SMT SNATOSH GUPTA, Jaipur V. ITO, Jaipur

ITA 269/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54108 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 30-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Assessee Lawyers: MRIDUL GOYAL
• Keywords: Onus to prove

Judgement Text

1 ITA 269-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 269/JP/2011 ASSTT. YEAR : 2005-06. SMT. SANTOSH GUPTA, VS. THE INCOME-TAX OFFICER, PROP. M/S. DEEPIKA GEMS, WARD 5(1), 47, CHOUDHARY HOUSE, OPPOSITE JAIPUR. HAWAMAHAL, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY GOYAL & SHRI MRIDUL GOYAL RESPONDENT BY : SHRI VINOD JOHARI DATE OF HEARING : 04.8.2011. DATE OF PRONOUNCEMENT : 19.8.2011. ORDER DATED : 19/08/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2. IN FIRST GROUND THE ASSESSEE IS OBJECTING IN CON FIRMING THE REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) AND CONFIRMING THE TRA DING ADDITION OF RS. 9,02,589/- MADE BY AO @ 25% AGAINST GROSS PROFIT DECLARED AT 15.07% . 3. THE AO REJECTED THE BOOKS OF ACCOUNT ON THE GROU ND THAT THE ASSESSEE WAS NOT MAINTAINING THE QUANTITATIVE AND QUALITATIVE STOCK REGISTER AND ASSESSEE COULD NOT PRODUCE BEFORE HER THE SUPPLIERS OF THE GOODS WORTH OF RS. 31,76,891/- AND, THEREFORE, THE PURCHASES TO THIS EXTENT WERE HELD AS UNVERIFIABLE. IN VIEW OF THESE DISCREPANCIES, THE AO 2 APPLIED 25% ON THE SALES OF RS. 90,91,080/- AS AGAI NST 15.07% DECLARED BY ASSESSEE. IN THIS WAY AN ADDITION OF RS. 9,02,589/- WAS MADE. R ELIANCE HAS BEEN PLACED ON VARIOUS CASE LAWS WHILE MAKING THE ADDITION. IT WAS SUBMIT TED BEFORE LD. CIT (A) THAT AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AS ASSESSEE HAD FILED CONFIRMATION LETTERS FROM THE PARTIES WHO SUPPLIED THE GOODS TO THE ASSE SSEE. ASSESSEE HAS ALSO PRODUCED THE COPIES OF INVOICE AND PAYMENT WHICH WERE MADE THROU GH PROPER BANKING CHANNEL. IT WAS SUBMITTED THAT ASSESSEE HAS NO STATUTORY POWER TO E NFORCE THE ATTENDANCE FROM WHOM THE MATERIAL WAS PURCHASED. ACCORDINGLY IT WAS SUBMITT ED THAT ASSESSEE HAS DISCHARGED HER INITIAL ONUS TO PROVE THE GENUINENESS OF PURCHASES. RELIANCE WAS PLACED ON VARIOUS CASE LAWS. IT WAS ALSO SUBMITTED THAT GROSS PROFIT SHOW N BY ASSESSEE IS BETTER AS COMPARED TO EARLIER YEAR AS IN THE YEAR UNDER CONSIDERATION GRO SS PROFIT DECLARED IS 15.07% WHEREAS IN EARLIER YEAR THE GROSS PROFIT RATE WAS 13.10%. THE REFORE, IT WAS SUBMITTED THAT ADDITION CAN BE MADE TAKING INTO CONSIDERATION THE PAST HIST ORY OF THE CASE. RELIANCE WAS PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BHAWAN VA PATH NIRMAN (BOHRA) & CO. (NO.1), 258 ITR 431 AND IN CAS E OF M/S. ASIAN CONSTRUCTION CO. VS. ITO, 34 TAX WORLD 89. AFTER CONSIDERING THE S UBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) WAS NOT CONVINCED WITH T HE EXPLANATION OF THE ASSESSEE. THEREFORE, HE CONFIRMED THE ACTION OF THE AO. WHIL E HOLDING SO, RELIANCE HAS BEEN PLACED ON THE DECISION OF KANCHWALA GEMS. 4. THE LD. COUNSEL OF THE ASSESSEE FILED BRIEF WRIT TEN SUBMISSION. 5. ON THE OTHER HAND, LD. D/R PLACED RELIANCE ON TH E ORDERS OF AO AND LD. CIT (A). 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROUND IN PART. UNDISPUTEDLY, CERTAIN PURCHASES 3 REMAINED UNVERIFIABLE. THE JAIPUR BENCHES OF THE TR IBUNAL ARE TAKING A CONSISTENT VIEW THAT WHERE PURCHASES REMAINED UNVERIFIABLE, THEN RE JECTION OF BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3) ARE JUSTIFIED . HOWEVER, THE JAIPUR BENCHES OF THE TRIBUNAL ARE ALSO TAKING A CONSISTENT VIEW THAT WHE RE CERTAIN PURCHASES REMAINS UNVERIFIABLE, THEN THE ADDITION CAN BE MADE AFTER T AKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND CURRENT EVENTS OF THE CASE. PAST H ISTORY SUGGESTED THAT GROSS PROFIT RATE SHOWN BY ASSESSEE IS BETTER AS COMPARED TO EARLIER YEAR. IN THIS YEAR THE GROSS PROFIT RATE HAS BEEN SHOWN AT 15.07% AGAINST 13.10% SHOWN IN IM MEDIATELY PRECEDING YEAR. SALES HAVE ALSO BEEN REDUCED AS COMPARED TO EARLIER YEAR. THE UNVERIFIABLE PURCHASES ARE ONLY OF RS. 31 LACS OR ODD. THE AO HAS DRAWN ADVERSE IN FERENCE AGAINST ALL THE SALES MADE AGAINST UNVERIFIABLE PURCHASES AND ALSO AGAINST UNV ERIFIABLE PURCHASES IF ANY ADVERSE INFERENCE COULD HAVE BEEN DRAWN THAT COULD HAVE BEE N DRAWN AGAINST UNVERIFIABLE PURCHASES ONLY. SINCE CERTAIN PURCHASES REMAINED U NVERIFIABLE, THEREFORE, WE ARE OF THE VIEW THAT IF AN ADDITION OF RS. 75,000/- IS CONFIRM ED ON ACCOUNT OF UNVERIFIABLE PURCHASES WHICH WILL TAKE CARE OF LEAKAGE OF REVENUE, IF ANY, THEN IT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART. 7. NEXT ISSUE IS AGAINST CONFIRMING THE DISALLOWANC E OF RS. 1,63,292/- OUT OF RS. 8,16,464/- ON ACCOUNT OF FOREIGN TRAVELING EXPENSES . 8. THE AO WAS OF THE OPINION THAT ASSESSEE HAS FAIL ED TO PROVE THAT FOREIGN TRAVELING WAS FOR THE PURPOSE OF BUSINESS. THERE WAS NO DOCU MENTARY EVIDENCE THAT HER HUSBAND AND EMPLOYEE HAD MET THE BUYERS FOR PROCURING EXPOR T ORDERS. ON CERTAIN OCCASIONS, THE ASSESSEE HAD SENT HER SON AND HUSBAND ON FOREIGN TO URS. SINCE COMPLETE BILLS/VOUCHERS FOR THESE EXPENSES WERE NOT AVAILABLE WITH THE ASSE SSEE AND THERE IS NO CONTRACT FOR POST 4 SALE SERVICES, THE AO HAS DISALLOWED 20% OF FOREIGN TRAVELING EXPENSES WHICH RESULTED IN AN ADDITION OF RS. 1,63,292/-. THE LD. CIT (A) ALSO CONFIRMED THE ACTION OF THE AO. 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT IF THE ADDITION IS RESTRICTED TO RS. 1,00,000/- THEN IT WILL MEET THE ENDS OF JUSTICE AS IN OUR VIEW THE DISALLOWANCE IS ON HIGHE R SIDE. ACCORDINGLY, WE RESTRICT THE ADDITION OF RS. 1,00,000/- ON ACCOUNT OF FOREIGN TR AVELING EXPENSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 .8.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- SMT. SANTOSH GUPTA, JAIPUR. THE ITO WARD 5(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 269/JP/2011) BY ORDER, AR ITAT JAIPUR.