AMIT SINGHAL, Jaipur V. ITO, Jaipur

ITA 234/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5136 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR CIT DHK
• Assessee Lawyers: MRIDUL GOYAL
• Keywords: Bogus purchase; Rejection of books of accounts; Unexplained expenditure; Opportunity of cross examination; Deemed to accrue or arise in india; Assessment record
• Section: 69C; 143(3); 68; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 234/JP/2015 ASSESSMENT YEAR : 2010-11. SHRI AMIT SINGHAL, 1740, CHELA HOUSE, JAT KE KUWE KA RASTA, CHANDPOLE BAZAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 4(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ASBPS 0351 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 286/JP/2015 ASSESSMENT YEAR : 2010-11. THE INCOME TAX OFFICER, WARD 4(1), JAIPUR. CUKE VS. SHRI AMIT SINGHAL, 1740, CHELA HOUSE, JAT KE KUWE KA RASTA, CHANDPOLE BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ASBPS 0351 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) & SHRI MRIDUL GOYAL (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10.08.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08/09/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THESE TWO CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)-2, JAIPUR DATED 12.0 1.2015. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO. 286/JP/2015. THE REVEN UE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 2 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN RESTRICTING THE ADDI TION OF RS. 15,26,154/- AS AGAINST RS. 80,51,100/- MADE BY THE AO ON ACCOUN T OF BOGUS PURCHASES U/S 69C. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDE R DATED 14.03.2013. WHILE FRAMING THE ASSESSMENT, THE AO MADE ADDITION OF RS. 80,51,000/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE AND DEEMED INCOME OF ASSESS EE U/S 69C OF THE ACT AND THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE UNDER T HE HEAD INCOME FROM OTHER SOURCES. AGGRIEVED BY THIS ORDER, ASSESSEE PREFER RED AN APPEAL BEFORE LD. CIT (A), WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RE STRICTING THE ADDITION TO RS. 15,26,154/- AS AGAINST RS. 80,51,000/- MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES U/S 69C. 3. NOW, BOTH THE REVENUE AND ASSESSEE ARE IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. D/R VEHEMENTLY ARGUED THAT THE LD. CIT ( A) WAS NOT JUSTIFIED IN REDUCING THE ADDITION. HE SUBMITTED THAT THE LD. CI T (A) OUGHT TO HAVE CONFIRMED THE ENTIRE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASE. HE SUBMITTED THAT THE AO HAS OBSERVED THAT AS PER THE STATEMENT OF SHRI AJAY KUM AR SHARMA, HE HAD ADMITTED THAT HE HAS NOT DECLARED THE TRANSACTIONS IN HIS RE TURN OF INCOME AND THE MAIN BENEFICIARY OF THE BOGUS BILL WAS M/S. MANGALAM JEW ELLERS WHOSE PROPRIETOR WAS SHRI AMIT SINGHAL. HE SUBMITTED THAT THE AO OBSERVED TH AT IT HAS BEEN ADMITTED BY SHRI AJAY KUMAR SHARMA DURING THE PERIOD M/S. MANGALAM J EWELLERS HAS BOGUS BILL AMOUNTING TO RS. 80.51 LACS. THIS FACT WAS ALSO CON FIRMED BY SHRI AMIT SINGHAL. HE 3 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL SUBMITTED THAT UNDER THESE FACTS, THE LD. CIT (A) W AS NOT JUSTIFIED IN REDUCING THE ADDITION. 4.1. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. THE LD. COUNSEL SUBMITTE D THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 4.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) HAS DECIDED THE ISSUE IN P ARA 2.3 TO 2.10 OF HIS ORDER AS UNDER :- 2.3. I HAVE PERUSED THE FACTS OF THE CASE, THE AS SESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSEE IS E NGAGED IN THE BUSINESS OF TRADING IN SILVER BARS, GOLD BARS & SIL VER JEWELLERY. DURING THE YEAR OF UNDER CONSIDERATION, ITS GP RATE WAS 1. 19% AS AGAINST 1.42% IN AY 2009-10 AND 1.73% IN AY 2008-09. THE AS SESSEE HAS MADE PURCHASES FROM M/S PAWAN PUTRA GEMS & JEWELLER Y (PROP. SHRI AJAY KUMAR SHARMA) DURING THE YEAR. ENQUIRIES COND UCTED BY THE INVESTIGATION WING SHOWED THAT M/S. PAWAN PUTRA GEM S & JEWELLERY HAD ISSUED BOGUS BILLS OF SALES AMOUNTING TO RS. 80 .51 LAKH TO THE APPELLANT DURING THE YEAR. THIS ISSUE WAS CONFRONTE D TO THE ASSESSEE BY THE INVESTIGATION WING ON 31.01.2011 IN WHICH TH E ASSESSEE ADMITTED THAT HE HAD OBTAINED BOGUS PURCHASE BILLS FROM M/S. PAWAN PUTRA GEMS & JEWELLERY (PROP. SHRI AJAY KUMAR SHARM A). HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN T HE ASSESSING OFFICER RECORDED THE STATEMENT OF THE ASSESSEE, HE DENIED THE ISSUE OF BOGUS PURCHASES ADMITTED EARLIER. THE ASSESSING OFF ICER REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) AND ADDED THE QUANTUM OF BOGUS PURCHASES OF RS. 80,51,000/- U/S 69C OF THE I.T. AC T, AS UNEXPLAINED EXPENDITURE. ALTERNATIVELY, SHE ALSO ADDED THE ABOV E SUM U/S 68 BY TREATING THE SALES TO BE BOGUS SINCE THE PURCHASES ARE BOGUS. 2.4. THE APPELLANT HAS STATED THAT SHRI AJAY KUMAR SHARMA DID NOT ADMIT TO BOGUS SALES IN HIS STATEMENT RECORDED ON 3 0.11.2010. LATER ON, VIDE LETTER DATED 10.01.2011, THE ABOVE PERSON HAS ADMITTED TO BOGUS PURCHASES. IT WAS ALSO STATED BY THE APPELLAN T THAT IN THE STATEMENT RECORDED ON 30.11.2010, SHRI AJAY SHARMA, HAS STATED THAT HE WAS DOING GENUINE BUSINESS ACTIVITY TILL OCTOBER , 2009 AND ALL THE PURCHASES OF THE ASSESSEE ARE BEFORE THE ABOVE DATE . I HAVE EXAMINED THE ABOVE CONTENTION OF THE APPELLANT AND FIND THAT THE 4 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL APPELLANT HAS DEBITED NON GENUINE PURCHASES FROM M/ S. PAWAN PUTRA GEMS & JEWELLERY (PROP. SHRI AJAY KUMAR SHARMA) IN THIS PREVIOUS YEAR. THIS HAS ALSO BEEN ADMITTED BY THE ASSESSEE I N HIS STATEMENT RECORDED ON 31.01.2011 BEFORE THE OFFICER OF THE IN VESTIGATION WING. I DO NOT AGREE WITH THE CONTENTION OF THE APPELLANT T HAT THIS STATEMENT WAS RECORDED UNDER COMPULSION OR MISREPRESENTATION OF FACTS. IN VIEW OF THIS STATEMENT RECORDED ON 31.01.2011, THE DENIA L MADE BY THE ASSESSEE REGARDING THE BOGUS PURCHASES DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, CANNOT BE RELIED UPON. IN VIEW OF THE ABOVE DISCUSSION IT IS HELD THAT THE PURCHASES MADE FROM M/S. PAWAN PUTRA GEMS & JEWELLERY (PROP. SHRI AJAY KUMAR SHARMA) BY THE ASSESSEE DURING THE YEAR ARE NOT GENUINE. THEREFORE, THE ACT ION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS U/S 145( 3) IS UPHELD. 2.6. FOR DETERMINING THE ADDITION PERTAINING TO THE ABOVE PURCHASES FROM M/S. PAWAN PUTRA GEMS & JEWELLERY (PROP. SHRI AJAY KUMAR SHARMA), THE FOLLOWING POINTS MERIT CONSIDERATION (A) QUANTITATIVE DETAILS OF SILVER BARS, SILVER JEW ELLERY AND GOLD BARS HAVE BEEN FURNISHED IN POINT NO. 28(A) OF THE 3 CD REPORT. (B) THE APPELLANT HAS FILED SEPARATE TRADING ACCOUN TS FOR GENUINE AND TOTAL PURCHASES AS WELL AS FOR PURCHASES FROM M /S. PAWAN PUTRA GEMS & JEWELLERY. THE PURCHASES FROM M/S. PAWAN PUT RA GEMS & JEWELLERY AMOUNTS TO RS. 1,01,74,356/- AND THE CORR ESPONDING SALES AMOUNTS TO RS. 1,02,68,154/-. THERE IS NO OPENING STOCK OR CLOSING STOCK. THE GROSS PROFIT RATIO ON THESE TRANSACTIONS IS 0.91%. (C) THE APPELLANT HAS SUBMITTED QUANTITATIVE TALLY WITH RESPECT TO THE PURCHASES M/S. PAWAN PUTRA GEMS & JEWELLERY AND ITS CORRESPONDING SALES ALONG WITH COPIES OF PURCHASE A ND SALE BILLS. (D) THE ASSESSING OFFICER HAS NOT DISPUTED OR GIVEN ANY ADVERSE FINDING WITH RESPECT TO THE SALES. 2.7. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD TH AT THE ASSESSEE HAS PURCHASED SILVER BARS SINCE THE SAME QUANTITY HAS B EEN SOLD BY THE ASSESSEE DURING THE YEAR. HOWEVER, IN VIEW OF THE A BOVE DISCUSSION, IT IS HELD THAT THE ASSESSEE HAS NOT PURCHASED THESE I TEMS FROM M/S. PAWAN PUTRA GEMS & JEWELLERY BUT FROM SOME OTHER CO NCERN. THE ITAT, JAIPUR IN RECENT JUDGEMENT DATED 22.10.2014 I N ITA NO. 5 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL 241/JP/2012, 253/JP/2012, 13/JP/2010 ETC. HAS HELD (IN PARA 10.6 PAGE 57) THAT THE LEARNED ASSESSING OFFICER APPLIED 25% N.P. DI SALLOWANCE ON UNVERIFIABLE PURCHASES ON THE BASIS OF DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES (SUPRA) AND VIJAY PROTEINS (SUPRA). HOWEVER, THE LEARNED A.R. HAD ARGUED TO APPLY PAST HISTORY OF TH E CASE BUT WE FIND THAT PAST HISTORY OF THE ASSESSEE IS ALSO DOCTORED, THEREFORE, THE SAME CANNOT BE APPLIED. WE ARE OF THE CONSIDERED VIEW TH AT 15% N.P. RATE IS REASONABLE ON UNVERIFIABLE PURCHASES. THIS VIEW ALS O GOT SUPPORT FROM THE RECENT DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF VENUS ARTS & GEMS ORDER DATED 20.8.2014 WHEREIN G.P . ADDITION WAS CONFIRMED BY THE ITAT, HAD FOUND FACTUAL AND NOT QU ESTION OF LAW INVOLVED IN IT. IT IS IMMATERIAL WHETHER THE ASSESS EE IS 100% EXPORTER. THE ASSESSING OFFICER CANNOT BE PRECLUDED FROM ENQU IRING INTO THE GENUINENESS OF THE UNVERIFIABLE PURCHASES. WHEREABO UTS OF THE PARTIES FROM WHOM THE PURCHASES WERE MADE ARE KNOWN TO THE ASSESSEE. HE SHOULD HAVE PRODUCED THESE PARTIES BEFORE THE ASSES SING OFFICER FOR VERIFICATION. THEREFORE, WE HAVE CONSIDERED VIEW T HAT 15% N.P. ON UNVERIFIABLE PURCHASES IS REASONABLE IN THIS CASE. ACCORDINGLY, THE ASSESEES APPEAL IS PARTLY ALLOWED. 