Abhay Chordia, JAIPUR V. DCIT CIRCLE 1, JAIPUR

ITA 291/JPR/2023

AI Insights

The case involves Abhay Chordia, the appellant, contesting various disallowances and additions made by the Deputy Commissioner of Income Tax (DCIT), Circle-01, Jaipur, which were upheld by the Commissioner of Income Tax (Appeals), Udaipur-02. The primary issues revolved around the disallowance of employees' contributions to PF and ESI, rejection of books of accounts under section 145(3) of the Income Tax Act, and the addition of 25% of purchases from M/s Sun Diam, deemed as bogus. The Tribunal examined the merits of each ground, considering the legal provisions, precedents, and the specific circumstances of the case, including the nature of the business and the financial transactions involved.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132202 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2023
• Other Referred Cases: Collector, Land Acquisition vs. Mst. Katiji and Others, CIT vs. State Bank of Bikaner & Jaipur, CIT vs. Jaipur Vidyut Vitran Nigam Ltd., K.S. Automobiles Pvt. Ltd. v/s The DCIT, Circle-2 Jaipur, Checkmate Services (P.) Ltd. vs. CIT, Dharkeshwari Cotton Mills Ltd. Vs. CIT, Omar Salay Mohammed Vs. CIT, Lal Chand Bhagat Ambica Ram Vs. CIT, M/s. Vijay Proteins Ltd. vs. Asst. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEERAJ BORAD
• Keywords: Bogus purchase; Rejection of books of accounts; Business income; Principle of natural justice; Opportunity of cross examination; Retrospective amendment; Corroborative evidences; Accommodation entries; Onus to prove
• Section: 69C; 43B; 143(3); 142(1); 250; 143(2); 139(1); 145(3)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 291/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2014-15 Abhay Chordia 20 Welfare House Ashok Marg, Near BSNL Office C Scheme GPO, Jaipur cuke Vs. DCIT Circle-01, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ADLPC 7128 H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Deeraj Borad, CA jktLo dh vksj ls@ Revenue by : Sh. Anoop Singh (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 05/07/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03/08/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the Commissioner of Income Tax, Appeal, Udaipur-02 dated 27/02/2023 [here in after ld. CIT(A) ] for assessment year 2014-15 which in turn arise from the order dated 01.12.2016 passed under section 143(3) of the Income Tax Act, by DCIT, Circle-02, Jaipur. 2 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 2. In this appeal, the assessee has raised following grounds: - “1. That the learned CIT(A) erred in sustaining disallowance of Rs. 74,402/- in regard to employees contribution to PF and ESI deposited by the appellant within the due date of filing of return of income u/s 139(1) but after the due dates of payment as per respective Acts relating to PF and ESI, which sustaining of such disallowance of Rs. 74,402/- is unjustified, non tenable in fact and in law and in the alternative excessive w.r.t facts and circumstances of the case. 2. The appellant craves leave to add, alter, amend, substitute one and more grounds of appeal as and when necessary. 3. That the learned CIT(A) erred in sustaining rejection of books of accounts u/s 145(3), upholding purchases of Rs. 31,99,996/- made from M/s Sun Diam as not verifiable and consequentially confirming addition u/s 69C of the IT Act at Rs.7,99,999/- being 25% of such purchase of Rs. 31,99,996/-, which sustaining of rejection of books of accounts, upholding of purchases as unverifiable and consequentially confirming addition of Rs. 7,99,999/- are most arbitrary, unjust and untenable in fact and in law and in the alternative excessive w.r.t facts and circumstances of the case. 4. That the learned CIT(A) erred in sustaining the addition of Rs. 6,400/- made by the AO for alleged payment of commission for obtaining accommodation entry in regard to purchases of Rs. 39,99,996/- from M/s Sun Diam, which sustaining of such addition of alleged payment of commission of Rs. 6400/- is unjustified and not maintainable in fact and in law.” 3. At the outset of hearing, the Bench observed that there is delay of 10 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an application for condonation of delay with following prayers: “Ref.: Communication of the defect in ITA 291/JPR/2023 (Defect notice dated 2023-May-16) With reference to above it is respectfully submitted as under:- 3 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 1. That appeal against the order dated 27.02.2023 was E-filed under acknowledgment number 1681894909 on 19.04.2023, which was well within statutory time limit of 60 days. 2. That after E-filing of appeal on 19.04.2023, the assessee was required to file form no. 36 of appeal after getting it signed by the appellant Abhay chordia. As the appellant was out of india to UAE for business purposes the full set of form no 36 and other relevant papers were sent to him abroad for his signatures. Normally it takes 10-12 days in reaching the papers in the hands of addressee (here the appellant) and the same time is taken in reaching the signed papers in the hands of appellant staff or the counsel in india. Such was the case with the appellant and it took about 22-24 days in getting the papers signed and then file before the Hon'ble tribunal. This delay was beyond his control. The delay in filing appeal manually is very much regretted. It is humbly prayed that delay in filing the appeal manually may kindly be condoned. 