SHRI KUMUD CHAND JAIN HUF, Jaipur V. ITO, Jaipur

ITA 246/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1557 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Search and seizure; Accommodation entries
• Section: 142(1); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI B.R. MITTAL AND SHRI B.R. JAIN) ITA NO. 246/JP/2012 ASSESSMENT YEAR : 2007-08 PAN: ABTPJ 9167 H SHRI KUMUD CHAND JAIN VS. THE ITO 63, SHOPPING CENTRE, NEAR PITAL FACTORY WARD- 1(1 ) BANI PARK, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY: MISS. ROSHANTA MEENA DATE OF HEARING: 21-01-2013 DATE OF PRONOUNCEMENT: 23-01-2013 ORDER PER B.R. MITTAL, JM:- THE ASSESSEE HAS FILED THIS APPEAL FOR THE ASSESS MENT YEAR 2007-08 AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 30-01-2010 (DATE APPEARS TO BE NOT CORRECT AND SHOULD BE 30-01-2012, IN VIEW OF DATE OF AFFIDAVIT FILED BEFORE THE LD. CIT(A) WHICH IS STATED TO BE NOTORISED ON 24-01-2012 AND APPEARANCE OF LD. AR BEFORE LD. CIT(A) ON 20- 01-2012) WHEREIN THE SOLITARY GROUND OF THE ASSESSE E IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING NET COMMISSION OF RS. 4,77,616/- AS AGAI NST RS. 95,174/- DECLARED BY THE ASSESSEE AND THEREBY CONFIRMING THE ADDITION OF RS. 3,82,442/- 2.1 THE ASSESSEE FILED THE RETURN OF INCOME ON 5-11 -2007 DECLARING TOTAL INCOME OF RS. 1,81,430/-. THE AO PICKED UP THE CASE FOR SCRU TINY AND ISSUED NOTICES U/S 142(1) AND 143(2) OF THE ACT BUT NONE APPEARED ON BEHALF OF TH E ASSESSEE. THE AO PROCEEDED TO 2 MAKE ASSESSMENT U/S 144 OF THE ACT. HE OBSERVED THA T THE ASSESSEE HAS SHOWN TOTAL TURNOVER OF RS. 9,55,23,214/- AND HAS SHOWN GROSS PROFIT OF RS. 13,67,231/- WHICH RESULTED INTO GROSS PROFIT RATE OF 1.43%. THE AO ES TIMATED THE GROSS PROFIT RATE AT 2% ON TOTAL TURNOVER RESULTING IN A TRADING ADDITION OF RS. 5,43,233/-. THE AO ALSO DISALLOWED THE CLAIM OF EXPENSES IN PROFIT AND LOSS ACCOUNT B Y 20% RESULTING IN A DISALLOWANCE OF RS. 2,16,894/-. THE ASSESSEE FILED APPEAL BEFORE TH E FIRST APPELLATE AUTHORITY. 2.2 DURING THE COURSE OF HEARING, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE WAS ENGAGED IN PROVIDING ACCOMMODATION ENT RIES. HE USED TO ISSUE SALE BILLS AND GOT MARGIN OF RS. 100/- TO RS. 200/- PER LAC ON THE VALUE OF SALE. IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE OR HIS FAM ILY MEMBERS HAVE NEVER DONE ANY BUSINESS IN PRECIOUS AND SEMI PRECIOUS STONES NOR H AS ANY DEALINGS OR EXPERIENCE IN THIS TRADE. SINCE THE ASSESSEE WAS GETTING COMMISSION OF 0.10% TO 0.20% OF THE SALE BILL, THE ASSESSEE DECLARED ULTIMATE INCOME OF RS. 95,174/-. 2.3 THE LD. CIT(A) CONSIDERED THE ABOVE SUBMISSIONS AND STATED THAT ASSESSEE FILED AN AFFIDAVIT AND ADMITTED OF HAVING ISSUED THE BOGUS B ILLS. THE LD. CIT(A) HAS STATED THAT AS PER INFORMATION REGARDING RATE OF COMMISSION PAID I N CASE OF ENTRY PROVIDERS, CALLED FROM INVESTIGATION WING TO BE ABLE TO DETERMINE THE QUAN TUM OF COMMISSION BEING CHARGED, IT WAS NOTICED THAT AVERAGE RATE OF COMMISSION IS OF 0 .50% PER RS. 100/- ON THE ENTRIES GIVEN BY WAY OF BOGUS BILLS. THE LD. CIT(A) HAS STA TED THAT SIMILAR CASE OF ASSESSEES HUF HAS ALSO BEEN CONSIDERED REGARDING RATE OF COMM ISSION. ACCORDINGLY, THE LD. CIT(A) HAS APPLIED RATE OF COMMISSION @ 0.50% PER RS. 100/ - ON RS. 9,55,23,214/- WHICH GIVES NET COMMISSION INCOME TO THE ASSESSEE AT RS. 4,77, 616/-.SINCE THE ASSESSEE HAS DECLARED 3 THE PROFIT OF RS. 95,714/-, THE LD. CIT(A) HAS CONF IRMED THE ADDITION TO THE EXTENT OF RS., 3,82,442/-. HENCE, THIS APPEAL BY THE ASSESSEE. 2.4 DURING THE COURSE OF HEARING, THE LD. AR DID NO T DISPUTE TO THE FACT THAT THE ASSESSEE WAS INDULGED IN ISSUING ACCOMMODATION ENTR IES FOR WHICH HE WAS COLLECTING COMMISSION. THE ONLY DISPUTE IS AS TO WHETHER THE R ATE OF COMMISSION 0.50% AS CONFIRMED BY THE LD. CIT(A) IS JUSTIFIED OR NOT. TH E LD. AR SUBMITTED THAT IN SIMILAR KIND OF BUSINESS, ITAT DELHI BENCH IN THE CASE OF SANJAY KUMAR GARG VS. ACIT, 134 ITD 82 DIRECTED TO ESTIMATE THE COMMISSION INCOME BY APPLY ING 0.20% ON THE TURNOVER DETERMINED AS AGAINST 1% CONSIDERED BY THE AO. HE S UBMITTED THAT THE RATE OF COMMISSION 0.50% IS EXCESSIVE. 2.5 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ACT ION OF THE LD. CIT(A) AND SUBMITTED THAT AS PER ENQUIRY CONDUCTED BY THE DEPA RTMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, IT WAS FOUND THAT COMMISSION CHARGED BY SUCH PERSONS FOR PROVIDING ACCOMMODATION ENTRIES VARIES BETWEEN 0.40 % TO 0.60% AND ACCORDINGLY THE LD. CIT(A) IS JUSTIFIED TO APPLY THE COMMISSION @ 0.50% . 2.6 CONSIDERING THE FACTS THAT THE ASSESSEE IS RUNN ING BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND THAT TOO IN THE BUSINESS RELATING TO PRECIOUS AND SEMI PRECIOUS STONES WHERE MARGIN OF THE PROFIT IS HIGH, WE ARE O F THE CONSIDERED VIEW THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ). SINCE THE ASSESSEE IS ADMITTEDLY ENGAGED IN UNFAIR PRACTICE WHICH IS AGAINST PUBLIC POLICY AND CONTRARY TO THE PROVISION OF LAW OF THE LAND, WE THEREFORE, HOLD THAT THE AUTHOR ITIES BELOW ARE REASONABLE AND FAIR IN ESTIMATING THE COMMISSION @ 0.50% . HENCE, WE UPHOL D THE ADDITION SUSTAINED BY THE LD. CIT(A) BY REJECTING THE GROUND OF APPEAL TAKEN BY T HE ASSESSEE. 4 2.7 BEFORE WE PART WITH THIS APPEAL, WE MAY STATE T HAT THIS APPEAL IS HEARD ALONGWITH APPEAL OF THE ASSESSEES HUF BEING ITA NO. 245/JP/ 2012 FOR THE ASSESSMENT YEAR 2007- 08 AND SIMILAR ADDITION SUSTAINED BY THE LD. CIT(A) HAS BEEN CONFIRMED. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23-01 -2013. SD/- SD/- (B.R. JAIN) (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 23 RD JAN 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI KUMUD CHAND JAIN , JAIPUR 2. THE ITO, WARD- 1 (1) , JAIPUR 3.THE LD. CIT 4.THE LD. CIT(A) 5.THE LD. DR 6.THE GUARD FILE (IT NO.246/JP/12) A.R. ITAT: JA IPUR 5 6