2.8. THE ASSESSING OFFICER HAS INVOKED THE PROVISIO NS OF SECTION 69C AND HAS TREATED THE ENTIRE QUANTUM OF PURCHASES AS UNEXPLAINED UNDER THIS SECTION. THE ASSESSING OFFICER HAS STATED THAT THE SOURCE OF EXPENDITURE OF RS. 80.51 LACS TO MAKE THE ABOVE PUR CHASES, HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND IS THERE FORE, UNEXPLAINED. THE APPELLANT HAS STATED THAT PAYMENT FOR THE PURCH ASES HAS BEEN MADE BY CHEQUE AND IN CASE THE PURCHASES ARE HELD T O BE BOGUS, THIS MONEY WOULD HAVE BEEN RETURNED BACK TO THE APPELLAN T. IN SUCH A SITUATION, THE PURCHASE CONSIDERATION CANNOT BE HEL D TO BE UNEXPLAINED. THE APPELLANT HAS ALSO RELIED ON THE D ECISION OF THE ITAT, JAIPUR IN THE CASES OF NISRAJ REAL ESTATE, RAJ KUMA R GOYAL, CHORADIYA GEMS, ALPANA GEMS, AKHIL EXPORT (SUPRA) THAT IN SUC H INSTANCES OF UNVERIFIED PURCHASES, ADDITION CANNOT BE MADE U/S 6 9C. FOLLOWING THE ABOVE CASE LAWS AND IN VIEW OF THE ABOVE DISCUSSION , IT IS HELD THAT PURCHASE CONSIDERATION CANNOT BE TREATED AS UNEXPLA INED UNDER SECTION 69C. THEREFORE, ADDITION CANNOT BE MADE U/S 69C AS HAS BEEN DONE BY THE ASSESSING OFFICER. 2.9. AS REGARDS THE ALTERNATE INFERENCE DRAWN BY TH E ASSESSING OFFICER THAT SINCE PURCHASES ARE BOGUS, SALES WOULD ALSO BE BOGUS, IS NOT CORRECT BECAUSE IT HAS ALREADY BEEN HELD THAT P URCHASES OF THE SAME QUANTITY HAS IN FACT BEEN MADE. THE ASSESSING OFFICER HAS ALSO NOT DISPUTED OR DRAWN ANY ADVERSE INFERENCE WITH RE SPECT TO THE SALES MADE BY THE ASSESSEE. THEREFORE, ADDITION U/S 68 CA NNOT BE SUSTAINED. 6 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL 2.10. IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING THE ORDERS OF THE ITAT JAIPUR DISCUSSED ABOVE IN PARA 2.7, IT IS HELD THAT A DISALLOWANCE OF 15% ON THE QUANTUM OF THESE UNVERIFIABLE PURCHAS ES (FROM M/S. PAWAN PUTRA GEMS & JEWELLERY) BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE SINCE THE ASSESSEE HAS NOT BEEN ABLE TO DI SCHARGE HIS ONUS REGARDING THE GENUINENESS OF THE ABOVE PURCHASES AN D THE REVENUE HAS SHOWN THAT THESE PURCHASES ARE NOT GENUINE. THE QUANTUM OF THE UNVERIFIABLE PURCHASES MADE FROM M/S. PAWAN PUTRA G EMS & JEWELLERY DURING THE YEAR IS RS. 1,01,74,356/- AND NOT RS. 80 ,51,000/- AS HAS BEEN TAKEN BY THE ASSESSING OFFICER. THEREFORE, AN AMOUNT OF RS. 15,26,154/- (=15% OF RS. 1,01,74,356/-) IS UPHELD A S DISALLOWANCE OUT OF UNVERIFIABLE PURCHASES ON THIS ISSUE. THE ADDITI ON MADE BY THE ASSESSING OFFICER U/S 69C, 68 IS DIRECTED TO BE DEL ETED. GROUND NO. 1 IS PARTLY ALLOWED WHILE GROUND NO. 2 & 3 ARE ALLOWED. WE FIND THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD SUGGESTING THAT THE SALES MADE BY THE ASSESSEE ARE BOGUS. THE CONTENTI ON OF THE ASSESSEE IS THAT THE SALES ARE DULY EXPLAINED, THEREFORE, NO ADVERSE INF ERENCE CAN BE DRAWN. THE REVENUE HAS NOT REBUTTED THIS CONTENTION BY PLACING ANY CONTRARY MATERIAL ON RECORD. HENCE, THE LD. CIT (A) HAS RIGHTLY FOLLOWED THE ORD ER OF THE TRIBUNAL. THUS THE GROUND OF THE REVENUE IS DISMISSED. THE APPEAL OF THE REVENUE IS DISMISSED. 5. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 234/JP/2015. 6. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL ARE TWO FOLD. FIRSTLY, THE FINDING OF THE LD. CIT (A) THAT ASSESSEE HAS NOT MADE PURCH ASES FROM M/S. PAWAN PUTRA GEMS & JEWELLERY AND SECONDLY, CONFIRMING DISALLOWA NCE AT 15% OUT OF UNVERIFIABLE PURCHASES. THE LD. COUNSEL FOR THE ASSESSEE REITERA TED THE SUBMISSIONS AS MADE IN THE SYNOPSIS OF ARGUMENTS. THE LD. COUNSEL SUBMITTE D THAT THE PAYMENTS OF THE PURCHASES ARE MADE THROUGH BANKING CHANNEL. THE DI SALLOWANCE IS MADE ON THE BASIS OF STATEMENT OF THIRD PARTY, NAMELY, SHRI AJA Y KUMAR SHARMA. THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE SHRI AJA Y KUMAR SHARMA. LD. COUNSEL 7 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL SUBMITTED THAT CONFIRMATION OF DISALLOWANCE ON THE BASIS OF STATEMENT OF A THIRD PARTY CANNOT BE SUSTAINED. HE FURTHER SUBMITTED THA T EVEN OTHERWISE ALSO THE LD. CIT (A) HAS ERRED IN MAKING DISALLOWANCE OF RS. 15,26,1 54/- BY FOLLOWING THE DECISION OF COORDINATE BENCH IN THE CASE OF ANUJ KUMAR VARSHNEY IN ITA NO. 241/JP/2012 DATED 22.10.2014. LD. COUNSEL SUBMITTED THAT THE DECISION IN THE CASE OF ANUJ KUMAR VARSHNEY RELATES TO THE GEMS AND JEWELLERY WHEREAS THE PURCHASES OF ASSESSEE FROM M/S. PAWAN PUTRA GEMS & JEWELLERY ARE OF SILVER BUL LION. LD. COUNSEL SUBMITTED THAT IN THE DECISION WHICH HAS BEEN FOLLOWED BY THE LD. CIT (A), IT IS OBSERVED THAT THE PAST HISTORY OF THE ASSESSEE IS DOCTORED HENCE CANN OT BE RELIED. LD. COUNSEL SUBMITTED THAT THERE IS NO SUCH FINDING OF LOWER AU THORITIES THAT THE PAST HISTORY OF THE ASSESSEE IS MANIPULATED. THE LD. COUNSEL FURTHE R SUBMITTED THAT MOTIVE BEHIND THE BOGUS BILL AND BENEFIT DERIVED THEREFROM SHOULD BE LOOKED INTO BEFORE MAKING DISALLOWANCE. LD. COUNSEL DREW OUR ATTENTION TO THE LAST THREE YEARS GROSS PROFIT AND TURNOVER. LD. COUNSEL SUBMITTED THAT THE GROSS PROF IT OF THE YEAR UNDER CONSIDERATION WAS SLIGHTLY DOWN IN COMPARISON TO PREVIOUS YEAR BE CAUSE OF THE REASON THAT THE ASSESSEE IS DEALING IN GOLD AND SILVER AND PRICES O F WHICH ARE HIGHLY VARIABLE AND THE SALES PRICE OF THE ASSESSEE VARIED, THEREFORE, THE PROFIT CANNOT BE DISALLOWED. THE LD. COUNSEL SUBMITTED THAT THE LOW PROFIT RATE IS NOT V ERIFIABLE BECAUSE OF PRICE FLUCTUATION BUT EVEN IF THE PROFIT RATE OF VERIFIAB LE PURCHASES @ 1.25% IS APPLIED FOR THE ALLEGED NOT VERIFIABLE PURCHASES THEN ALSO THE TRADING ADDITION SHOULD ONLY BE MADE IN THE INCOME OF THE ASSESSEE OF RS.54,292/- A S AGAINST RS. 15,26,154/-. LD. COUNSEL SUBMITTED THAT THE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUES AND SAME WAS PAID FROM THE BANK ACCOUNT OF THE ASSESSEE OUT OF THE BALANCE AVAILABLE IN 8 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL BANK ACCOUNT. THE LD. COUNSEL SUBMITTED THAT THE RE VENUE HAS NOT BROUGHT ANY MATERIAL SUGGESTING THAT THE MONEY PAID WAS RETURNE D TO THE ASSESSEE. 6.1. ON THE CONTRARY, LD. D/R VEHEMENTLY OPPOSED TH E SUBMISSIONS OF THE ASSESSEE AND SUBMITTED THAT IN THE ASSESSMENT RECORD THE ASS ESSEE HAS SUBMITTED THE FACTUM OF PURCHASES FROM SHRI AJAY KUMAR SHARMA. HE DREW OUR ATTENTION TO THE ASSESSMENT ORDER WHEREIN THE STATEMENT OF THE ASSES SEE IS REPRODUCED. 6.2. WE HAVE HEARD RIVAL CONTENTION, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW.TH E LD.COUNSEL HAS APPLIED THE RATE OF 15% ON UNVERIFIABLE PURCHASES BY FOLLOWING THE D ECISION OF COORDINATE BENCH IN THE CASE OF ANUJ KUMAR VARSHNEY, SUPRA. THERE IS NO DISPUTE THAT ENTIRE ADDITION HAS BEEN MADE ON THE BASIS OF THE STATEMENT OF THIRD PA RTY. WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN AN ADVERSE STATEMENT IS MADE THE BASIS FOR DISALLOWANCE/ADDITION BY THE AO, IN THAT EVENT HE IS REQUIRED TO GIVE OPPORTUNITY OF CROSS EXAMINATION. IN THE PRESE NT CASE NO SUCH OPPORTUNITY IS GIVEN. HOWEVER, THE LD. D/R HAS DRAWN OUR ATTENTION TO THE STATEMENT OF THE ASSESSEE BEFORE THE AO BY WHICH THE ASSESSEE IS CON FRONTED WITH THE PURCHASES MADE FROM M/S. PAWAN PUTRA GEMS & JEWELLERY. IN SU CH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PROCEEDINGS CANNOT BE STATED TO B E VITIATED ON THE GROUND THAT NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN. ANOTHER CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT ASSUMING THAT THE FINDING OF THE AUTHORITIES BELOW WITH REGARD TO THE UNVERIFIABLE PURCHASES IS CORRECT, IN THAT EVENT THE PROFIT RATE OF VERIFIABLE PURCHASES @ 1.25% IS REQUIRED TO BE APPL IED BUT NOT THE 15% AS APPLIED BY LD. CIT (A). WE HAVE GIVEN OUR THOUGHTFUL CONSID ERATION TO THIS CONTENTION OF THE 9 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL LD. COUNSEL FOR THE ASSESSEE. WE FIND MERIT INTO TH E CONTENTION THAT THE PROFIT RATE HAS TO BE APPLIED SAME AS WITH REGARD TO THE VERIFI ABLE PURCHASES AND UNVERIFIABLE PURCHASES. KEEPING IN VIEW THE FACT THAT THE RATE A S DECLARED BY THE ASSESSEE HAS TO BE COMPARED WITH THE RATE DECLARED BY THE OTHER SIM ILARLY SITUATED ASSESSES. WE DIRECT THE AO TO APPLY GROSS PROFIT AT 7.5% ON THE UNVERIFIABLE PURCHASES IN VIEW OF THE FACT THAT THE FACTS IN THE PRESENT CASE ARE DIS TINGUISHABLE FROM THE FACTS OF THE DECISION OF THIS TRIBUNAL RENDERED IN THE CASE OF A NUJ KUMAR VARSHNEY IN ITA NO. 241/JP/2012. THUS THE ASSESSEE GETS RELIEF OF RS. 7,63,077/-. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D WHEREAS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/09/201 6. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 08/09/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI AMIT SINGHAL, JAIPUR. 2. THE RESPONDENT- THE ITO WARD 4(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 234 & 286/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 10 ITA NO. 234(2)/JP/2015 SHRI AMIT SINGHAL