SATYA NARAYAN SHARMA, Jaipur V. ACIT, Jaipur

ITA 211/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5369 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA J DHK
• Assessee Lawyers: H M SINGHVI
• Keywords: Bogus purchase
• Section: 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 211/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 SHRI SATYA NARAYAN SHARMA 5, KAILASHPURI, AMER ROAD JAIPUR CUKE VS. THE ACIT CIRCLE- 5 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACTPS 0728A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ ASSESSEE BY : SHRI H.M. SINGHVI, CA FU/KZKFJRH DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/02/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21 /04/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 02-01-2014 FOR THE ASSESSM ENT YEAR 2005-06 WHEREIN THE ASSESSEE HAS RAISED THE GROUND AS UNDE R:- THAT ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A ) WENT WRONG IN CONFIRMING THE PENALTY U/S 271(1)( C) FOR RS. 49,453/- WHICH SHOULD BE DELETED. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE PENALTY IN QUESTION HAS BEEN IMPOSED AS ITAT JAIPUR BENCH HAS SUSTAINED THE TRAD ING ADDITION BASED ITA NO.211/JP/2014 SHRI SATYA NARAYAN SHARMA VS. THE ACIT , CIRCLE- 5, JAIPUR . 2 ON GROSS PROFIT VARIATION AMOUNTING TO RS. 1,61,611 /-. THE AO INITIATED THE PENALTY PROCEEDINGS. THE ASSESSEE VEHEMENTLY CO NTENDED THAT THE IMPUGNED GROSS PROFIT ADDITION IS ONLY BASED ON AN ESTIMATE AND THUS THE CONCEALMENT PENALTY IS NOT LEVIABLE. THE EXPLANATIO N OF THE ASSESSEE WAS REJECTED IN AN UNJUSTIFIED MANNER WITHOUT CITING AN Y COGENT REASONS. THE LD. CIT(A) WRONGLY HELD THAT THE GP ADDITION WAS MA DE NOT ON THE BASIS OF MERE ESTIMATE BUT HOLDING THE PURCHASES TO BE BO GUS. 2.2 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 2.3 DURING THE COURSE OF HEARING LD. AR OF THE ASSE SSEE REFERRED TO THE OBSERVATION OF THE LD. CIT(A) THAT GROSS PROFIT ADD ITION IS MADE BECAUSE OF BOGUS PURCHASES BUT BECAUSE OF REJECTION OF BOOKS O F ACCOUNT FOLLOWING OBSERVATION IS EMERGED. ..UNDER SIMILAR CIRCUMSTANCES HON'BLE ITAT JAIPUR BENCH RECENTLY IN THE CASE OF SMT. ASFAR BAN O SHEIKH VS. ACIT, CIRCLE- 5, JAIPUR IN ITA NO. 233/JP/2006 DATED 31- 12-2007 WHEN APPELLANT HAS NOT PRODUCED THE PARTIES FROM WHOM PURCHASES WERE MADE AND NOTICE ISSUED U/S 131 REMAINED UNSERVED AS WELL AS NO DAY TO DAY QUANTITY DETAILS WERE SUBMITTED AND UNDER THESE CIRCUMSTANCES IN SPI TE OF CONFIRMATION FURNISHED BY THE CONCERNED PARTIES IN ASSESSMENT PROCEEDINGS HON'BLE ITAT HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING PROVISION S OF SECTION 145(3) OF I.T. ACT. SINCE, FACTS OF THE CAS E ARE EXACTLY IDENTICAL THEREFORE, IN MY CONSIDERED VIEW THE ASSE SSING OFFICER WAS FULLY JUSTIFIED IN REJECTING BOOKS OF A CCOUNTS BY INVOKING PROVISIONS OF SECTION 145(3) OF I.T. ACT. NOW THE QUESTION COMES THAT AFTER REJECTING BOOKS OF ACCOUN TS WHETHER TRADING ADDITION IS REQUIRED TO BE MADE AND IF YES TO ITA NO.211/JP/2014 SHRI SATYA NARAYAN SHARMA VS. THE ACIT , CIRCLE- 5, JAIPUR . 3 WHAT EXTENT. IT IS ARGUED BY SHRI SINGHVI THAT THE TURNOVER DURING THE YEAR WAS INCREASED AS COMPARED TO LAST Y EAR WHICH WAS THE REASON FOR REDUCED G.P. AS COMPARED T O LAST YEAR AND THERE WERE SOME NATURAL CALAMITY IN ASIAN COUNTRIES. TO SOME EXTENT, IT CAN BE CONSIDERED AS SATISFACTORY BUT UNLESS IT IS PROVED THAT THE ACTUA L REALIZATION PER ITEM WAS COMPARATIVELY LESSER AS COMPARATIVELY LAST YEAR OR COST OF PURCHASES WAS MORE WITHOUT PROPORTIONATE INCREASE IN THE SALE PRICE THEN SUCH ARGUMENT CANNO T BE ACCEPTED AT PAR. UNDER THESE CIRCUMSTANCES, IN MY CONSIDERED VIEW IT SHALL BE JUSTIFIABLE TO ADOPT GR OSS PROFIT RATE OF 8.15% AS SHOWN IN THE PRECEDING ASSESSMENT YEAR FOR WHICH RAJASTHAN HIGH COURT IN THE CASE OF KANSARA B EARING (P) LTD. VS. CIT 270 ITR 235 HAS HELD THAT PAST YE AR PROFIT DECLARED BY ASSESSEE IS BEST GUIDE FOR APPLICATION OF PROFIT RATE. ON THIS BASIS THE GROSS PROFIT RATE FOR THE Y EAR IS WORKED OUT AT RS. 12,63,238/- AS AGAINST G.P. SHOWN OF RS. 11,01,627/- AND IN THIS PROCESS A TRADING ADDITION OF RS. 1,61,611/- IS HEREBY SUSTAINED. SINCE, ON THIS ACCO UNT TRADING ADDITION OF RS. 7M,58,192/- HAS BEEN MADE, THEREFOR E, THE APPELLANT GETS A RELIEF ON THIS ISSUE AT RS. 5,96,5 81/-. THUS THE LD. CIT(A) GAVE SUBSTANTIAL RELIEF TO THE ASSESSEE IN THE TRADING ADDITION HAD IT BEEN DUE TO BOGUS PURCHASES THE REL IEF IN QUESTION WOULD NOT HAVE BEEN GIVEN. THEREFORE, THE OBSERVATION OF THE LD. CIT(A) IN CONFIRMING THE PENALTY IS UNJUSTIFIED AND SAME SHOU LD BE DELETED. 2.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN MY CONSIDERED VIEW THE ADDI TION IN QUESTION IS BASED ON MATTER OF OPINION ABOUT THE PERCENTAGE OF GROSS PROFIT. HUGE ADDITIONS WERE MADE WHICH HAVE BEEN SUBSTANTIALLY R EDUCED ON ITA NO.211/JP/2014 SHRI SATYA NARAYAN SHARMA VS. THE ACIT , CIRCLE- 5, JAIPUR . 4 COMPARATIVE BASIS. THUS IN MY CONSIDERED VIEW, IT I S NOT A FIT CASE OF PENALTY WHICH IS DELETED. THUS THE APPEAL OF THE AS SESSEE IS ALLOWED. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21/04/2016 . SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/04/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO:- 1. VIHYKFKHZ@ THE APPELLANT- SHRI SATYA NARAYAN SHARMA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 5,JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 211/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR