ACIT, Jaipur V. DHARMENDRA KUMAR TANK, Jaipur

ITA 245/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99423 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A K MATHUR C A DHK
• Keywords: Bogus purchase; Rejection of books of accounts; Search and seizure; Documents seized
• 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. 245/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2006-07 . ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. SHRI DHARMENDRA KUMAR TANK, PROP. M/S. HEERALAL CHAGANLAL TANK, 2333, TANK BUILDING, MSB KA RASTA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AALPT 4877 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL, (JCIT) /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI A.K. MATHUR (C.A) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.10.2015. ?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 REVENUE AGAINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 29.01.2014 FOR THE A.Y. 2006-07. THE SOLE GROUND RAISED IN THE APPEAL IS AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN ALLOWING RELIEF OF RS. 11,09,640/- OUT OF ADDITION MADE BY THE AO ON ACCOUNT OF UNVERI FIABLE PURCHASES. 2 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR. 2. THE SOLE GROUND IN THE REVENUES APPEAL IS AGAIN ST ALLOWING PART RELIEF OUT OF ADDITION MADE BY THE AO ON ACCOUNT OF UNVERIFIABLE PURCHASES. THE AO OBSERVED THAT THE ASSESSEE IS THE SOLE PROPRIETOR OF THE CONCERN M/S. HEERALAL CHAGANLAL TANK AND ENGAGED IN THE BUSINESS OF PRECIOUS AND SEMI PRECIO US STONE. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 19.10.2006 DECLARING TOTAL INCO ME OF RS. 19,55,434/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE I.T. ACT, 1961. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DISCLOSED GROSS PROFIT OF RS. 1,38 ,70,953/- ON TOTAL TURNOVER OF RS. 8,48,93,746/- WHICH GAVE A G.P. RATE OF 16.33% IN C OMPARISON TO GROSS PROFIT OF RS. 74,42,029/- ON TOTAL TURNOVER OF RS. 3,32,14,354/- GIVING A GP RATE OF 22.40% OF THE IMMEDIATELY PRECEDING YEAR. HE FURTHER OBSERVED T HAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD MA INTAINED THE STOCK REGISTER ONLY ON STONE-WISE WHICH WAS NOT VERIFIABLE IN RESPECT OF V ARIOUS VARIETIES OF THESE STONES. THE ASSESSEE HAD ALSO NOT MAINTAINED THE QUANTITATIVE, QUALITATIVE, RATE-WISE DETAILS. IT WAS ALSO NOTICED THAT IN THE CASE OF SEMI PRECIOUS STON ES, PURCHASES HAVE BEEN MADE IN ONE BULK AND SALE HAVE BEEN MADE IN DIFFERENT QUALITIES AND AT DIFFERENT RATES. THEREFORE, 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 THAT ASSESSEE H AD MADE TOTAL PURCHASES OF RS. 1,60,07,540/- DURING THE YEAR UNDER CONSIDERATION, OUT OF WHICH THE ASSESSEE HAD MADE PURCHASES AMOUNTING TO RS. 48,38,558/- FROM FOLLOWI NG PARTIES :- 3 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR. NAME OF PARTY A MOUNT IN RS. M/S. CLARITY GOLD PVT. LTD., 105, RASTA GOPALJI, JOHARI BAZAR, JAIPUR. 10,12,164 / - M/S. MARINE MINERAL & HERBAL REMEDIES PVT. LTD., 4, SARDAR PATEL MARG, C-SCHEME, JAIPUR 38,26,394/ - TOTAL 48,38,558 / - IN THE ABOVE TWO CASES, A SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT ON 20.05.2009. DURING THE COURSE OF THE SEARCH AND SEIZURE OPERATION, THE STATEMENT OF A KEY PERSO N SHRI KHUSHI KUMAR AMERIYA WAS RECORDED. HE IS A DIRECTOR IN M/S. CLARITY GOLD PVT . LTD., JAIPUR. HE HAS STATED ON OATH THAT 95% OF SALES OF GEMS UNIT WERE BOGUS. FURTHER , AS IS CLEAR FROM PAGE NO. 42 OF ANNEXURE A-26, SEIZED FROM RESIDENCE OF SHRI KHUSHI KUMAR AMERIYA, CONTAINING BROKER WISE DETAILS OF BOGUS PURCHASES/SALES BOOKED BY GEM S UNIT FROM 01.04.2008 TO 04.02.2009 CONTAIN NAME OF M/S. HEERALAL CHAGAN LAL TANK TO WHOM RS. 18,01,406/- SALES HAVE BEEN EFFECTED THROUGH BROKER