3. It is further submitted that the under signed counsel M.L. Borad Advocate was out of Jaipur from 13th to 26th May and 27th and 28th being Saturday and Sunday there occurred a delay of four days in filing the reply to the above mentioned defective notice and the same is regretted. In the circumstances mentioned above it is very humbly prayed that delay in manually filing the appeal and also in filing reply to the above mentioned notice issued by hon'ble ITAT in above regard may kindly be condoned. The humble appellant will ever remain grateful to the Hon'ble bench for your this act of kindness.” 4. During the course of hearing, the ld. DR not objected to assessee’s application for condonation of delay and prayed that Court may decide the issue as deem fit in the interest of justice as delay is of ten days only. 5. We have heard the contention of the parties and perused the materials available on record. The prayer by the assessee for condonation of delay of 10 has merit and we concur with the 4 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT submission of the assessee. Thus the delay of ten days in filing the appeal by the assessee is condoned in view of the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee is prevented by sufficient cause. 6. Succinctly, the fact as culled out from the records is that e-return of income for the assessment year 2014-15 was filed by the assessee on 29.09.2014 declaring total income of Rs. 95,42,710/- and tax paid u/s 115C on total income of Rs. 2,71,20,381/-. The case was selected for scrutiny under CASS. A notice u/s 143(2) was issued to the assessee on 3.9.2015 which was duly served upon the assessee. On account of change of incumbent notice u/s 142(1) along with detailed questioners were issued on 18.7.2016 and duly served upon the assessee. The assessee company is engaged in Manufacturing & export of Gems and Jewellery and 100 % Export Oriented Unit established in SEZ at Sitapura Industrial Area, Jaipur through this proprietorship concern namely M/s. Ashoka Jewells. As per information obtained from Investigation Wing, Mumbai the assessee has obtained bogus entry in the form of Bogus purchases amounting to Rs. 31,99,996/- during the year under consideration from M/s. Sun Diam. The 5 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT ld. AO noted the assessee is indulged in accommodation entry of purchase of goods without any physical deliveries. In such circumstances, the books of accounts kept by the assessee cannot give true picture of the profit earned. Hence provisions of section 145(3) are invoked in this case and 25 % as cush purchases of Rs. 31,99,996/- from bogus concern which are operated by Shri Rajendra Jain are treated as non genuine and a sum of Rs. 7,99,999/- added back to the total income the assessee, being un explained expenditure u/s. 69C of the Act. As the assessee has taken bogus accommodation entry from bogus concerns it is apparent that the assessee paid Rs. 6,400/- [ 0.20% of Rs. 31,99,996/-] on account of commission paid out of books for accommodation entry. The ld. AO also noted that the assessee deposited the employees contribution towards the PF and ESI beyond the stipulated time as allowed u/s. 36(1)(va) r.w.s.2(24)(x) of the Act. Therefore, these late payments of Rs. 35,729/- received on account of employee contribution towards PF and Rs. 38,683/- on account of ESI found not allowable expenditure and the same also added to the income of the assessee. 7. Aggrieved from the order of the Assessing Officer making above adjustment, the assessee has preferred an appeal before the ld CIT(A). The 6 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT assessee did not find any favourable from the appeal so filed before ld. CIT(A). Apropos to the grounds so raised the finding of the ld. CIT(A) is reproduced here in below: “4.3 I have considered the submission of Ld. A/R and carefully gone through the material available on record. It is noticed that the AO had received the information from the Investigationwing of the Department that the appellant has taken accommodation entry amounting to Rs. 31,99,996/- from M/s Sun Diam, in whose case a search was conducted by the income taxdepartment, wherein, it was admitted by him that he was in the business of providingaccommodation entries. The appellant is found to be indulged in bill shopping from bogus concerns of Sh. Rajendra Jain and his associates. In the statement before the investigation wing Sh. Rajendra Jain admitted that