ITO, Jaipur V. SMT. MAHIMA NATIYA, Jaipur

ITA 298/JPR/2012

• Counselvise Citation: 29823114 RSA 2012
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PUROSHOTTAM KASHYAP
• Assessee Lawyers: ABHISHEK DALMIA CA DHK
• Keywords: Bogus purchase; Business income; Opportunity of being heard
• Section: 131

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 VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 298/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER, WARD 3(1), JAIPUR. CUKE VS. SMT. MAHIMA NATIYA, PROP. M/S. NEELKANTH EXPORTS, C-1/309, CHITRAKOOT NAGAR, AJMER ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACAPN 5108 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI PUROSHOTTAM KASHYAP, JCIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ABHISHEK DALMIA, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/07/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 17 /07/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A)-I, JAIPUR DATED 17.01.2012 FOR THE ASSESSMENT YEAR 2007-08. T HE SOLE GROUND RAISED BY THE REVENUE IS AS UNDER :- 2 ITA NO.298/JP/2012 A.Y. 2007-08. ITO VS. SMT. MAHIMA NATIYA, JAIPUR. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) IS JUSTIFIED IN :- I) ALLOWING RELIEF OF RS. 10,83,356/- OUT OF TRADING A DDITION BY APPLYING G.P. RATE OF 5.00% AS AGAINST G.P. RATE OF 10.00% APPLIED BY THE A.O. ON THE BASIS OF UNVERIFIABLE PU RCHASES. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DE ALS IN PRECIOUS AND SEMI PRECIOUS STONES UNDER NAME AND STYLE M/S. NEELKANTH EXPORTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO FOUND THAT ASSESSEE H AS PURCHASED THE STONES FROM 19 PARTIES LISTED IN THE ORDER WHICH PURCHASES WERE TO BE VERIFIED. ACCORDING TO AO, ASSESSEE COULD NOT PRODUCE THEM AND NOTICES UND ER SECTION 131 WERE ISSUED TO THEM. THE NOTICES REMAINED UN-COMPLIED WITH. CONS EQUENTLY, BOOKS OF ACCOUNTS WERE REJECTED AND THE TRADING ADDITIONS WERE MADE B Y OBSERVING AS UNDER :- THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE, IT WILL BE FAIR AND REASONABLE TO ESTIMAT E THE GROSS PROFITS OF THE ASSESSEE @ 10% OF THE SALES AN D DIFFERENCE IN GROSS PROFIT IS ADDED TO THE TOTAL IN COME OF THE ASSESSEE. 10% OF SALES IS WORKED OUT TO RS. 21,66,712/-. THE GROSS PROFIT SHOWN BY THE ASSESSEE IS RS. 9,41,264/-. THUS, TRADING ADDITION WOULD BE RS. 12,25,448/- (21,66,712 9,41,264) AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3 ITA NO.298/JP/2012 A.Y. 2007-08. ITO VS. SMT. MAHIMA NATIYA, JAIPUR. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED FIRST APPEAL BEFORE LD. CIT (A). IN SUPPORT OF THE PURCHASES MADE BY T HE ASSESSEE, RELEVANT DOCUMENTS WERE FILED BY THE ASSESSEE. THE LD. CIT (A) ALLOW ED RELIEF BY OBSERVING AS UNDER :- I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE AR ALONGWITH REMAND REPORT SENT BY THE AO, SUBSEQUENTLY. IT IS SEEN THAT THE APPELLANT WAS NOT ABLE TO DISCHARGE HIS ONUS OF PROVING THE GENUINENESS OF TH E PURCHASES. ON THE OTHER HAND SUFFICIENT EVIDENCE HAD BEEN GATH ERED AND PLACED ON RECORD BY THE DEPARTMENT TO PROVE THAT SO ME OF THESE PURCHASES WERE UNVERIFIABLE. IT HAS BEEN THE CONSIS TENT STAND OF THE HONBLE ITAT JAIPUR BENCH TO CONSIDER THE BOGUS PURCHASES TO BE SUFFICIENT DEFECT FOR INVOKING PROV ISIONS OF SECTION 145(3). GIVEN THE FACTS OF THE CASE OF THE ASSESSEE, EVIDENCE GATHERED BY THE DEPARTMENT AND THE DECISIO N OF THE HONBLE ITAT, IN SUCH CASES THE REJECTION OF BOOK I S OF ACCOUNTS OF THE ASSESSEE U/S 145(3) IS UPHELD. REGARDING THE ESTIMATION OF INCOME, I CONCUR WITH T HE SUBMISSIONS OF THE AR THAT THE FACTS OF THE CASE OF M/S. SANJAY OILCAKE INDUSTRIES VS. CIT 10 DTR (GUJ.) 153 ARE NO T APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE SINCE THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THE PURCHASE BILLS WERE INFLATED BY 25%. IT IS SEEN THAT THE ASS ESSEE HAS SHOWN G.P. RATE OF 4.34% ON TOTAL SALES OF RS. 2,16 ,67,129/- GIVING GROSS PROFIT OF RS. 9,41,264/- DURING THIS A SSESSMENT 4 ITA NO.298/JP/2012 A.Y. 2007-08. ITO VS. SMT. MAHIMA NATIYA, JAIPUR. YEAR. THIS IS THE FIRST YEAR OF BUSINESS OF THE AS SESSEE SO THERE IS NO PAST HISTORY TO FORM THE BASIS OF ESTIMATION OF G.P. DURING THIS YEAR. THE SUBMISSION OF THE AR THAT THE CASE OF SMT. POOJ A SONI BE TREATED AS COMPARABLE AND G.P. RATE BE TAKE N AT 3.82% IS ALSO NOT ACCEPTABLE. TURNOVER IS NOT THE ONLY CRITE RION FOR COMPARING THE BUSINESS. NO DETAILS WERE FURNISHED W HETHER SMT. POOJA SONI WAS TRADING IN SAME QUALITY OF STON ES AND WHETHER THE SAME KIND OF STONES WERE TRADED. WHETHE R SHE WAS EXPORTING 100% SALES OR THERE WERE SALES WITHIN THE COUNTRY. IN ABSENCE OF EVIDENCE HER CASE CANNOT BE TAKEN AS A B ENCHMARK ON GROUNDS OF BEING COMPARABLE FOR THE PURPOSE OF E STIMATING THE G.P. RATE OF THE ASSESSEE. AFTER CONSIDERING A LL THE FACTS OF THE CASE, THE G.P. RATE IS ESTIMATED AT 5% ON THE D ECLARED TOTAL TURNOVER RESULTING IN A TRADING ADDITION OF RS. 1,4 2,092/-. 4. AGGRIEVED BY THE ORDER, THE REVENUE IS BEFORE US . THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT (A). 5. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND CO NTENDS THAT ITAT IN THE CASE OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO IN ITA NO. 187/JP/2012 DATED 22.10.2014 IN RESPECT OF UNVERIFIABLE PURCHASES HAS HELD 15% OF THE PURCHASES TO BE LIABLE FOR ADDITION, AGAINST WHICH BOTH THE ASSE SSEE AND THE DEPARTMENT HAVE FILED APPEAL BEFORE HONBLE RAJASTHAN HIGH COURT TH AT SINCE THE ITAT CANNOT 5 ITA NO.298/JP/2012 A.Y. 2007-08. ITO VS. SMT. MAHIMA NATIYA, JAIPUR. ENHANCE THE ADDITION. THE LD. COUNSEL FOR THE ASSE SSEE CONTENDS THAT THERE IS A DISTINCTION IN THE FACTS OF THE CASE OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO (SUPRA) AND THE FACTS OF ASSESSEES CASE IN AS MUCH AS PROPER DOCUMENTS WERE GIVEN TO LD. CIT (A) ON WHICH REMAND REPORT WAS CALLED BY LD. CIT (A). BASED ON THE REMAND REPORT, THE RELIEF HAS BEEN GIVEN. THEREFORE , THE ORDER OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO (SUPRA) CANNOT BE EQUATED WITH ASSESSEES CASE. ALTERNATIVELY, IT IS PLEADED THAT SINCE THE ISSUE I N QUESTION IS BEFORE HONBLE RAJASTHAN HIGH COURT AT THE INSTANCE OF BOTH THE PA RTIES, IT WILL BE FAIR AND REASONABLE THAT THE MATTER MAY PLEASE BE SET ASIDE AND RESTORED BACK TO THE AO TO DECIDE THE SAME AFRESH KEEPING IN MIND THE DISTINCT FACTS OF THE CASE AND THE HONBLE HIGH COURT JUDGMENT IN THIS CASE. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND MERIT IN THE SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSEE TO SET ASIDE THE MATTER BACK TO THE AO TO DECIDE THE ISSUE AFRESH AFTER HON BLE RAJASTHAN HIGH COURT ORDER IN THE CASE OF ANUJ KUMAR VARSHNEY IS DELIVERED. TH E AO SHOULD DECIDE THE ISSUE AFRESH KEEPING IN VIEW THE LD. CIT (A)S OBSERVATIO N ABOUT THE DISTINCT FACTS I.E. FILING OF DOCUMENTS BEFORE LD. CIT (A) AND REMAND R EPORT BASED ON WHICH THE ADDITION WAS REDUCED. THE AO SHALL DECIDE THE ISSUE AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCOR DANCE WITH LAW AND ALSO TAKING INTO CONSIDERATION THE IMPUGNED ORDER OF THE AO DAT ED 29.12.2009. 6 ITA NO.298/JP/2012 A.Y. 2007-08. ITO VS. SMT. MAHIMA NATIYA, JAIPUR. 7. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17/07/201 5. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P. TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17/07/ 2015 DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- INCOME TAX OFFICER WARD 3(1), JAIPUR . 2. IZR;FKHZ@ THE RESPONDENT- SMT. MAHIMA NATIYA, 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.298/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO.298/JP/2012 A.Y. 2007-08. ITO VS. SMT. MAHIMA NATIYA, JAIPUR.