ANIL GUPTA, Jaipur V. ITO, Jaipur

ITA 281/JPR/2014

• Counselvise Citation: 28123114 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA J DHK
• Keywords: Bogus purchase
• 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 (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. 281/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI ANIL GUPTA PROP. M/S. GEM TRADING CENTER, N.K. TOWER, PUROHIT JI KA KATLA, GOPINATH MARG,M.I. ROAD, JAIPUR CUKE VS. THE ITO WARD- 1(3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABEPG 0362 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/09/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/09/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-1, ALWAR DATED 06-01-2014 FOR THE ASSESSMEN T YEAR 2009-10 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS :-. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LA W IN CONFIRMING REJECTION OF BOOKS OF ACCOUNT OF THE APP ELLANT BY THE AO ON THE GROUND THAT PURCHASES OF RS. 14,30,9 63/- MADE BY THE APPELLANT ARE NOT GENUINE AND ARE NOT V ERIFIABLE. ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 2 2. THAT THE LD. CIT(A) IS FURTHER WRONG AND HAS ERR ED IN CONFIRMING TRADING ADDITION OF RS. 3,57,741/- MADE BY THE AO ON ACCOUNT OF ALLEGED UNVERIFIABLE PURCHASES RE FERRED TO IN GROUND NO. 1() ABOVE. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PARTNERSHIP FIRM AND HAS FILED THE RETURN OF INCOME ON 30-09-2009 DECLAR ING TOTAL INCOME OF RS. 9,99,800/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY AND AN ORDER U/S 143(3) OF THE ACT WAS PASSED BY THE AO ON 26-12-2011 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 13,86 ,340/- THE AO OBSERVED THAT THE ASSESSEE DEALS IN THE BUSINESS OF EXPORT OF GEM STONES. THE ASSESSEE HAS SHOWN THE SALES, GROSS PROFIT AND GROSS PROFIT RATE OF THE LAST TWO YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE THE AO AS UNDER:- ASSESSMENT YEAR SALES (IN LACS) GROSS PROFIT ( IN LACS) GROSS PROFIT RATE 2007-08 560.99 63.65 11.35% 2008-09 746.87 83.77 11.22% 2009-10 660.36 54.19 08.21% THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN LESS SA LES AND GROSS PROFIT AS COMPARED TO EARLIER YEARS. THE AO OBSERVED THAT THE ASSESSEE HAD MADE PURCHASES FROM TWO PARTIES NAMELY M/S. GEMS OC EAN FOR RS. 4,73,501/- AND M/S. SANCHI IMPEX FOR RS. 9,57,462/- TOTALING TO RS. 14,30,964/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO OBSERVED THAT THESE ABOVE PARTIES HAVE BEEN EARLIER DECLARED AS ENTRY ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 3 PROVIDER BY THE INCOME TAX DEPTT. THE AO DIRECTED T HE ASSESSEE TO PRODUCE THESE PARTIES FOR EXAMINATION ALONG WITH AL L THE BOOKS OF ACCOUNT AND BANK ACCOUNT CONCERNING THE PURCHASES BUT THE A SSESSEE FAILED TO PRODUCE THESE PARTIES ALONG WITH THE DETAILS DESIRE D BY THE AO. LD. AO REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND TO MADE ADDITION OF RS. 3,57,741/- QUA THE UNVERIFIABLE PURCHASES OF RS. 14,30,963/- IN VIEW OF THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT (2008) 10 DTR 153 AND I TAT AHEMDABAD DECISION IN THE CASE OF VIJAY PROTEINS LTD. 58 ITD 428. 2.2 BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAS DISMISSED THE APPEAL OF THE ASSESSEE BY FOLLOWING OBSERVATIONS. 4.1 I HAVE CONSIDERED SUBMISSIONS OF THE APPELLAN T AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. IT IS NOTED THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT ON TH E GROUND THAT PURCHASES FROM M/S. N.V. GEMS & JEWELLERS AND M/S. RAJSHREE GEMS WAS FOUND TO BE UNVERIFIABLE. THE ASS ESSEE HAD FAILED TO FURNISH ANY EVIDENCE BEFORE THE AO TO SHOW THAT THE PURCHASES WERE GENUINE. RELYING ON THE DEC ISION OF M/S. KANCHWALA GEMS 134 ITAT JAIPUR), THE AO HELD T HAT THE APPELLANT HAD FAILED TO PROVE THE PURCHASED AND ACCORDINGLY REJECTED THE BOOKS OF ACCOUNT. THEREFOR E, RELYING ON THE DECISION OF SANJAY OIL CAKE (10 DTR 153), HE DISALLOWED 25% OF THESE PURCHASES. 4.1 IT IS, HOWEVER, NOTED THAT THE DISALLOWANCE OF 25% OF PURCHASES ON THE BASIS OF SANJAY OIL CAKE (S UPRA) IS NOT CORRECT AS THE FACTS OF THE CASE ARE DIFFERENT. AS HELD BY HON'BLE ITAT, JAIPUR BENCH IN THE CASE OF GEMS PAR ADISE (SUPRA), IT IS A CASE OF REJECTION OF BOOKS OF ACCO UNT, THE ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 4 PROFIT HAS TO BE ESTIMATED. THE HON'BLE ITAT IN TH E CASE OF SHRI SHREE KRISHAN MALPANI (ITA NO. 1045/JP /1997) HELD THAT THE BOGUS PURCHASES REFLECT DEFECT IN THE BOOK S OF ACCOUNT AND THEREFORE, THE BOOKS OF ACCOUNT OF HAVE TO BE REJECTED. HENCE, THE REJECTION OF BOOKS OF ACCOUNT BY THE AO IS UPHELD. 