SHR. CHAMPA LAL CHOUDHARY, Jaipur V. DCIT, Jaipur

ITA 35/JPR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62021 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 12-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: MANISH AGARWAL CAAR
• Keywords: Rejection of books of accounts; Cost of acquisition; Accommodation entries; Onus to prove
• Section: 143(3); 133A; 153A; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE T RIBUNAL JAIPUR BENCHE S A , JAIPUR BEFORE S/SHRI R.K. GUPTA, JM AND SANJAY ARORA, AM I.T.A NOS. 35 TO 37JP/2012 ASSESSMENT YEARS: 2002-03 TO 2004-05 CHAMPA LAL CHOUDHARY, 696, PANO KA DARIBA, SUBHASH CHOWK, JAIPUR [PAN AAHPC 9350 J] VS THE DY. CIT , CENTRAL CIRCLE- 2, JAIPUR (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI MANISH AGARWAL, CA-AR REVENUE BY SHRI D.K. MEENA, JR. DR DATE OF HEARING 18/04/2012 DATE OF PRONOUNCEMENT 25 /5/2012 O R D E R PER SANJAY ARORA, AM: THESE ARE THE SET OF THREE APPEALS BY THE ASSESSE E, DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-CENTRAL, J AIPUR (CIT (A) FOR SHORT) DATED 19-10-2011, DISMISSING THE ASSESSEE'S APPEAL FOR T HE ASSESSMENT YEAR (A.Y.) 2002-03 AND 2003-04 AND PARTLY ALLOWING THE ASSESSEE'S APPEAL F OR THE A.Y. 2004-05 CONTESTING ITS ASSESSMENTS U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) VIDE DIFFERENT ORDERS DATED 23-12-2009 FOR THE ASSESSMENT YEARS (A .YS.) 2002-03 TO 2004-05 2. THE ASSESSEE, AN INDIVIDUAL, IS A PROPRIETOR OF TWO FIRMS, NAMELY M/S. AKASH GEMS AND M/S. VIKAS GEMS, ENGAGED IN THE BUSINESS OF MAN UFACTURING AND TRADING OF PRECIOUS AND SEMI-PRECIOUS STONES, INCLUDING THEIR EXPORTS. A SEARCH AND SURVEY ACTION U/S. 132 AND ALSO THE SURVEY U/S. 133A OF THE ACT WAS CARRI ED OUT BY THE REVENUE AT THE PREMISES 2 OF DIFFERENT MEMBER OF THE RMC GROUP INCLUDING THE ASSESSEE, LEADING TO THE IMPUGNED ASSESSMENTS U/S. 143(3) READ WITH SEC. 153A OF THE ACT. THE FACTS OF THE CASE BEING THE SAME IN THESE YEARS, THE SAME WERE HEARD TOGETHER A ND ARE BEING DISPOSED OF THROUGH A COMMON, CONSOLIDATED ORDER. THE FACTS 3. THE PRINCIPAL ISSUE IN THESE APPEALS IS QUA UNVERIFIABLE PURCHASES. WHILE THE ASSESSING OFFICER (AO) EFFECTED ADDITION BY ESTIM ATING THE GROSS PROFIT (G.P.) RATE AT 30% QUA UNVERIFIABLE PURCHASES, WHICH STOOD CONFIRM ED BY THE FIRST APPELLATE AUTHORITY, THE ASSESSEE BASES ITS CASE ON ITS BETTER TRADING R ESULTS, SO THAT NO DISALLOWANCE OR ADDITION ON THAT COUNT WOULD ARISE. THE ASSESSEE'S TRADING RESULTS FOR THREE YEARS ARE AS UNDER:- A.Y. M/S. AKASH GEMS M/S. VIKAS GEMS TURNOVER G.P. G.P. RATE (%) TURNOVER G.P G.P. RATE (%) 2002-03 2,39,74.515 44,63,055 18.62 1,11,17,709 37,00,233 33.35 2003-04 1,73,96,613 33,60,289 19.32 98,70,775 33,25,112 33.69 2004-05 1,03,26,161 26,51,853 25.68 1,00,71,155 35,56,196 35.31 3.1 IT WOULD BE RELEVANT TO STATE THE PERTINENT FAC TS. FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSEE WAS FOUND BY THE AO TO BE NOT MAINTAIN ING ANY STOCK RECORDS BEARING THE QUALITATIVE AND QUANTITATIVE DETAILS OF THE GOODS D EALT IN. IN ITS ABSENCE THE TRADING RESULTS, WHICH WOULD ALSO INCLUDE THE VALUATION OF THE CLOSI NG STOCK AS AT THE YEAR-END, WERE NOT VERIFIABLE. FURTHER, THE ASSESSEE WAS OBSERVED TO H AVE MADE PURCHASES FROM A PARTY, M/S. TRIVENI GEMS AT RS. 8.34 LACS, WHICH HAD BEEN IN TH E PAST HELD TO BE PROVIDING ONLY ACCOMMODATION ENTRIES/ BILLS AND NOT ENGAGED IN ANY ACTUAL TRADE/BUSINESS. THE SAID PARTY 3 COULD NOT BE PRODUCED BY THE ASSESSEE ON BEING CALL ED FOR BY THE AO, BEING STATED TO BE NOT AVAILABLE AT THE GIVEN ADDRESS. THE SAID PURCHA SES, NOTWITHSTANDING THE FACT THAT PAYMENTS THERE-AGAINST WERE MADE BY THE CHEQUES, AN D THE BILLS ISSUED CARRIED THE REGISTRATION NUMBER, WERE CONSIDERED BY THE AO AS N OT GENUINE. THE REGISTRATION IS ISSUED ON THE BASIS OF THE APPLICATION MADE AND THE DOCUME NTS SUBMITTED ALONG WITH, AND NOT ON THE BASIS OF ANY SPOT VERIFICATION BY THE REGISTERI NG AUTHORITY. REGISTRATION, BY ITSELF, WOULD NOT PRECLUDE A PERSON FROM ENGAGING IN BOGUS TRANSACTIONS. AS SUCH, THE FACT OF THE PAYMENT BEING THROUGH THE BANKING CHANNEL OR PURCHA SES BEING FROM REGISTERED DEALERS, WOULD NOT PROVE THE PURCHASES. THE PERSONS OPERATIN G THESE PAPER CONCERNS, NO DOUBT, EXIST, BUT DO NOT ENGAGE IN ANY ACTUAL TRADE, AND O NLY ISSUE ACCOMMODATION BILLS FOR A CHARGE. THE BOOKS OF ACCOUNTS WERE REJECTED IN VIEW OF NOT BEING CORRECT AND COMPLETE, AND IN VIEW OF THE UNVERIFIABLE PURCHASES AFORE-REF ERRED, A G.P. RATE OF 30% IN ITS RESPECT WAS ESTIMATED, I.E., QUA UNVERIFIABLE PURCHASES, AS UPHELD BY THE TRIBUNAL IN THE CASE OF RAVI HALDIA (IN ITA NOS. 320-321/JP/2008 DATED 31-07-2008). T HE ASSESSEE HAVING ALREADY DISCLOSED A G.P. RATE OF 18.62% IN ITS RELE VANT FIRM, M/S. AKASH GEMS, TRADING ADDITION FOR THE BALANCE 11.38% ON SALES QUA THE UNVERIFIABLE PURCHASES OF RS. 8,34,199/- EFFECTED AT RS. 94,932/- AS SUPPRESSED PROFIT IN VI EW OF THE UNDISPUTED PRIMARY FACTS. RELIANCE WAS PLACED BY HIM ON THE DECISIONS IN THE CASE OF INDIAN WOOLEN CARPET FACTOR VS ITAT AND OTHERS (2002) 178 CTR 420 260 ITR 658) (RAJ.); VISP (P) LTD. VS. CIT , 186 ITR 718 (265 ITR 202) (M.P.); CIT VS. PRECISION FINANCE (P.) LTD ., 208 ITR 465 (CAL.); CIT VS. GOLCHA PROPERTIES (P.) LTD ., 227 ITR 391 (RAJ.); CIT VS. LA MEDICA , 250 ITR 575 (DEL.); BEENA METALS VS. CIT , 240 ITR 222 (KER), BESIDES BY THE TRIBUNAL IN THE CASE OF KANCHWALA GEMS VS. JCIT (ITA NO. 134/JP/02 DATED 10-12-2003), SINCE AFFIRM ED BY THE HON'BLE SUPREME COURT IN THE CASE OF KACHWALA GEMS VS. JT. CIT (2007) 288 ITR 10; ACIT VS SHRIKISHAN MALPANI , 32 TW 122 (JAIPUR ); AND ACIT VS. SINDHUJA FOODS (P.) LTD ., 35 TW 67 (JD). THE TEST WITH REGARD TO THE GENUI NENESS OF THE TRANSACTION IS WITH REFERENCE TO THE `PREPONDERANCE OF PROBABILITIES A ND NOT `BEYOND REASONABLE DOUBT, CITING THE DECISIONS IN THE CASE OF CHATURBHUJ PANAUJ , AIR 1969 (SC) 255; SUMATI DAYAL 4 VS. CIT (1995) 214 ITR 801(SC); AND C. VASANT LAL & CO. (1962) 45 ITR 206 (SC). THE SAME STOOD CONFIRMED BY THE LD. CIT(A) FOR THE SAME REASONS. 3.2 FOR ASSESSMENT YEAR 2003-04, THOUGH NO UNVERIFI ABLE PURCHASES WERE OBSERVED, YET THE BOOKS WERE REJECTED IN VIEW OF THEIR BEING NOT CORRECT OR COMPLETE IN THE ABSENCE OF THE STOCK RECORDS, AND A TRADING ADDITION FOR RS. 5 0,000/- EFFECTED. THE SAME STOOD DELETED IN APPEAL BY THE LD. CIT(A) IN THE ABSENCE OF ANY U NVERIFIABLE PURCHASES; THE ASSESSEE HAVING RATHER DISCLOSED BETTER TRADING RESULTS AT 1 9.32% (OF THE TURN-OVER). THE REVENUE IS NOT IN APPEAL AGAINST THE SAME. 3.3 FOR ASSESSMENT YEAR 2004-05, THE UNVERIFIABLE P URCHASES WERE FOUND AT RS. 4,00,045/- FROM THREE CONCERNS, INCLUDING FROM M/S. TRIVENI GEMS. THE ASSESSEE HAVING DISCLOSED BETTER RESULTS FOR BOTH ITS CONCERNS, I.E ., AT 25.68% AND 35.31% IN M/S. AKASH GEMS AND M/S. VIKAS GEMS RESPECTIVELY, A TRADING AD DITION OF RS. 50,000/- EACH WAS MADE IN BOTH THE CONCERNS. THE SAME STOOD RESTRICTE D BY THE LD. CIT(A) TO 25% OF SUCH UNVERIFIABLE PURCHASES, RELYING ON THE DECISIONS IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT , 316 ITR 274 (GUJ.) AND VIJAY PROTEINS VS. ACIT (1996) 55 TTJ 76 (AHD.). AGGRIEVED, THE ASSESSEE IS IN APPEAL. THE ARGUMENTS 4. BEFORE US, THE ASSESSEE CHALLENGES THE INVOCATIO N OF SECTION 145(3) OF THE ACT FOR ALL THE YEARS, CLAIMING, INTER ALIA , THAT THE ALLEGED UNVERIFIABLE PURCHASES WERE BACK ED BY PROPER BILLS AND, SECONDLY, STOCK RECORDS WERE MAIN TAINED TO THE EXTENT FEASIBLE. EACH AND EVER PIECE OF STONE HAS DIFFERENT CHARACTERISTICS A ND COMPOSITION AND, THEREFORE, IT WAS NOT POSSIBLE TO MAINTAIN THE STOCK REGISTER QUALITY-WIS E. QUANTITY-WISE STOCK REGISTER IN TERMS OF WEIGHT IS THOUGH KEPT. THE REVENUES CASE STANDS DULY REFLECTED IN THE ORDERS OF THE AUTHORITIES BELOW, WHICH WERE RELIED UPON. 5 THE FINDINGS 5. WE HAVE HEARD THE PARTIES, AND PERUSED T HE MATERIAL ON RECORD. 5.1 THE ADDITION (S) BEING AGIATED WOULD THUS N EED TO BE EXAMINED, FIRSTLY, FROM THE STAND POINT OF THE VALIDITY OR OTHERWISE OF THE INV OCATION OF SEC. 145(3) OF THE ACT AND THE CONCOMITANT REJECTION OF ASSESSEES BOOK RESULTS, A ND THEN ON THE MERITS OF THE ADDITION ON QUANTUM. THE REVENUES ACTION IN INVOKING S. 145(3) IS CONFIRMED. THIS IS PRINCIPALLY FOR THE REASON THAT THE ASSESSEE'S BOOKS OF ACCOUNTS DO NOT MEET THE TEST OF DEDUCTION OF TRUE AND CORRECT PROFITS THERE-FROM IN THE ABSENCE OF PR OPER STOCK RECORDS, ONLY WHEREUPON CAN THEY BE CONSIDERED AS CORRECT AND COMPLETE. WE MAY REFER TO THE FOLLOWING DECISIONS IN THIS REGARD: KACHWALA GEMS VS. JT. CIT (SUPRA); NAMASIVAYAM CHETTIAR (S.N.) V. CIT (1960) 38 ITR 579 (SC); SRIRAM & CO. V. ASSTT. CIT , 316 ITR 139 (RAJ.); AND NARSINGHDAS RAMKISHAN PUNAGALIA V. ASSTT. CIT , 272 ITR 467 (RAJ.). WE SHALL, HOWEVER, AS INCUMBENT ON US, DISCUSS THE ASSESSEES CONTENTI ONS AND ARGUMENTS AS URGED BEFORE US, WHICH THOUGH STAND DULY EXAMINED AND CONSIDERED BY US IN ARRIVING AT OUR DECISION AFORESTATED. THE ASSESSEE'S CASE IS THAT EACH PIECE OF STONE BEARS DIFFERENT CHARACTERISTICS AND COMPOSITION AND, THEREFORE, IT IS NOT POSSIBLE TO MAINTAIN THE STOCK REGISTER QUALITY- WISE. FIRSTLY, THEREFORE, IT ADMITS TO ITS BOOKS OF ACCOUNTS AS NOT BEARING THE QUALITY-WISE DETAILS OF THE GOODS PURCHASED AND SOLD AND, THUS, IN STOCK AT ANY GIVEN POINT OF TIME AND, THEREFORE, NOT COMPLETE. THE SAME MAY YIELD OR REFL ECT ITS QUANTITY BUT THEN THAT BY ITSELF IS OF LITTLE MOMENT OR VALUE IN THE ABSENCE OF ANY INDICATION AS TO ITS VALUE WHICH IS AN ESSENTIAL INGREDIENT IN DETERMINING THE COST OF THE GOODS SOLD AND THUS TRADING PROFIT, AND WHICH IN TURN IS NECESSARY TO WORK OUT THE NET PROF IT. THE VALUE OF THE STOCK-IN-TRADE AS AT THE YEAR-END OR THE YEAR OF ACCOUNT, THUS BECOMES A N INDEPENDENT VARIABLE, WHICH CANNOT EVEN BE APPROXIMATED WITH REFERENCE TO THE BOOKS OF ACCOUNTS AS MAINTAINED. IT IS NOT THE ASSESSEE'S CASE THAT STOCK IS VALUED AT THE AVERAG E (WEIGHTED) COST OF PURCHASE, AND WHICH THOUGH NOT A PRECISE MEASURE, EVENS OUT THE PROFITS WHEN APPLIED FROM YEAR TO YEAR, SO THAT IT MAY BE CONSIDERED AS A VIABLE ALTERNATIVE, EMPLOYED BONA FIDE . THE SAME, EVEN OTHERWISE, DOES NOT OFFER ITSELF AS AN ACCEPTABLE A LTERNATIVE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS IS AS THE AVERAGE METHOD WOULD YI ELD APPROXIMATE AND REASONABLY 6 CORRECT RESULTS ONLY WHEN THE CONDITIONS FOR ITS AP PLICATION EXIST. THAT IS, THE PRICES OF THE VARIOUS STONE PIECES VARY OVER A GIVEN, SMALL RANGE , WITH A LOW COEFFICIENT OF STANDARD VARIATION. WHEN THE INDIVIDUAL PRICES (OR DATA POIN TS) VARY CONSIDERABLY, WHICH IS ADMITTED, EMPLOYMENT OF SUCH A METHOD WOULD YIELD I RREGULAR AND MISLEADING RESULTS. TWO STONES OF THE SAME WEIGHT MAY HAVE LARGELY DIFF ERENT VALUES OR (SAY) VALUE PER UNIT (WEIGHT), WHERE THEIR WEIGHT DIFFERS. FURTHER, HOW WOULD THE STOCK-IN-TRADE AS AT THE YEA R END BE VALUED ? THE SAME IS TO BE AT THE ACTUAL COST OF ACQUISITI ON OR PRODUCTION, AND WHICH AGAIN REQUIRES COST OF BOUGHT OUT GOODS/RAW M ATERIAL, I.E., NOT ONLY WOULD ITS CHARACTERISTIC AND/OR COMPOSITION BE REQUIRED TO BE ASSESSED FOR THE PURPOSE, BUT ALSO ITS COST ASCERTAINED WITH REFERENCE TO THE ACQUISITION COST, IDENTIFYING THE RELEVANT PURCHASE BILLS, AND WHICH DO NOT BEAR ANY SUCH DETAILS IN RE SPECT OF SUCH CHARACTERISTICS OR COMPOSITION? 5.2 NOW COMING TO THE ASSESSEE'S JUSTIFICATION FOR NON-MAINTAINING THE STOCK RECORDS, THOUGH IT BY ITSELF THE ASSESSEE NOT EVEN ADMITTE DLY MAINTAINING ANY ALTERNATIVE METHOD, HOWSOEVER GROSS IT MAY BE - CANNOT BE A GROUND FOR NOT REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS A RELIABLE SOURCE FOR DEDUCING T RUE AND CORRECT PROFITS, THE RELEVANT TEST BEING UNSATISFIED. WE ARE AGAIN UNABLE TO AGREE WIT H THE ASSESSEE'S CLAIM OF IT BEING NOT POSSIBLE TO DO SO AS EVERY PIECE OF STONE HAS A DIF FERENT CHARACTERISTIC AND COMPOSITION. DOES THE ASSESSEE IMPLY THAT THERE IS NO BASIS FOR VALUING SUCH GOODS ? IN FACT, IF SO, THAT WOULD BE A SERIOUS, IF NOT AN INTRACTABLE, IMPEDIME NT, IN THE CREATION OF A MARKET FOR SUCH GOODS, WHICH IN FACT IS VERY MUCH IN PLACE. UNLESS THE QUALITY OF GOODS IS REDUCIBLE IN TERMS OF DISCERNABLE AND MEASURABLE CRITERIA, THERE COULD NOT BE A READY OR OPEN MARKET THEREFORE. THIS IS AS A MARKET TO EXIST NECESSARILY REQUIRES AND USES THOSE CRITERIA, AND ON WHICH BASIS ALONE TRADE TAKE PLACE. HOW ELSE, ONE MAY ASK, WOULD ONE EVALUATE IF THE GOODS BEING BOUGHT OR SOLD ARE COMPETITIVE, I.E., D ECIDE ON THE VIABILITY OF A PARTICULAR PURCHASE (OR SALE), I.E., OF A PARTICULAR STONE AT A PARTICULAR RATE ? IN FACT, A `GOOD IS DEFINED ONLY IN TERMS OF ITS ESSENTIAL ATTRIBUTES; THE ASSESSEE HIMSELF ADMITTING TO `WEIGHT AS BEING ONE SUCH CRITERIA, THOUGH IT IS ADMITTEDLY A MEASURE OF QUANTITY AS WELL. RATHER, 7 HOW WOULD ONE ACTUALLY BUY OR SELL WITHOUT KNOWING THE RATE OR COST AT WHICH HE IS BUYING, I.E., WHAT IS HE BUYING AND AT WHAT RATE. A TRADER WOULD BUY ONLY IF HE IS CONFIDENT ABOUT THE PURCHASE COST, AND OF BEING ABL E TO SELL, AFTER INCURRING ADDITIONAL COST, IF ANY, AT A PROFIT. MAN HAS, WITH HIS INGENU ITY, IN FACT BEEN ABLE TO PERCEIVE AND FACTORIZE THE MOST INTANGIBLE OF CRITERION, EVEN AS THE TRADE IN THE CASE OF PRECIOUS AND SEMI-PRECIOUS STONES IS A VERY COMMON TRADE, WITH A HISTORY OF THE CENTURIES, WITH THE RECENT PAST WITNESSING THE SETTING UP OF PROFESSION AL INSTITUTES, WHERE KNOWLEDGE IN THE TRADE, IN THE RELEVANT DISCIPLINE/(S), VIZ. GEMOLOG Y, IS PROVIDED. 5.3 THE INTRACTABLE CRITERION REFERRED TO EARLIER ARE MOSTLY INTANGIBLE, AS (SAY) `TASTE, WHILE WE FIND NO SUCH INTANGIBLE CRITERIA IN THE IN STANT CASE. ONE VARIETY OF MANGOES TASTES DIFFERENT THAN THE OTHER, WHICH IS IDENTIFIA BLE WITH ITS TYPE, WITH EACH VARIETY BEARING A DIFFERENT PRICE TAG, WHICH THOUGH ITSELF IS NOT CONSTANT, AS IT MAY CONTAINS SUB- TYPES, BESIDES BEING IMPINGED BY OTHER FACTORS AS S EASONAL/TIME AND OTHER FLUCTUATIONS, AS ON ACCOUNT OF PRODUCTION, SUPPLY AND DEMAND EQUATI ON, ETC. THERE IS, IN OUR CLEAR VIEW, DEFINITE, MEASURABLE AND DISCERNIBLE CRITERIA ON TH E BASIS OF WHICH STONES, PRECIOUS AND SEMI PRECIOUS, WHICH ITSELF INDICATES A DIFFERENCE - WITH VALUE IMPLICATION QUA ONE OR MORE OF THOSE CRITERION OR QUALITATIVE ATTRIBUTES, AND ON WHICH BASIS TRADE TAKES PLACE. ACCOUNTING ONLY ENDEAVORS TO CAPTURE THE SAME AND, THEREFORE, THE BUSINESS RESULTS - NOTHING MORE AND NOTHING LESS. IT IS FOR THE FOREGO ING REASONS THAT WE ARE UNABLE TO APPRECIATE THE ASSESSEE'S CLAIMS IN THIS REGARD, AN D HAVE UPHELD THE APPLICATION OF S. 145(3) OF THE ACT IN THE PRESENT CASE. WE HAVE DELI BERATELY NOT REFERRED TO OTHER DEFECTS, I.E., OF UNVERIFIABLE PURCHASES, INFLICTING THE ASS ESSEE'S ACCOUNTS. THIS IS FOR THE REASON THAT SUCH PURCHASES, AS WOULD BE APPARENT, ARE INSI GNIFICANT IN RELATION TO THE VOLUME OF THE TURNOVER. AS SUCH, IT CANNOT BE SAID THAT THE A SSESSEES ACCOUNTS ARE VITIATED, AND CANNOT BE RELIED UPON AT ALL. THE AO HAS THE OPTION AND, RATHER, ONLY NEEDS TO DISALLOW THE WHOLE OR PART OF SUCH PURCHASES, WITHOUT DISTURBING THE BOOK RESULTS ON THE BASIS OF THE ACCOUNTS. HOWEVER, WITHOUT DOUBT, THE BOOKS OF ACCO UNTS HAVING BEEN CONFIRMED FOR REJECTION IN THE PRESENT CASE, THE SAID INFIRMITY B ECOMES AN ADDITIONAL, RELEVANT FACTOR. IN 8 THIS REGARD, WE MAY ADD THAT THE ONUS TO PROVE ITS PURCHASE AS GENUINE IS ON THE ASSESSEE, AND WHEN YEAR AFTER YEAR SIMILAR ISSUES HAVING CO ME UP IN ITS CASE FOR THE PRECEDING AS WELL AS THE SUCCEEDING YEARS - OF SUCH SUPPLIERS SU DDENLY DISAPPEARING, WITHOUT ANTECEDENTS, WHEN CALLED UPON FOR PRODUCTION IN THE COURSE OF ASSESSMENT PROCEEDINGS, IS CLINCHING ENOUGH TO NAIL THE PURCHASES AS NOT GENUI NE. THE CASE LAW RELIED UPON, THOUGH A SUBJECT MATTER OF TRITE LAW, IS MORE THAN ADEQUATE, AND NOT MET BY THE ASSESSEE. 5.4 WE, NEXT, COME TO THE ISSUE OF THE QUANTUM OF T HE IMPUGNED TRADING ADDITION, BEING SUSTAINED BY THE LD. CIT(A), AS UNDER:- [G.P. IN (%), AMOUNT IN (RS. LACS)] A.Y. M/S. AKASH GEMS M/S. VIKAS GEMS G.P. G.P. U.P. G.P. G.P. U.P. 2002-03 18.62 30 (1) 8.34 33.35 - - 2003-04 19.32 - - 33.69 - - 2004-05 25.68 (2.1) 2.27 35.31 (2.2) 1.73 G.P. => GROSS PROFIT (IN PERCENTAGE OF SALES) AS DI SCLOSED; G.P. => G.P. AS ESTIMATED BY THE REVENUE U.P. => UNVERIFIABLE PURCHASES (1) => QUA SALES RELATABLE TO UNVERIFIABLE PURCHASE S ONLY (2.1) => AT RS. 50,000/-, RESULTING IN GROSS PROFIT RATE AT 26.67 % (2.2) => AT RS. 50,000/-, RESULTING IN GROSS PROFIT RATE AT 35.80% % DECISION 6.1 FOR THE ASSESSMENT YEAR 2002-03, THE TRADING ADDITION MADE BY THE AO IS WITH RESPECT TO UNVERIFIABLE PURCHASES. AS SUCH, HE HAS, FOR MOST PART, ACCEPTED THE ASSESSEE'S TRADING RESULTS, I.E., EXCEPT QUA UNVERIFIABLE PURCHASES (RS. 8.34 LACS), FURTHER AC CEPTING THE ASSESSEE TO HAVE ALREADY DISCLOSED A GROSS PROF IT AT THE REFLECTED RATE OF 18.62% ON 9 THOSE PURCHASES. IN OUR VIEW AN ADDITIONAL GROSS PR OFIT OF 5% ON SUCH PURCHASES WOULD BE JUSTIFIED, SO THAT AN ADDITION TO THAT EXTENT BECOM ES SUSTAINABLE. THE GROSS PROFIT RATE IS WITH REFERENCE TO THE SALES, I.E., AS RELATABLE TO SUCH PURCHASES (APPROXIMATED AT 75% OF SALES), WHICH IS WORKED OUT AT RS. 11.12 LACS (8341 99 X 100/75), SO THAT THE TRADING ADDITION WORKS OUT TO RS. 55613/- [I.E., RS. 11.12 LACS X 5%]. WE DECIDE ACCORDINGLY. 6.2 FOR ASSESSMENT YEAR 2004-05, AN ADHOC ADDIT ION OF RS. 50,000/- EACH HAS BEEN MADE AND SUSTAINED IN EACH OF THE TWO PROPRIETARY C ONCERNS. IT IS APPARENT THAT THE SAME IS WITHOUT RELATION TO THE ASSESSEE'S DISCLOSED TRADIN G RESULTS, WHICH ARE PROGRESSIVE, AS WELL AS THE QUANTUM OF UNVERIFIABLE PURCHASES. IN OUR VI EW, THERE IS NO BASIS FOR DISTURBING THE ASSESSEE'S TRADING RESULTS FOR THE YEAR, WHICH HAVE BEEN ITSELF ACCEPTED DESPITE THE REJECTION OF BOOKS OF ACCOUNTS IN RESPECT OF THE IN TERVENING YEAR (I.E., ASSESSMENT YEAR 2003-04), I.E., APART, OF COURSE, QUA UNVERIFIABLE PURCHASES. AN ADDITIONAL MARK UP OF 5 % QUA SUCH PURCHASES, IN LINE WITH OUR DECISION IN THE C ASE FOR ASSESSMENT YEAR 2002-03, SIMILARLY COMPUTED, IS THUS UPHELD. THE ASSESSEE GE TS PART RELIEF. WE DECIDE ACCORDINGLY. 7. THE NEXT ISSUE ARISING IN THESE APPEALS IS T HE DISALLOWANCE EFFECTED @ 10% QUA CERTAIN EXPENSES, VIZ. ON STAFF WELFARE, CONVEYANCE , TELEPHONE, REPAIR AND MAINTENANCE, GENERAL OFFICE EXPENSES. THE REASON STATED, WHICH I S THE SAME FOR ALL THE ASSESSMENT YEARS, IS LACK OF PROPER SUPPORTING VOUCHERS, BEING SELF-M ADE, AND WITHOUT PROPER AUTHENTICATION. THE SAME STOOD CONFIRMED BY THE LD. CIT(A) ON THE SAME BASIS, REFERRING TO HIS EARLIER DECISION ON THE SAME ISSUE FOR THE P RECEDING AND THE SUCCEEDING THREE YEARS, VIDE HIS ORDER DATED 30-09-2011 IN ITA NO.341 TO 34 3/09/10. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE M ATERIAL ON RECORD. THE ASSESSEES CASE IS THAT NO FRESH MATERIAL TO IMPUGN THE DISALLOWANCE H AS BEEN FOUND IN SEARCH FOR THE REVENUE TO HAVE EFFECTED DISALLOWANCE/S IN ASSESSME NT U/S. 153A OF THE ACT. THE ASSESSEE, IN OUR VIEW, HAVING NOT BEEN ABLE TO CONT ROVERT THE SPECIFIC FINDINGS BY THE AUTHORITIES BELOW, WHICH ARE A SUBSISTING ASPECT OF ITS ASSESSMENT FOR DIFFERENT YEARS, 10 CONTINUING FROM THE PAST AND IN TO THE SUCCEEDING Y EARS, THE ARGUMENT QUA COMPETENCE IS NOT MAINTAINABLE, UNLESS THE ASSESSMENT HAS BEEN FR AMED ON EARLIER OCCASION U/S. 143(3) AND THE MATTER EXAMINED BY THE ASSESSING AUTHORITY. THERE IS NOTHING ON RECORD TO SO INDICATE. FURTHER, AS STATED BY THE ASSESSEE, THE T RIBUNAL IN ITS OWN CASE FOR THE ASSESSMENT YEAR 2003-04 (IN ITA NO.1125/JP/2008 DATED 19-09200 8) HAS CONFIRMED THE DISALLOWANCE ON SUCH EXPENSES @ 7.5% (REFER TO THE ASSESSEES WRITTEN SUBMISSIONS PAGE 9). THE FACTS OF THE CASE BEING ADMITTEDLY THE SAME , NO REASON FOR DISTURBING THE SAME AND, THUS, THE SAID RATIO, IN OUR OPINION, EXISTS. THE DISALLOWANCE IS THUS CONFIRMED AT 7.5%. CLEARLY, THOUGH, WE MAY ADD, THAT WHERE A DIS ALLOWANCE QUA SUCH EXPENSES HAS BEEN MADE EARLIER, OR SUBJECT TO EXAMINATION UNDER SEC. 143(3) ASSESSMENT, AS IT TRANSPIRES TO BE THE CASE FOR A.Y. 2003-04, THERE CAN BE NO RE VIEW OF THE MATTER IN SEC. 153A PROCEEDINGS. WE DECIDE ACCORDINGLY. 9. IN THE RESULT, THE ASSESSEES APPEALS FOR A LL THE YEARS ARE PARTLY ALLOWED. SD/- SD/- (R.K. GUPTA) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: JAIPUR, DATED: MAY 25 , 2012 *MISHRA COPY TO: 1. SHRI CHAMPA LAL CHOUDHARY, JAIPUR 2. THE DCIT, CENTRAL CIRCLE- 2, JAIPUR 3. THE CIT (APPEALS), CENTRAL, JAIPUR 4. THE CIT CONCERNED 5. THE D.R., I.T.A.T. 6. GUARD FILE (ITA NOS. 35 TO 37/JP/2012) BY ORDER (ASSISTANT REGIST RAR) ITAT, JAIPUR BENCHES