SUBHASH. TH E ROLE OF BROKER HAS BEEN AMPLY DESCRIBED BY SHRI KHUSHI KUMAR AMERIYA IN HIS ANSWE R TO QUESTION NO. 25 WHO ARE ARRANGING BOGUS TURNOVER DEALS. FROM THE DOCUMENTS SEIZED BY THE INVESTIGATION WING AS WELL ACIT, CENTRAL CIRCLE-1, JAIPUR, IT IS CLEAR THAT SHRI AMERIYA WAS INVOLVED IN THE FINANCIAL AFFAIRS OF M/S. MARINE MINERAL & HERBAL R EMEDIES PVT. LTD. THE CONTENTION OF THE ASSESSEE THAT RELIANCE CANNOT BE PLACED ON HIS STATEMENTS IS, THEREFORE, WRONG AS SHRI AMERIYA HAD BEEN INVOLVED IN THE FINANCIAL DEA LINGS OF THE GROUP INCLUDING M/S. S. GUPTA & CO. AND M/S. MARINE MINERAL & HERBAL REMEDI ES PVT. LTD. 4 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR. 2.1. IN SUCH CIRCUMSTANCES PURCHASES FROM M/S. CLAR ITY GOLD PVT. LTD., JAIPUR AND M/S. MARINE MINERAL & HERBAL REMEDIES PVT. LTD., JAIPUR, CANNOT BE SAID TO BE GENUINE. IN VIEW OF UNVERIFIABLE PURCHASES INTRODUCED IN THE BO OKS OF ACCOUNT AND THE NON VERIFICATION OF CLOSING STOCK, PROVISIONS OF SECTIO N 145(3) ARE CLEARLY APPLICABLE IN ASSESSEES CASE. 2.2. IT IS UNDISPUTED FACT THAT ASSESSEE IS NOT MAI NTAINING STOCK RECORDS AND THE CLOSING STOCK IS NOT SUBJECT TO VERIFICATION. THE D ISCUSSIONS IN FOREGOING PARAS CLEARLY SHOWS THAT NON GENUINE PURCHASES OF RS. 48,38,558/- FROM THE ABOVE NAMED PARTIES HAVE BEEN INTRODUCED IN THE BOOKS OF ACCOUNTS AND T HE ONLY MOTIVE CAN BE TO REDUCE ITS PROFITS. UNDER THESE CIRCUMSTANCES THE CORRECTNESS OR COMPLETENESS OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS TOTALLY RULED OUT AND T HE CORRECT PROFITS OF THE ASSESSEE CAN NOT BE DEDUCTED THERE FROM. THE AO AFTER CONSIDER ING THE ASSESSEES REPLY AND RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT, (2008) 10 DTR 153 (GUJ.) REJEC TED THE BOOK RESULT U/S 145(3) OF THE ACT AND AFTER FOLLOWING THE DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT (SUPRA) DISALLOWED 25% OF UNVERIFIABLE PURCHASES OF RS. 48,38,558/- AND MADE ADDITION OF RS. 12,09,640/- 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 ALLOWED PART RELIEF BY OBSERVI NG AS UNDER :- 6. I HAVE CONSIDERED FACTS OF THE CASE. IT IS SEE N THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT AS THE APPELLANT HAD FAILED TO PRODUCE THE SELLERS CONCERNED AND ALSO FAILED TO ESTABLISH THAT THE PURCHASES MADE HIM WERE GENUINE. THE REJECTION OF BOOKS OF ACCOUNT IS, THEREFORE, UPHELD. 5 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR. 6.1. SO FAR AS THE ESTIMATION OF INCOME IS CONCERNE D, IT IS SEEN THAT THE G.P. RATE AS WELL N.P. RATE OF THE APPELLANT IN THE YEAR UNDER CONSIDERATION WAS 22.40% AND 5.67% WHICH WAS BETTER THAN THE EARL IER YEARS RATE OF 14.72% AND 3.26% RESPECTIVELY. CONSIDERING THE OVER ALL FACTS AND CIRCUMSTANCES OF THE CASE AND TAKING INTO ACCOUNT T HAT CERTAIN PURCHASES HAVE REMAINED UNVERIFIED, THE ADDITION OF RS. 1 LAC IS CONFIRMED. REST OF THE ADDITION IS DELETED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE SOUGHT TO RELY ON THE ORDERS PASSED BY THE TRIBUNAL IN THE ASSESSEES CASE FOR THE A.YS. 2007- 08 AND 08-09 AND REQUESTED 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 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. 6 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR. 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, REVENUES APPEAL IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/2015 . 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- THE ACIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SHRI DHARMENDRA KUMAR TANK, 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.245/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 7 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR. 8 ITA NO. 245/JP/2014 A.Y. 2006-07. ACIT VS. DHARMENDRA KUMAR TANK, JAIPUR.