4.2 NOW COMING TO THE ISSUE OF ESTIMATION OF PROFIT , IT IS SEEN THAT IN THE YEAR UNDER CONSIDERATION, TH E GROSS PROFIT RATE SHOWN BY THE APPELLANT WAS 8.21% WHILE IN THE ASSESSMENT YEARS 2997-08 AND 2008-09, IT WAS 11.35% AND 11.22% RESPECTIVELY. IT IS FURTHER NOTED THAT EVEN AFTER THE ADDITION OF RS. 3,57,741/- MADE BY THE AO THE GROSS PROFIT RATE IS LESS THAN WHAT WAS DECLARED IN IMMEDIATELY PRECEDING TWO YEARS. THEREFORE, I DO NOT FIND ANY R EASON TO INTERFERE WITH THE ORDER OF THE AO ON THIS ISSUE. IN THE RESULT, THE APPEAL IS DISMISSED. 2.3 THE LD. AR OF THE ASSESSEE DURING THE COURSE OF HEARING SUBMITTED THAT THE ASSESSEE FURNISHED COMPLETE DETAILS OF PUR CHASES WHICH INCLUDED THE COPIES OF PURCHASE BILLS, CONFIRMATIONS, RST/CS T NO. OF THE SUPPLIER, PAN OF THE SUPPLIER, PROOF OF PAYMENTS MADE AGAINST PURCHASES THROUGH ACCOUNT PAYEE CHEQUES DULY DEBITED AND CREDITED IN THE BANK ACCOUNTS OF SUPPLIER AND THE ASSESSEE RESPECTIVELY. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO DOUBTED THE CREDITWORTHINESS OF THE SUPPLIERS WITHOUT MAKING ANY EFFORTS TO EXAMINE THE GENUINENE SS OF THE TRANSACTIONS AND HAS BASED HIS OPINION AND OBSERVAT ION MERELY ON THE BASIS OF INFORMATION SUPPLIED BY BCTT WING. THE ASS ESSEE SUBMITTED THAT THE AO HAS NOT DOUBTED THE PAYMENT MADE THROUG H ACCOUNT PAYEE ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 5 CHEQUES AND HAS ALLEGED THAT PURCHASES ARE UNVERIFI ABLE PURCHASES MERELY BECAUSE THE SAID PARTIES COULD NOT BE PRODUCED BEFO RE THE AO. THE LD. AR OF THE ASSESSEE RELIED ON FOLLOWING DECISIONS TO TH IS EFFECT. (1) DCIT VS. ADINATH INDUSTRIES 252 ITR 476 (GUJ.) (2) ACIT VS. GEM STONES, 26 TW 511 (ITAT JAIPUR ) (3) RADHA MOHAN AGARWAL S ITO , 30 TW 190 (ITAT JAIPUR) (4) OM METALS & MINERALS LTD. VS. JCIT, 32 TW 54 (ITAT JAIPUR ) (5) SYNTEXA VS. ACIT, 111 TAXMAN 47 (CALCUTTA BEN CH) THE LD. AR OF THE ASSESSEE AT LAST PRAYED FOR DELET ION OF ADDITION OF RS. 3,57,741/- ON ACCOUNT OF UNVERIFIABLE PURCHASES MA DE BY THE AO AND SUBSEQUENTLY SUSTAINED BY THE LD. CIT(A). 2.4 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THIS COORDINATE BENCH VIDE ITS ORDER DATED 22-10- 2014 IN ITA NO. 187/JP/2012 IN THE CASE OF ANUJ KUM AR VARSHNEY VS. ITO AND OTHERS GEMS AND JEWELLERY CASES (SUPRA) HA S ALREADY TAKEN DECISION TO APPLY 15% DISALLOWANCE OUT OF UNVERIFIA BLE PURCHASES BY FOLLOWING OBSERVATIONS. 8.6 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH T HE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE R ECORD. AS DISCUSSED IN ABOVE CASES, THE MATERIAL AVAILABLE ON RECORD ESTABLISHED THAT IN JAIPUR, A RAMPANT PRACTICE IS I N VOGUE TO GET AND ISSUE ACCOMMODATION BILLS OF PURCHASES TO DEFLA TE THE PROFIT. THE LEARNED ASSESSING OFFICER MADE DISALLOWANCE @ 2 5% OF SUCH BOGUS PURCHASES ON THE BASIS OF DECISION IN THE CAS E OF SANJAY OIL ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 6 CAKE INDUSTRIES AND VIJAY PROTEIN LTD. (SUPRA). IN OUR VIEW THE 25% DISALLOWANCE APPEARS TO BE HIGHER SIDE, THEREFO RE, KEEPING IN VIEW OF THE FACTS OF THE ASSESSEES CASE AS WELL AS OTHER CASES AS DISCUSSED ABOVE, WE FEEL THAT 15% DISALLOWANCE OUT OF BOGUS PURCHASES IS REASONABLE ON UNVERIFIABLE PURCHASES A ND WILL MEET THE ENDS OF JUSTICE. THE REJECTION OF BOOKS OF ACCO UNT IS JUSTIFIED. THE ASSESSEE GETS RELIEF PARTLY. THEREFORE, IN VIEW OF THE DECISION OF THIS COORDINA TE BENCH IN THE CASE OF ANUJ KUMAR VARSHNEY VS. ITO AND OTHERS GEMS AND JEW ELLERY CASES (SUPRA), THE ADDITION IS RESTRICTED TO 15% OF UNVER IFIABLE PURCHASES OF RS. 14,30,963/-, WHICH WILL BE WORKED OUT BY AO ACCORDI NGLY. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 24 /09/20 15 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24 /09/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ANIL GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO ,WARD- 1 (3), 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. 281/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 7 ITA NO. 281/JP/2014 SHRI ANIL GUPTA VS. ITO WARD- 1 (3), JAIPUR . 8