M/S ASHIYANA ENTERPRISES, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5, JAIPUR

ITA 38/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2482 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 10-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANURADHA JCIT DHK
• Assessee Lawyers: SATISH KR GUPTA
• Keywords: Bogus purchase; Opportunity of being heard
• 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 JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 38/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 M/S ASHIYANA ENTERPRISES, A-100, JANTA COLONY, JAIPUR (RAJASTHAN) CUKE VS. ACIT, CIRCLE-5, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AAFFA 0099 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI SATISH KR. GUPTA (CA) & SHRI VEDANT AGARWAL (ADV) JKTLO DH VKSJ LS @ REVENUE BY : MS. ANURADHA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/04/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT :20/06/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-4, JAIPUR DATED 14/11/2018 FOR THE A.Y. 2013-14 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LAW ALSO LD. CIT (A) GROSSLY ERRED IN PASSING EX- PARTY APPEAL ORDER WHEREAS HIS OFFICE ACCEPTED ADJOURNMENT APPLICATION OF ASSESSEE AND ENSURED THAT NEW DATE OF HEARING WILL BE INTIMATED THROUGH NEW NOTICE OF HEARING. ITA 38/JP/2019 ASHIYANA ENTERPRISES VS ACIT 2 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. CIT (A) GROSSLY ERRED IN REJECTING APPEAL OF ASSESSEE WITHOUT CONSIDERING THE FACTS OF THE CASE AND WITHOUT GIVING THE PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. AO GROSSLY ERRED IN REJECTING THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. AO GROSSLY ERRED IN MAKING ADDITION OF RS 3,94,734/- BY UNLAWFULLY DECLARING THE PURCHASES OF RS.15,78,934/- AS BOGUS PURCHASES & APPLYING 25% OF PROFIT THEREON. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE DURING THE COURSE OF SCRUTINY ASSESSMENT, THE A.O. FOUND THAT THE ASSESSEE HAS PURCHASED GOODS WORTH RS. 15,78,934/- FROM THE SUPPLIER WHICH WAS FOUND TO BE BOGUS BY THE INVESTIGATION WING. ACCORDINGLY, THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF PURCHASES. THE ASSESSEE SUPPLIED COPY OF BILLS, DETAILS OF PAYMENT MADE, DELIVERY CHALLANS ETC., HOWEVER, THE A.O. DID NOT CONVINCE WITH THE ASSESSEES REPLY. AFTER REJECTING THE BOOKS OF ACCOUNT, THE A.O. ADDED 25% OF ALLEGED PURCHASES AMOUNTING TO RS. 3,94,734/- IN ASSESSEES INCOME. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 3. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE SHRI SATISH KUMAR GUPTA, C.A. THAT TO PROVE THE GENUINENESS OF THE PURCHASES, THE ASSESSEE HAS ITA 38/JP/2019 ASHIYANA ENTERPRISES VS ACIT 3 FURNISHED COMPLETE QUANTITATIVE DETAILS OF THE PURCHASES AND SALES MADE DURING THE YEAR. AS PER THE LD AR, ALL THE PURCHASES WERE MADE THROUGH ACCOUNT PAYEE CHEQUES AND CONFIRMATION OF THE SUPPLIERS WERE ALSO FILED. HE FURTHER CONTENDED THAT THE ASSESSEE HAS ASKED FOR CROSS EXAMINATION OF THE ALLEGED SUPPLIER ON WHOSE STATEMENT, THE ADDITION HAS BEEN MADE, HOWEVER, NO SUCH CROSS EXAMINATION WAS ALLOWED BY THE A.O. NOR BY THE LD. CIT(A). FOR THIS PURPOSE, RELIANCE WAS PLACED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS CCE IN CIVIL APPEAL NO. 4228/2006 ORDER DATED 02/09/2015 WHEREIN IT WAS HELD THAT WITHOUT PROVIDING CROSS EXAMINATION IN RESPECT OF STATEMENT RECORDED BEHIND BACK OF THE ASSESSEE, NO ADDITION CAN BE MADE. THE LD AR FURTHER CONTENDED THAT THE G.P. DECLARED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS MORE THAN AVERAGE G.P. DECLARED DURING LAST THREE YEARS, THEREFORE, ALLEGATION OF THE A.O. THAT ALLEGED PURCHASES HAS REDUCED ASSESSEES PROFIT HAS NO LEGS TO STAND. 4. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND CONTENDED THAT THE DEPARTMENT MADE DETAILED ENQUIRY AND FOUND THAT THE ALLEGED SUPPLIERS WERE ONLY ISSUING BILLS AND NO PHYSICAL DELIVERY OF GOODS WAS AFFECTED, THEREFORE, THE A.O. WAS JUSTIFIED IN ITA 38/JP/2019 ASHIYANA ENTERPRISES VS ACIT 4 DISALLOWING 25% OF THE PURCHASES SO MADE, WHICH HAS RESULTED IN REDUCTION IN ASSESSEES PROFIT. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT ON THE BASIS OF INFORMATION BY THE INVESTIGATION WING REGARDING BOGUS SUPPLIERS, THE A.O. HAS REJECTED BOOKS OF ACCOUNT AND ADDED 25% OF SUCH ALLEGED PURCHASES IN ASSESSEES INCOME. I ALSO FOUND THAT THE G.P. AND N.P. OF THE ASSESSEE IN THE LAST THREE YEARS AS COMPARED TO THE YEAR UNDER CONSIDERATION WAS AS UNDER: A.Y. GROSS PROFIT TURNOVER G.P.% NET PROFIT N.P.% 2010-11 10879850.00 121646474.00 8.94 3621384.56 2.98 2011-12 7264514.00 70061434.00 10.37 1228469.24 1.75 2012-13 12190577.00 144574187.00 8.43 901182.00 0.62 2013-14 8820686.02 89578120.52 9.85 4498138.89 5.02 6. IT IS CLEAR FROM THE ABOVE CHART THAT DURING THE YEAR UNDER CONSIDERATION, THE G.P. AND N.P. DECLARED BY THE ASSESSEE WAS MUCH MORE THAN THE G.P. AND N.P. DECLARED IN THE EARLIER THREE YEARS. DURING THE YEAR UNDER CONSIDERATION, THE G.P. DECLARED BY THE ASSESSEE WAS 9.85% WHEREAS AVERAGE G.P. OF THE EARLIER THREE YEARS WAS 9.24%. THE HONBLE RAJASTHAN HIGH COURT HAVE ALSO STATED THAT IN CASE OF REJECTION OF BOOKS OF ITA 38/JP/2019 ASHIYANA ENTERPRISES VS ACIT 5 ACCOUNT AVERAGE PROFIT OF LAST YEARS IS TO BE APPLIED. DURING THE YEAR, THE ASSESSEE HAS DECLARED G.P. RATE OF 9.85% WHICH IS MORE THAN AVERAGE G.P. OF 9.24%. I ALSO FOUND THAT THE PROFIT RATE DECLARED BY THE ASSESSEE ON THE ALLEGED PURCHASES WERE MORE THAN THE PROFIT RATE DECLARED ON THE NORMAL PURCHASES. ACCORDINGLY, THERE IS NO JUSTIFICATION FOR ADDING FURTHER 25% OF SUCH PURCHASES IN PROFIT OF THE ASSESSEE. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I DIRECT THE A.O. TO RESTRICT THE ADDITION TO THE EXTENT OF 2% OF THE ALLEGED BOGUS PURCHASES WHICH COMES TO RS. 31,560/-. I DIRECT ACCORDINGLY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2019 SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH JUNE, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S ASHIYANA ENTERPRISES, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 38/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR