ITO, Jaipur V. SABOO FOOD PROCESSING P LTD., Jaipur

ITA 404/JPR/2011

• Counselvise Citation: 40423114 RSA 2011
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Keywords: Bogus purchase; Rejection of books of accounts; Accommodation entries; Retraction
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.404/JP/2011 ASSESSMENT YEAR: 2006-07 PAN: AAHCS 2678 C THE ITO VS. M/S. SABOO FOOD PROCESSING (P)LTD WARD 3 (1) 6, AGRASEN NAGAR, JHOTWARA JAIPUR JAIPUR (APPELLANT) (RESPONDENT) C.O. NO.73/JP/2011 (ARISING OUT OF ITA NO.404/JP/2011) ASSESSMENT YEAR: 2006-07 PAN: AAHCS 2678 C M/S. SABOO FOOD PROCESSING (P)LTD VS. THE ITO 6, AGRASEN NAGAR, JHOTWARA WARD 3 (1) JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI K.C. MEENA ASSESSEE BY : ADJOURNMENT APPLICATION REJECTED DATE OF HEARING: 23-09-2011 DATE OF PRONOUNCEMENT:30-09-2011 2 PER N.L. KALRA, AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 15-02-2011 FOR THE ASSESSMENT YEAR 200 6-07. THE ASSESSEE HAS FILED THE CROSS OBJECTION. 2.1 THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE AND IN LAW THE LD CIT(A) IS JUSTIFIED IN DELETI NG THE TRADING ADDITION OF RS. 11,82,645/- OUT OF TOTAL TR ADING ADDITION OF RS. 15,61,076/- WITHOUT RELYING UPON GU JARAT HIGH COURT DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS CIT (2008) 10 DTR 153 IN ADDING 25% O F UNVERIFIABLE PURCHASES. 2.2 THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AN D TRADING OF PULSES. THE ASSESSEE HAS SHOWN PURCHASES FROM M/S. ANPURNA TRADING CO. SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF M/S. ANPU RNA TRADING CO. BY THE INVESTIGATION WING, JAIPUR AND STATEMENT OF SHRI A RVIND KUMAR JAIN WAS RECORDED ON 31-07-06 AND 10-08-06. SHRI ARVIND KUMA R JAIN STATED THAT HE HAS ONLY ISSUED THE BILLS OF SALE AND HE HAS ACTUAL LY NOT DELIVERED ANY GOODS. THE ASSESSMENT IN THE CASE OF M/S. ANPURNA TRADING CO. WAS MADE BY THE ITO, TONK. AT PAGES 4 AND 5 OF ASSESSMENT ORDER, TH E FINDINGS SO RECORDED 3 BY THE ITO, TONK POINTS TO THE FACT THAT THE CONCER N M/S. ANPURNA TRADING CO. WAS ISSUING THE BOGUS BILLS. THESE FACTS WERE P OINTED OUT TO THE ASSESSEE AND THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 26-12-2008. THE ASSESSEE STATED THAT THE SUPPLIERS ARE REGISTERED UNDER SALE S TAX ACT AND ALL PAYMENTS HAVE BEEN MADE THROUGH CHEQUES. THE ASSESSEE STATED THAT THE PURCHASES ARE SUPPORTED BY RECEIPTS OF WEIGHING BRIDGE. 2.3 THE AO HAS CONSIDERED THE SUBMISSIONS OF THE AS SESSEE. THE BANK ACCOUNT OF M/S. ANPURNA TRADING CO. SHOWS THAT CHEQ UES ARE DEPOSITED AND THEREAFTER THE AMOUNT IS WITHDRAWN IN CASH. IT IS T RUE THAT SHRI ARVIND KUMAR JAIN IN HIS AFFIDAVIT RETRACTED FROM THE STATEMENT. THE AO THEREFORE, ASKED SHRI ARVIND KUMAR JAIN, PROP. M/S. ANPURNA TRADING CO. TO FURNISH CERTAIN DETAILS. THE PARTY WAS NOT ABLE TO PRODUCE THE DETA ILS. THE DETAILS SO DESIRED BY THE AO ARE AVAILABLE AT PAGES 8 AND 9 OF THE ASS ESSMENT ORDER. M/S. ANPURNA TRADING CO. WAS NOT ABLE TO PRODUCE THE FAR MERS AND TO CORROBORATE THE PURCHASES FOR MAKING SUPPLIES TO THE ASSESSEE. THE AO REJECTED THE BOOKS OF ACCOUNTS AND ADDED 25% OF UNVERIFIABLE PUR CHASES TO THE RETURNED INCOME. THE NON-VERIFIABLE PURCHASES WERE TO THE EX TENT OF RS. 62,44,304/- AND THE AO MADE THE ADDITION TO THE EXTENT OF RS. 1 5,61,076/-. 2.4 THE LD CIT(A) HAS NOTICED THAT SHRI ARVIND KUMA R JAIN RETRACTED FROM THE STATEMENT AFTER A DELAY OF ABOUT TWO YEARS FROM THE DATE OF SURVEY AND 4 HELD THAT RETRACTION HAS NO VALUE. THE LD CIT(A) NO TICED THAT M/S. ANPURNA TRADING CO.HAS SHOWN SALE OF 12.5 CRORES WHILE PROF IT SHOWN IS ONLY 2,00,845/-. THIS SHOWS THAT M/S. ANPURNA TRADING CO . WAS INDULGING IN PROVIDING ACCOMMODATION ENTRIES. THE LD CIT(A) THER EFORE, UPHELD THE REJECTION OF BOOKS OF ACCOUNTS AND REDUCED THE TRAD ING ADDITION TO RS. 11,82,645/- AFTER OBSERVING AS UNDER. .FOR MAKING GROSS PROFIT ADDITION, RELIANCE IS PLACED TO COMPARABLE CASES OF M/S. UMA ENTERPRISES VPT LTD., ASSESSMENT YEAR 2005-06 AND M/S. K.M. INDUS. ASSESSMENT YEAR 2006-07 AS IT IS PRACTICALLY FIRST YEAR OF BUSINESS OF THE APPELLANT AND THEREFORE, PAST HISTO RY CANNOT BE RELIED UPON. IN THE CASE OF M/S. UMA ENTERPRISES (P) LTD. WHO DEALS IN MUSTARD SEEDS GRO SS PROFIT RATE OF 2.56% WAS DECLARED AS AGAINST 3.02% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. IN THAT CASE ALSO, A SURVEY U/S 133A WAS CONDUCTED. IN THIS CASE ALSO, THE PARTY HAS CLAIMED PURCHASES OF MORE THAN RS. 41 LACS FROM FROM M/S. ANPURNA TRADING CO. IN THE CASE OF K .M. INDUS, GROSS PROFIT RATE DECLARED IS 2.62% AND PURC HASES OF RS. 37.96 LACS HAVE BEEN SHOWN FROM M/S. ANPURNA TRADING CO. IN THE PRESENT CASE, THEREFORE, IT WILL BE REASONABLE IF GROSS PROFIT RATE OF 3% IS APPLIED ON THE DECLARED SALES OF RS. 269959694/- AND MAKE TRADING ADDITION. AS A RESULT, THE APPELLANT GETS PARTIAL R ELIEF. 5 2.5 WE HAVE HEARD THE LD DR AND PERUSED THE MATERIA LS AVAILABLE ON RECORD. SINCE THE PURCHASES WERE NOT VERIFIABLE, TH EREFORE, THE AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING THE BOOKS OF ACCO UNTS. RELIANCE IS PLACED ON THE DECISION OF HONB'LE APEX COURT IN THE OF KANCHWALA GEMS VS JCIT , 288 ITR 10 (SC) . IN THE INSTANT CASE, THE ASSESSEE HAS DISCLOSED THE G.P. RATE OF 1.60%. AND IT IS THE FIRST YEAR OF THE BUSINESS . IT IS TRUE THAT WHEN BOGUS PURCHASES ARE MADE THEN BILLS ARE MANAGED FOR THE P URCHASES AND THEN THE ASSESSEE HAS TO PAY COMMISSION OUTSIDE THE BOOKS OF ACCOUNTS. IN THE INSTANT CASE, NON-VERIFIABLE PURCHASES ARE TO THE EXTENT OF RS. 62,44,304/-. IN THE COMPARABLE CASES CONSIDERED BY THE LD CIT(A), THE G .P. RATE OF WAS 3.02% AND 2.62%. THE LD CIT(A) HAS DIRECTED TO APPLY THE G.P. RATE OF 3%. THE G.P. RATE SO APPLIED BY THE LD CIT(A) APPEARS TO BE ON HIGHER SIDE. LOOKING TO THE QUANTUM OF UNVERIFIABLE PURCHASES AND CONSID ERING THE COMMISSION TO BE PAYABLE ON GETTING THE BOGUS BILLS, WE FEEL THA T IT WILL BE FAIR AND REASONABLE TO RESTRICT THE ADDITION TO RS. 1.25 LAC S. 3.1 IN THE C.O., THE ASSESSEE IS AGGRIEVD AGAINST C ONFIRMING THE TRADING ADDITION TO THE EXTENT OF RS.3,77,435/- AFTER REJEC TING THE BOOKS OF ACCOUNTS. 3.2 WE HAD ALREADY HELD THAT THE BOOKS OF ACCOUNTS HAS RIGHTLY BEEN REJECTED. THE TRADING ADDITION HAS BEEN REDUCED TO RS. 1.25 LACS AS AGAINST RS. 3,77,435/- CONFIRMED BY THE LD CIT(A). 6 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND C.O. OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30-09 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 30 /09/2011 *MISHRA COPY FORWARDED TO :- 1. THE ITO, WARD- 3 (1), JAIPUR 2. M/S. SABOO FOOD PROCESSING (P) LTD., JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.404/JP /11) A.R, ITAT, JAIPUR