he is providing accommodation entries in lieu of certain commission. These statements were confirmed during search and post search proceedings. It was admitted by Mr. Jain that he does not have any stock of diamond at any of his concern. Hence, it is established that the appellant has taken accommodation entries. The AO has made addition of Rs. 7,99,999/- to the income of the appellant,being 25% of bogus purchased of Rs. 31,99,996/-, The AO has not disputed the salesmade by the appellant and thus, the purchases must have been made for making the sales. The AOhas doubted the genuineness of the purchases on the ground that the suppliers were found to beaccommodation entries providers and the purchases from entities controlled by ShriRajendraJain could not be verified during the assessment proceedings. The books of accounts of the appellant have been rejected by the AOu/s 145(3) of the Act as the appellant could not substantiate the real delivery of goods from theentities controlled by entry providers providing accommodation purchase bills and thus, the tradingresults of the appellant were not verifiable. The rejection of books and estimating disallowance of 25 percent of bogus purchases is found to be justified on the facts of the case. It is also noted by the AO that the appellant is habitual in taking such type of accommodation entries year after year. 4.4 The argument put forth by the appellant are discussed as under- It is argued that opportunity of hearing and opportunity of cross examination was not provided to the appellant. The appellant has claimed the purchases in its books of accounts. The onus is on the appellant to prove that the purchases made by it are genuine. The appellant has failed to do so. In the show cause notice issued by the AO, facts of bogus purchases was clearly mentioned. Therefore, the argument of the appellant are not found to be acceptable. 7 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT It is argued that no defect is pointed out in the books of accounts. The purchases made from Sun Diam are real. The AO has brought out the fact that the purchases are not genuine and hence, the books of accounts are not reliable. When the seller i.e. Sun Diam itself admitted that no delivery of goods Iwas made by them, the argument of the appellant is just an argument without any basis. It is argued that goods purchased from Sun Diam were exported by the appellant. The AO has not disputed the sales. It is established that purchases were not made from Sun Diam. The appellant might have made purchases from parties not disclosed in the books of accounts. The appellant earned more profit on these transactions and to suppress profit the appellant procured bogus purchase bills from Sun Diam. In view of the above discussion, the disallowance of 25 percent out of purchases made by the appellant is found to be reasonable and the addition made by the AO is upheld. The appellant has relied upon some judgements which are applicable on particular facts of the case. There are several judgementswhere even 100 per cent of the bogus purchases is confirmed. Therefore, addition of 25% of the impugned purchases is found to be reasonable. Similar addition was upheld in the case of M/s. Vijay Proteins Ltd. vs. Asst. CIT [1996] 58 ITD 428 (Ahd.). Therefore the addition made by AO with regard to 25 percent of the bogus purchases and the commission expenditure of Rs. 6,400 for taking such accommodation entries is confirmed.” The position of law is made clear by the Hon'ble Supreme Court even for Assessment Years prior to 2021-22. Accordingly as per law the amount of PF and ESI which is deducted from employees and is not deposited in respective accounts within due date of the respective acts is deemed income of the assesseeas per section 2(24)(x). Therefore claiming this amount as expenditure by the assessee is an incorrect claim as per law. 8. Aggrieved from the order of the ld. CIT(A), the assessee has preferred this present appeal before this tribunal on the grounds as stated here in above in para 2. 9. The ld. AR of the assessee a propose to the ground no. 1 raised for disallowance of ESI and PF fairly admitted that after decision of the Hon’ble Apex Court in the case of Checkmate Services (P.) Ltd there is no merit in 8 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT the ground and therefore, he has not pressed that ground and therefore, Ground No. 1 raised by the assessee is dismissed. Ground no. 2 raised being general in nature and does not require any adjudication by us. 10. A propose to the Ground Nos. 3 & 4 raised by the assessee, the ld. AR of the assessee argued that on the similar set of facts in the case of the assessee for A.Y 2012-13 on the similar issue of bogus purchase, there is a judgment of this Co-ordinate Bench and looking to the same set of facts and circumstances and ratio of decisions taken by the Co-ordinate Bench may please be considered and accordingly ground Nos. 3 & 4 be decided. In addition the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; Sub: Written Submissions in regard to above mentioned Appeal No. ITA/291/JPR/2023 -in the case of Abhay Chordia vs. DCIT Circle 1 Jaipur for A.Y. 2014-15. Date of hearing 05/072023 With reference to above and in continuation to form no. 36 of appeal interalia containing grounds of appeal, the humble appellant craves leave to make following submissions in respect of each ground of appeal for the kind consideration of the hon’ble bench:- GROUND OF APPEAL NO. 1 1. This ground of appeal is against sustenance of disallowance of Rs. 74,402/- in regard to employees contribution to PF and ESI deposited by the assessee within the due date of filing of return of income but after the due date of 9 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT payment as per respective Acts i.e. PF & ESI Acts. In this regard it is respectfully submitted as under: a. That both these payments of Rs. 35,729/- and 38,683/- have been deposited by the assessee before the due date of filing of return of income. The details of payment stand already filed with the learned A.O. during the course of assessment proceedings. b. It is respectfully submitted that the issue of disallowance of PF and ESI is covered in favour of the assessee by various decisions of the Hon'ble jurisdictional High Court including the decision in case of CIT vs. State Bank of Bikaner & Jaipur (2014) 363 ITR 70 (99 DTR 131) (Raj.) as well as decisions in the cases of CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (2014) 363 ITR 307 (Raj.). c. Besides the appellant craves leave to refer to and rely upon the judgement dated 08/03/2019 of Honourable Income Tax Appellate Tribunal, Jaipur Bench in ITA No. 1184/JP/2018 and ITA No. 1185/JP/2018 for AY 2013-14 and 2014-15 respectively in the case of K.S. Automobiles Pvt. Ltd. v/s The DCIT, Circle-2 Jaipur. This judgment the hon’ble Jaipur Tribunal held that in view of a series of decisions of the Hon’ble Jurisdictional High Court in favour of the assessee and further Hon’ble Supreme Court in case of PCIT vs. Rajasthan State Beverages Corporation Ltd. 250 taxmann 16 having dismissed the SLP filed by the Department this issue is decided in favour of the assessee and against the Revenue. d. That the learned A.O. failed to appreciate that section 43B of the IT Act has a non-obstante clause and accordingly it has precedence over the provisions of section 36(1)(va) of the I.T. Act. e. Various High Courts including the jurisdictional High Court have held that as section 43B starts with a non-obstante clause, it overrides section 36(1)(va), and that no disallowance can be made if the sums are paid prior to the due date u/s. 139(1). f. That the appellant craves leave to submit that amendment in section 36(1)(va) of the I.T. Act by way of insertion of explanation 2 to section 36(1)(va) in regard to non-application of sec.43B to provisions of sec.36(1)(va) has been brought on Statute Book w.e.f. Asstt. Year 2021-22 and accordingly no disallowance can be made in the previous year relevant to A.Y. 2014-15 i.e. year under appeal if the contribution to PF and ESI have been paid prior to the due date under section 139(1). g. That , the year under appeal is A.Y. 2014-15 and explanation 2 to section 36(1)(va) in regard to non-application of sec.43B to provisions of 10 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT sec.36(1)(va) has been brought on Statute Book w.e.f. Asstt. Year 2021-22 and hence it cannot be given a retrospective effect. GROUND OF APPEAL NO. 2 While filling form 36 of appeal this ground of appeal was kept by assessee at sr.no.4 but, while uploading this form on line, somehow or the other, this ground of appeal was automatically renumbered as ground of appeal no.2. The mistake is regretted. It is further submitted that this ground of appeal is of consequential nature and may please be decided accordingly. GROUND OF APPEAL NO. 3 This ground of appeal is against upholding by the ld. CIT (A) of application of provisions of section 145(3), consequential rejection of books of accounts of the assessee, treatment of purchases of Rs. 31,99,996/- made by the assessee from M/s. Sun Diam as not verifiable and consequential addition of Rs. 7,99,999/-, being 25% of above mentioned alleged unverifiable purchases of Rs. 31,99,996/-, and levy of tax thereon. In support of this ground the appellant craves leave to make following respectful submissions: 1. That, both the AO as well as ld. CIT(A) failed to take into consideration the following papers, documents and records maintained by the assessee:- (a) Copy of purchase invoices (b) All the payments for the purchases have been made by the assessee through proper banking channels. Such bank statement confirming the payments through proper banking channels stand already filed in the course of assessment proceedings. (c) Full name and address of the party referred above which stand mentioned in the purchase invoice itself. (d) That the above named party is registered with VAT department and have TIN. To have a TIN which is issued to a dealer doing business of purchase/sale, manufacturing etc by the State Governments is a clear cut proof of bonafideness and genuineness of the dealer. TIN of the above party who sold the goods to the assessee is duly mentioned in the purchase invoice issued by the selling dealer while selling the goods to the assessee. (e) Above party has PAN (f) That the transaction of purchase is entered into in the course of regular business activities and it is fully supported with books of accounts including stock register regularly kept and maintained by the assessee and the same 11 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT stands already produced before the AO. All these books of accounts are regularly audited by a Chartered Accountant and tax audit report alongwith copies of final accounts stood already filed with the AO and more over there is no adverse observation in the tax audit report. (g) That the assessee has kept and maintained full and complete quantitative record of all the goods lying in hand as on the opening date of the previous year relevant to AY.2014-15, goods purchased, manufactured and sold during the previous year and closing stock as on 31.03.2014 i.e. on the close of previous year relevant to year under appeal and there is no leakage at any stage. (h) That each and every entry in the books of accounts including purchase/sale/manufacturing is supported by bills and vouchers. Moreover there is no change in the method of accounting nor in method of valuation of closing stock. (i) That about 97% sale are export sales. (j) That the assessee is not a seller but a purchaser and before purchasing the goods from the above party it verified the bonafideness of it i.e. the selling dealer and after its full satisfaction regarding complete address, VAT registration no. and PAN etc. purchased the goods and made the payment through banking channel. It is not understood as to what kind of irregularity has been made by the assessee while purchasing the goods from above referred party and what more precautions should have been taken by the assessee while purchasing the goods. (k) That the observation made in the impugned order that Shree Rajender Jain said to be associated with the selling dealer M/s Sun Diam has stated that he is providing accommodation entries is in fact far away from truth and based on surmises and conjectures. It is submitted that Income tax Act 1961 as well as related laws never support the actions based on hypothetical grounds. In this regard the assessee craves leave to refer to and rely upon on the following judgments of the Hon’ble Supreme Court: 1. Dharkeshwari Cotton Mills Ltd. Vs. CIT 26 ITR 775 2. Omar Salay Mohammed Vs. CIT 37 ITR 151 3. Lal Chand Bhagat Ambica Ram Vs. CIT 37 ITR 288 (l) That detailed exhaustive stock register has been maintained for each and every items traded and the same was duly produced before the A.O. (m) That out of total sales of Rs. 16,77,23,126/- except a meager local sales of Rs. 56,63,661/- the balance sales of Rs. 16,20,59,465/- are export sales and full record of export has been maintained by the assessee and the same was produced before the A.O. from time to time. 12 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT (n) The assessee has regularly kept and maintained books of accounts consisting of Cash Book, ledger, stock registers, export register, , export realization register, bills and vouchers and other relevant records. (o) That the learned A.O. has not pointed out any inherent defects in the books of accounts. (p) The humble appellant craves leave to refer to and rely upon various judicial pronouncements as per annexure annexed herewith. (q) That the assessee reaffirmed before the A.O. that the purchases made by him from M/s. Sun Diam are not bogus purchases but real. In support of it assessee inter alia filed before the AO copy of purchase invoices, bank statements confirming to have made payments by assessee to the selling concern by account payee cheques/bank transfers and statements of accounts duly certified by the selling dealers. To get verified these papers, documents from the assessee’s books of accounts the assessee produced before the AO his entire record i.e. books of accounts, stock registers, export register, export realiasation registers, bank statements, bank deposit slips, papers, bills and vouchers etc. The AO duly verified these papers and documents from the books of accounts produced. From the perusal of the impugned assessment order your honor will kindly find that no kind of defect in the books of accounts has been pin pointed by the learned AO. (r) That it was duly stated before the A.O. that the goods purchased from above named concern have been exported by assessee out of India after due certification of the export sale invoices by customs department, Government Of India. In support of it various documents like copy of export invoices duly verified and stamped by customs department, Airways bills, Shipping bill, Certificate of Insurance of goods exported, Bank statements showing receipts of export sale proceeds in convertible foreign exchange were filed before the AO. 2. That the entire fabric being woven against the assessee by treating the purchases from the above named parties as not genuine is going around after thought statements of the sellers in the course of survey or search operations being carried against them or persons related to them. The judicial consensus is that after thought statements carry no weight under the law and they are against the spirit of natural justice. 3. From the above state of affairs it is very much clear that assessee was nowhere involved in the alleged activities of the selling dealer M/s. Sun Diam. In anyway punishment of wrong doings, if any, of other person cannot be given to the assessee. Assessee has no malafide intention and nothing wrong has been proved against the assessee. 13 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 4. That the AO has not brought on record a single piece of evidence which could show that the assessee has indulged in any layering of funds or circulation of funds. 5. It is respectfully submitted that there was no corroborative material available with the AO for making additions. 6. It is further respectfully submitted that not providing copy of statements and not providing opportunity to cross examine the related persons including Shri Rajendra S. Jain amounted to violation of principles of natural justice and this serious flaw makes the additions not maintainable in law. 7. The consensus of judicial opinion is that merely on the basis of statements of third parties no addition can be made in the absence of other corroborative evidence. 8. In this regard, it is further submitted that the sales in this concern in the previous year ended on 31/03/2014 relevant to AY 2014-15 i.e. year under appeal is Rs. 16,77,23,126/- and out of this turnover export turnover is of Rs. 16,20,59,465/-, which is 96.6% of total turnover Similarly, the total purchases including alleged unverifiable purchases of Rs. 31,99,996/- in this concern is Rs. 13,94,55,582/-. These alleged unverifiable purchases of Rs. 31,99,996/- are simply 2.30% of total purchases and as such very little seeing the volume of total purchases of this concern which are of Rs. 13,94,55,582/- and seeing the volume of the business, export sales being to the tune of Rs. 16,20,59,465/- out of total sales of Rs. 16,77,23,126/- and fully verifiable, the sale proceeds having been received in foreign exchange through proper banking channels and sales having become more than double as compared to the immediately preceding assessment year, the learned AO as well as the ld CIT (A) should have ignored the issue of unverifiable purchases and no addition should have been made by the AO nor it should have been upheld by the ld CIT(A). 9. It is further submitted that for every sale, there has to be a purchase and without purchase, there can’t be sales and particularly export sales. The AO has also admitted the declared turnover. When sales are admitted the learned AO should not have suspected a little amount of purchases which too duly supported by sale invoice, duly recorded in sales registers, payment to seller having been made through proper banking channels and goods purchased from above named party M/s Sun Diam, having directly been exported by the appellant assessee himself. 14 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 10. That the assessee has maintained individual trading accounts of different precious and semi precious stones in terms of weight and value and no kind of leakage have been pointed out by the learned AO. 11. That the burden of proof of not accepting the apparent as real lies on the AO but he has failed to discharge this burden of proof. So much so the AO has not given a single instance of layering of funds or circulation of funds or returning by the seller in cash the amount of cheque given by the assessee to him in lieu of goods purchased by him. 12. That while rejecting the assessee’s appeal the ld CIT(A) has followed the judgement in the case of M/s Vijay Proteins Ltd., vs. Asst. CIT (1996) 58 ITD 428 (Ahd.). In this regard it is submitted that the facts of M/s Vijay Proteins Ltd’s case are quite different and not the same. The main issue in above mentioned case of M/s Vijay Proteins Ltd., was low yield of oil, oil cake and shortfall in the Mill of M/s Vijay Proteins Ltd., as compaired to yield shown by other Mills in nearby area and as such this case of M/s Vijay Proteins Ltd., is quite distingiushable with the present case of the appellant. 13. That, without preudice to above submissions it is respectfully submitted as under:- (i) That the learned AO failed to appreciate that various high courts including the Hon’ble Rajasthan High Court as well as the Hon’ble Jaipur Bench of Income Tax Appellant Tribunal in last 6-7 years have repeatedly held that while applying GP rate for estimating the gross profits the average gross profit rate of the assessee in past years should be taken into account. In appellant’s case average GP rate of preceding 4 years comes to 4.43%. G.P. chart forms part of paper book being filed simultaneously. The assessee is also enclosing herewith an annexure containing reference to various judicial pronouncements including applying of average GP Rate on the basis of past years’ results. (ii) That from the perusal of GP Chart the hon’ble banch will kindly see that the average gross profit rate of the appellant in past 4 years is 4.43%. As against the average gross profit rate of the appellant in past 4 years at 4.43% the GP rate of the year under appeal is 6.05% which is higher by 1.62% than the average GP rate of 4.43% in past years. It is respectfully submitted that GP rate in the year under appeal being above the average GP rate of past years book results should have been accepted by the lower authorities and the impugned addition of Rs. 7,99,999/- (being 25% of alleged unverifiable purchases of Rs. 31,99,996/- )should not have been sustained by the learned CIT(A). 15 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 14. That in the case of the appellant assessee Shri Abhay Chordia himself similar issue was involved in A.Y. 2012-13 before the hon’ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur in ITA No. 117/JP/2019 for A.Y. 2012-13 in the case of AbhayChordia v/s. The DCIT, Circle-2, Jaipur wherein the hon’ble Bench vide Para no. 15 of order dated 28.04.2020 held that where the assessee has disclosed better gross profit rate then the past years’ average results, gross profit so declared should be accepted. Copy of this judgement is enclosed. GROUND OF APPEAL NO. 4 The issue raised in this ground of appeal is against addition of Rs. 6400/- for alleged payment of commission for obtaining accommodation entry of purchase of Rs. 31,99,996/- from M/s. Sun Diam. In this regard it is submitted that under the submissions of grounds of appeal no. 2,3 and 4 the assessee has very elaborately submitted that it is not correct to call this purchase as bogus. Rather it is a genuine purchase supported by purchase bills which also contain the selling dealers registration number under RVAT Act. Besides, payment has been made through banking channel and goods have been exported and the assessee’s sale has been accepted by the learned AO. For detailed submissions assessee craves leave to refer to and rely upon submissions made in above paras, namely under the heading grounds of appeal no. 2,3 and 4. Besides there is no supporting evidence whatsoever with the learned AO against the assessee and accordingly all the allegations are most arbitrary and unjust and the addition made at Rs. 6,400/- may please be cancelled.” 11. On the other hand, the ld. DR representing the revenue heavily relied upon the findings of the lower authority. He has also filed the copy of the following decision to support the contentions of the revenue: • High Court of Gujrat in the case of Vijay Proteins Ltd., order dated 09.12.2014. • Supreme Court, New Delhi in the case of Checkmate Services (P.) Ltd., order dated 12.10.2022. 16 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 12. We have heard the rival contentions and perused the material placed on record. The Bench has noted that so far as Ground No 3 & 4 is concerned, the issue is already decided in the favour of the assessee for A.Y 2012-13, the relevant finding is reproduced here in below:- “We find that once the past year results are taken as a reliable basis for estimating the gross profit and such results have attained finality and where the assessee has disclosed better gross profit rate than the past years results, gross profit so declared should be accepted and the same cannot be disturbed applying the same basis pursuant to which the books of accounts have been rejected.” 12.1 As the ld. DR did not controvert the finding of the Co-ordinate Bench and gross profit chart submitted by the assessee and reproduce here in below: 17 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT 13. We find no reason to deviate from the finding of the Co-ordinate Bench in the assessee’s own case and therefore, Ground No. 3 raised by the assessee is allowed. 14. As regards the Ground No. 4 is concerned for alleged commission. Since we have considered the purchase as per Ground No. 3, we see no merit to sustain the grounds of alleged commission for an amount of Rs. 6,400/-. Based on these observations, the Ground No. 4 is allowed. 18 ITA No. 291/JP/2023 Abhay Chordia vs. DCIT In terms of these observations, appeal of the assessee is partly allowed. Order pronounced in the open court on 03/08/2023. Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 03/08/2023 * Ganesh Kumar, PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Abhay Chordia, Jaipur 2. izR;FkhZ@ The Respondent- DCIT, Circle-01, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 291/JP/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar