DCIT, Jaipur V. M/S BHURA MAL RAJ MAL SURANA (MFRS.), Jaipur

ITA 407/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99348 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Assessee Lawyers: G G MUNDRA
• Keywords: Bogus purchase; Depreciation; Opportunity of being heard
• Section: 80G

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 FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 407/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 THE DCIT CENTRAL CIRCLE- 2, JAIPUR CUKE VS. M/S. BHURA MAL RAJ MAL SURANA LAL KATLA, HALDIYON KA RASTA JOHRI BAZAR, JAIPUR FKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFB 0612 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 409/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 M/S. BHURA MAL RAJ MAL SURANA (MFRS.) D-68, NEAR POLICE MEMORIAL, JLN MARG, JAIPUR CUKE VS. THE DCIT CIRCLE- 2, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFB 0612 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 499/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) D-68, NEAR POLICE MEMORIAL, JLN MARG, JAIPUR CUKE VS. THE DCIT CENTRAL CIRCLE- 2, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFB 0612 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 626/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE DCIT CENTRAL CIRCLE- 2, JAIPUR CUKE VS. M/S. BHURAMAL RAJ MAL SURANA (MFRS.) D- 68, NEAR POLICE MEMORIAL, JLN MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFB 0612 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 409/JP/2012 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) VS. DCIT , CIR CLE- 2, JAIPUR 2 FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 09 /10/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE APPEALS FILED FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09 ARE THE CROSS APPEALS RELATING TO THE ORDERS OF THE LD. CIT(A)-1, JAIPUR DATED 14-12-2011 AND LD. CIT(A)-CENTRAL, JAIPUR DATED 29- 03-2012 RESPECTIVELY. 2.1 THE ABOVE MENTIONED CROSS APPEALS RELATE TO UNV ERIFIABLE PURCHASES. FOR THE SAKE OF CONVENIENCE, THE GROUNDS RAISED BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEAR 20 07-08 ARE AS UNDER:- ASSESSEE APPEAL FOR A.Y. 2007-08 1.1 THE LD. CIT(A) AND AO ERRED IN LAW AND ON FAC TS IN REJECTING THE ASSESSEE'S BOOKS OF ACCOUNT AND IN IN VOKING THE PROVISIONS OF SECTION 145(3) MERELY BECAUSE THE ASS ESSEE DID NOT MAINTAIN THE STOCK RECORD QUANTITATIVE-CUM-QUALITAT IVE DESPITE THE FACT THE ASSESSEE HAD MAINTAINED PROPER IDENTIFIAB LE RECORDS. THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM WERE BEING MA INTAINED REGULARLY AND PROPERLY. TRADING ACCOUNT IS BACKED B Y QUANTITATIVE TALLY DULY SUPPORTED BY STOCK REGISTER. THE CLOSING STOCK HAS BEEN VALUED AT COST OR REALIZABLE VALUE WHICHEVER IS LES S. THERE HAS BEEN NO DEFECT IN ACCOUNTS WHICH WERE DULY AUDITED AND S UPPORTED BY TAX AUDIT REPORT. IN THESE CIRCUMSTANCES, REJECTION OF BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3 ) OF I.T. ACT IS NOT JUSTIFIED. ITA NO. 409/JP/2012 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) VS. DCIT , CIR CLE- 2, JAIPUR 3 1.2 THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN SUS TAINING TRADING ADDITION OF RS. 2,96,936/- BY ESTIMATING GR OSS PROFIT RATE OF 18% AS AGAINST DECLARED GROSS PROFIT RATE OF 17.7% OF DECLARED TURNOVER OF RS. 13,64,88,794/-. REVENUES APPEAL FOR A.Y. 2007-08 1.(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, JAIPUR HAS ERRED IN LAW AND ON FA CTS IN DELETING ADDITION OF RS. 12,57,014/- OUT OF THE TOT AL ADDITION OF RS. 15,53,950/- MADE BY THE AO AFTER REJECTING T HE BOOKS OF ACCOUNT U/S 145(3) OF I.T. ACT, 1961 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, JAIPUR HAS ERRED IN LAW AND ON FA CTS IN DELETING ADDITION OF RS.12,57,014/- OUT OF THE TOTA L ADDITION OF RS. 15,53,950/- MADE BY THE AO EVEN THOUGH THE R EJECTION OF BOOKS OF ACCOUNT HAS BEEN UPHELD BY HER. 1(III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE THE LD. CIT(A)-1, JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE TRADING ADDITION OF RS. 12,57,014/- OUT OF THE TOTAL ADDITION OF RS. 15,53,950/- MADE BY THE AO WHEREAS THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF M/S. SAN JAY OIL CAKE INDUSTRIES (316 ITR 274(GUJ.) HAD DIRECTED TO ADD 25% OF THE UNVERIFIABLE PURCHASES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 1,02,051/-, RS. 50,000/-, RS. 1,00, 000/- AND RS. 27,444/- MADE BY THE AO ON LUMP SUM BASIS OF 10 % OF EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF DEPRECIATION, FREIGHT & CARTAGE EXPENSES, LABOUR CH ARGES AND TRAVELING EXPENSES RESPECTIVELY. 3.1 AT THE OUTSET, THE LD. DR CONTENDS THAT THIS BE NCH OF ITAT IN BUNCH OF APPEALS BY ITS CONSOLIDATED ORDER IN THE C ASE OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO (ITA NO. 187/JP/2012 DATE D 20-10-2014) HAS ITA NO. 409/JP/2012 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) VS. DCIT , CIR CLE- 2, JAIPUR 4 HELD THAT 15% OF THE UNVERIFIABLE PURCHASES SHALL H ELD TO BE THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES IN THE RELEVA NT YEAR. THEREFORE, THE APPEALS MAY BE DECIDED IN VIEW OF THE ITAT ORDER. A T THE SAME TIME, IT IS PLEADED THAT BOTH THE REVENUE AND ASSESSEE HAVE GON E IN APPEAL BEFORE HON'BLE RAJASTHAN HIGH COURT AGAINST THIS BUNCH O F ORDERS. 3.2 THE LD. AR OF THE ASSESSEE ALSO CONTENDS THAT T HE ISSUE IN QUESTION MAY BE SET ASIDE TO THE FILE OF THE AO TO DECIDE TH E SAME AFRESH AFTER THE JUDGEMENT RENDERED IN THE CASE OF SHRI ANUJ KUMAR V ARSHNEY AND OTHERS VS. ITO (SUPRA) BY HON'BLE RAJASTHAN HIGH COURT, A FTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH LAW. 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE PROPOSAL OF BOTH THE PARTIES. ACCORDINGLY, WE ARE INCLINED TO SET ASIDE THE ISSUE S RAISED IN THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2007-08 AND RESTOR E THE MATTERS TO THE FILE OF AO TO DECIDE THE SAME AFRESH AFTER THE JUDG MENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF ANUJ KUMAR VARS HNEY AND OTHERS VS. ITO (SUPRA) IS DELIVERED, AFTER GIVING ADEQUATE OPP ORTUNITY OF BEING HEARD TO THE PARTIES. THUS THE ISSUE OF UNVERIFIABLE PURC HASES RELATING TO BOTH THE PARTIES ARE ALLOWED FOR STATISTICAL PURPOSES. 3.4 AS REGARDS THE GROUND NO. 2 OF THE REVENUE RELA TING TO DELETION OF ADDITION OF RS. 1,02,051/- ON ACCOUNT OF DEPRECIAT ION , RS. 50,000/- ON ITA NO. 409/JP/2012 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) VS. DCIT , CIR CLE- 2, JAIPUR 5 ACCOUNT OF FREIGHT AND CARTAGE EXPENSES, RS. 1.00 LAC ON ACCOUNT OF LABOUR CHARGES AND RS. 27,444/- ON ACCOUNT OF TRAV ELING EXPENSES MADE BY THE AO ON LUMP SUM BASIS OF 10% EXPENSES CLAIMED BY THE ASSESSEE 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND NO INFIRMITY IN THE OR DER OF THE LD. CIT(A) ON THIS ISSUE WHICH IS SUSTAINED. 4.1 NOW WE TAKE UP THE APPEALS OF THE ASSESSEE AND REVENUE FOR THE ASSESSMENT YEAR 2008-09 WHEREIN BOTH THE PARTIES RA ISED FOLLOWING GROUNDS:- ASSESSEES GROUNDS A.Y. 2008-09 1.1 THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN U PHOLDING THE FINDING OF THE AO, REJECTING THE BOOKS OF ACCOU NT AND INVOKING THE PROVISION OF SECTION 145(3) OF THE ACT . 1.2 THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN SUS TAINING THE TRADING ADDITION OF RS. 16,16,040/- BY APPLYING GROSS PROFIT RATE OF 17.5% AS AGAINST DECLARED GROSS PROF IT RATE OF 16.42% ON DECLARED TURNOVER OF RS. 14,96,28, 985/- 2. THE LD. CIT(A) ERRED IN LAW ON FACTS IN REJECTIN G THE GROUND NO. 5 RAISED BEFORE HIM RELATING TO THE CLAI M OF THE ASSESSEE U/S 80G OF I.T. ACT ON ELIGIBLE DONATION O F RS. 1,99,820/- REVENUES GROUNDS A.Y. 2008-09 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 53,09,670/- OUT OF THE ADDITION OF RS. 69,25,710/- MADE BY THE AO AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE I.T. ACT, 1961 ITA NO. 409/JP/2012 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) VS. DCIT , CIR CLE- 2, JAIPUR 6 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) (CENTRAL), JAIPUR ERRED IN LAW AND ON FA CTS IN DELETING THE TRADING ADDITION OF RS. 53,09,670/- OU T OF THE TOTAL ADDITION OF RS. 69,25,710/- MADE BY THE AO WH EREAS THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF M/S. SANJAY OIL CAKE INDUSTRIES, 316 INCOME TAX RULES 274 HAD D IRECTED TO ADD 25% OF THE UNVERIFIABLE PURCHASES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE TRADING ADDITION OF RS. 57,714/- MA DE BY THE AO ON ACCOUNT OF COMMISSION PAYMENT OF RS. 57,714/ - ON BOGUS PURCHASES MADE BY THE ASSESSEE OUT OF ITS UND ISCLOSED SOURCES. 4.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE SIMILAR ISSUE OF ASSESSEE AND REVENUE FOR THE ASSESSMENT YEAR 2007-08 AS TO UNVERIFIABLE PURCHASE S HAS BEEN RESTORED TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH AFTER THE JUDGEMENT OF THE JUDGEMENTS OF HON'BLE RAJASTHAN HIGH COURT. IN VIE W THEREOF, WE RESTORE THE MATTERS TO THE FILE OF AO TO DECIDE THE SAME AF RESH AFTER THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF ANU J KUMAR VARSHNEY AND OTHERS VS. ITO (SUPRA) IS DELIVERED, AFTER GIVI NG ADEQUATE OPPORTUNITY OF BEING HEARD TO THE PARTIES. THUS THE ISSUE RAI SED BY BOTH THE PARTIES AS TO UNVERIFIABLE PURCHASES FOR THE ASSESSMENT YEAR 2008-09 ARE ALLOWED FOR STATISTICAL PURPOSES. 4.3 AS REGARDS THE GROUND NO. 2 OF THE ASSESSEE REL ATING TO CLAIM U/S 80G OF THE ACT ON ELIGIBLE DONATION OF RS. 1,99,820 /-, WE FIND THAT NO ITA NO. 409/JP/2012 M/S. BHURAMAL RAJ MAL SURANA (MFRS.) VS. DCIT , CIR CLE- 2, JAIPUR 7 SPECIFIC SUBMISSIONS HAVE BEEN ADVANCED BY THE ASSE SSEE DURING THE COURSE OF HEARING. HENCE, THE SAME IS DISMISSED. 5.0 IN THE RESULT, ASSESSEES APPEAL IN ITA NO.409 /JP/2012 IS ALLOWED FOR STATISTICAL PURPOSES, REVENUES APPEAL IN ITA N O. 407/JP/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES, ASSESSEE'S APPEAL IN ITA NO. 499/JP/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPO SES AND REVENUES APPEAL IN ITA NO.626/JP/2012 IS ALLOWED FOR STATIST ICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 09 /10/ 2015. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 /10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. BHURAMAL RAJMAL SURANA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE- 2,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.409/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR