFORE, FOR THIS REASON THE LD. CIT (A) CONFIRMED THE ADDITION MADE BY THE AO. 8. AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE AND THE ORDERS OF THE AUTHORITIES BELOW ON WHICH RELIANCE H AS BEEN PLACED BY LD. D/R, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THESE CASES IN PART . 8.1. THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIABLE THEN INVOCATION OF PR OVISIONS OF SECTION 145(3) ARE CORRECT. IN VIEW OF RULE OF CONSISTENCY, WE CONFIRM THE ACTI ON OF THE AO AND LD. CIT (A) IN REJECTING BOOKS OF ACCOUNT. 3 8.2. THE JAIPUR BENCHES OF THE TRIBUNAL ARE ALSO TA KING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIABLE, NO ADDITION CAN BE MADE @ 25% OF UNVERIFIABLE PURCHASES. HOWEVER, ADDITION CAN BE MADE ON THE BAS IS OF PAST HISTORY AND TAKING INTO CONSIDERATION THE CURRENT EVENTS OF THE CASE. NO D OUBT, THERE IS A MARGINAL DECLINE IN G.P. IN CASE OF BOTH THESE ASSESSEES. HOWEVER, THE FACTS REMAIN THAT THE TURNOVER OF THE ASSESSEES HAVE BEEN INCREASED SUBSTANTIALLY. THERE FORE, DISTURBING THE G.P. RATE ON ACCOUNT OF MARGINAL DECLINE, IN OUR VIEW, WAS NOT J USTIFIED. HOWEVER, THE FACTS REMAIN THAT CERTAIN PURCHASES REMAINED UNVERIFIABLE, THERE FORE, WE ARE OF THE VIEW THAT IF THE ADDITION OF RS. 30,000/- IN CASE OF SHRI ANIL KUMAR CHORDIA AND AN ADDITION OF RS. 20,000/- IN CASE OF M/S. CHORDIA GEMS ARE CONFIRMED AGAINST THE ADDITIONS SUSTAINED BY LD. CIT (A), THEN IT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 9. NEXT ISSUE IS AGAINST SUSTAINING THE DISALLOWANC E OF RS. 2929/- AND RS. 5485/- BEING 10% OF TOTAL EXPENDITURE IN CASE OF SHRI ANIL KUMAR CHORDIA. 10. THE AO AND LD. CIT (A) MADE AND CONFIRMED THE ABOVE DISALLOWANCES ON ACCOUNT OF PERSONAL USE. 11. WE ARE OF THE VIEW THAT THESE DISALLOWANCES ARE ON HIGHER SIDE. TURNOVER OF THE ASSESSEES IS INCREASED SUBSTANTIALLY AND NOTHING HA S BEEN BROUGHT ON RECORD THAT HOW 10% DISALLOWANCE IS JUSTIFIED ON ACCOUNT OF PERSONAL US E. HOWEVER, THE FACTS REMAIN THAT PERSONAL USE CANNOT BE RULED OUT. THEREFORE, WE ARE OF THE VIEW THAT IF DISALLOWANCE OF RS.2,000/- EACH ON ACCOUNT OF TELEPHONE EXPENSES AN D DEPRECIATION ON CAR IS SUSTAINED THAT WILL MEET THE ENDS OF JUSTICE. 12. THERE IS NO OTHER GROUND IN CASE OF SHRI ANIL K UMAR CHORDIA. 4 13. THERE IS ONE MORE GROUND IN APPEAL IN CASE OF M /S. CHORDIA GEMS. THE AO DISALLOWED RS. 71,637/- BEING 20% OF TOTAL EXPENDIT URE OF RS. 3,58,187/- UNDER THE HEAD FOREIGN TRAVELING EXPENSES. THE LD. CIT (A) HAS CO NFIRMED 10% DISALLOWANCE I.E. RS. 35,819/-. 14. AFTER CONSIDERING THE SUBMISSIONS, WE ARE OF TH E VIEW THAT THIS DISALLOWANCE IS ALSO ON HIGHER SIDE. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO THAT HOW 20% DISALLOWANCE IS JUSTIFIED NEITHER THE LD. CIT (A) H AS ASSIGNED ANY REASON WHILE SUSTAINING 10% DISALLOWANCE. HOWEVER, AS PERSONAL ELEMENT CANN OT BE DENIED, THEREFORE, WE ARE OF THE VIEW THAT IF AN ADDITION OF RS. 10,000/- IS SUS TAINED ON ACCOUNT OF FOREIGN TRAVELING THAT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORD INGLY. 15. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED IN PART. 16. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 .7.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- SHRI ANIL KUMAR CHORDIA, JAIPUR. M/S. CHORDIA GEMS, JAIPUR. THE DCIT CIRCLE-2, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 184(2)/JP/2011) BY ORDER, AR ITAT JAIPUR. 5