ITO, Jaipur V. ANIL KUMAR DANGAYACH(HUF), Jaipur

ITA 413/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5311 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARSH SARASWAT C A DHK
• Keywords: Bogus purchase
• Section: 143(3); 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 413/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 . INCOME TAX OFFICER, WARD 3(2), JAIPUR. CUKE VS. M/S. ANIL KUMAR DANGAYACH (HUF), D-49, KALYAN KUNJ, HATHI BABU KA MARG, BANI PARK, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACHA 0340 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 364/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 . M/S. ANIL KUMAR DANGAYACH (HUF), D-49, KALYAN KUNJ, HATHI BABU KA MARG, BANI PARK, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 3(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACHA 0340 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI PRITHVI SINGH MEENA (JCIT) /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI HARSH SARASWAT (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10.05.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 13/05/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THESE ARE TWO CONNECTED APPEALS FILED BY THE REVEN UE AND ASSESSEE AGAINST THE ORDER OF LD. CIT (APPEALS)-I, JAIPUR DATED 02.0 2.2015 FOR THE A.Y. 2011-12. THE GROUNDS RAISED BY THE REVENUE AND ASSESSEE ARE AS U NDER :- 2 ITA NO. 413 & 364/JP/2015 ITO VS. ANIL KUMAR DANGAYACH HUF ITA NO. 413/JP/2015 (REVENUE) : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN RESTRICTING THE AD DITION MADE BY THE AO FROM RS. 36,94,376/- TO RS. 22,16,626/- ON ACCOU NT OF UNVERIFIABLE PURCHASES EVEN AFTER CONFIRMING THE RE JECTION OF BOOKS OF ACCOUNT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN NOT FOLLOWING THE DECISION OF HONBLE ITAT JAIPUR IN THE CASE OF M/S. TRIDENT JEW ELLERS (ITA NO. 552/JP/2013) DATED 10.07.2013. ITA NO. 364/JP/2015 (ASSESSEE) : THE LEARNED CIT (A) HAS ERRED IN SUSTAINING TRADING ADDITION OF RS. 22,16,626/- BY DISALLOWING 15% OF ALLEGED UN-VERIFI ABLE PURCHASES RS. 1,47,77,507/- FOLLOWING HONBLE ITAT JUDGMENT IN CA SE OF ANUJ KUMAR VERSHNEY (ITA NO. 187/JP/2012) BY IGNORING PAST HIS TORY OF ASSESSEE AND VARIOUS OTHER EVIDENCES ON RECORD. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PRECIOUS AND SEMI PREC IOUS STONES. DURING THE YEAR UNDER CONSIDERATION, A TOTAL TURNOVER OF RS. 8,11,4 2,478/- WITH GROSS PROFIT OF RS. 34,81,012/- AND GP RATE OF 4.29% WAS DECLARED. THE ASSESSEE HAS FILED THE RETURN ON 22.09.2011 DECLARING TOTAL INCOME OF RS. 5,94,07 0/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT UNDER SECTION 143(3) WA S COMPLETED THEREBY TOTAL INCOME WAS ASSESSED AT RS. 42,88,450/- AFTER REJECT ING THE BOOKS OF ACCOUNTS AND TRADING ADDITION OF RS. 36,94,376/- WAS MADE. THE AO IN THE ASSESSMENT ORDER HAS GIVEN THE REASONS FOR REJECTION OF BOOKS OF ACCOUNT . THE ASSESSEE IN HIS APPEAL HAS NOT CHALLENGED THE REJECTION OF BOOKS OF ACCOUNT. IN PARA 3.5.1 AND 3.5.2, THE AO HAS GIVEN THE DETAILS OF NON-MAINTENANCE OF STOCK R EGISTER, SALES ARE NOT VOUCHED AND NOT VERIFIABLE AND SIMILAR IS WITH RESPECT TO P URCHASE ALSO. ON THE BASIS OF THE 3 ITA NO. 413 & 364/JP/2015 ITO VS. ANIL KUMAR DANGAYACH HUF EVIDENCE COLLECTED BY THE AO, THE AO HAS HELD THAT THE PURCHASES MADE FROM CONCERNS WERE NOT VERIFIABLE FOR THE REASONS MENTIO NED AS UNDER :- A) DEPARTMENT TRIED TO CONDUCT INDEPENDENT INQUIRIE S BY ISSUE OF SUMMONS U/S 131 WHICH WERE UN-SERVED OR REMAINED UN -COMPLIED WITH. B) INQUIRIES WERE CONDUCTED THROUGH THE INSPECTOR O F INCOME TAX AND IT WAS REPORTED BY HIM THAT NO SUCH CONCERN EXI STS AT THE GIVEN ADDRESS AND NO ACTIVITY OF TRADING IN GEMS AND JEWE LLERY WAS EVER CONDUCTED IN THE NAME OF ABOVE CONCERNS. C) THE ASSESSEE WAS GIVEN AN OPPORTUNITY OF PRODUCI NG THE PARTIES BUT FAILED TO PRODUCE THEM. INSTEAD, THE ASSESSEE O NLY FILED CONFIRMATIONS AND THE RST/CST NOS. ETC. D) THE COPY OF BANK STATEMENT OF THE ABOVE PARTIES WERE CALLED FOR FROM THE BANK AND IT IS FOUND THAT CASH WAS WITHDRA WN AS SOON AS CHEQUE IS CLEARED AND THERE IS HARDLY ANY SUBSTANTI AL BALANCE IN THE BANK ACCOUNT. IN VIEW OF THE ABOVE FACTS, THE AO OBSERVED THAT IT CAN BE SAFELY CONCLUDED THAT THE PURCHASES SHOWN BY THE ASSESSEE FROM THE ABOVE MENT IONED FIRMS ARE NOT GENUINE. IT MAY AGAIN BE SEEN THAT DURING ASSESSMENT PROCEED ING ALSO, THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE REFERRED PARTIES FOR EXA MINATION SO THAT PURCHASES MADE BY IT COULD BE VERIFIED, BUT THE ASSESSEE FAILED TO DO SO. THE SUMMONS ISSUED TO THE PARTIES COULD NOT BE SERVED. INQUIRY REPORT OF THE INSPECTOR OF THE DEPARTMENT AGAIN ESTABLISHES THE FACT THAT THESE PARTIES HAVE NEVER EXISTED OR OPERATED AT THE GIVEN ADDRESSES. THUS, THE ONUS IS ON THE ASSESSEE TO PRO VE ITS PURCHASES GENUINE BUT THE ASSESSEE TOTALLY FAILED TO PROVE GENUINENESS OF THE PURCHASES MADE BY IT. ON THE BASIS OF THE UNVERIFIABLE PURCHASES, THE INCOME OF THE ASSESSEE WAS ESTIMATED TO THE TUNE OF RS. 36,94,376/- AS MENTIONED BELOW :- IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED PU RCHASES OF RS. 1,47,77,507/- FROM 8 PARTIES AND THE SAME ARE UNVER IFIABLE FOR THE 4 ITA NO. 413 & 364/JP/2015 ITO VS. ANIL KUMAR DANGAYACH HUF REASONS GIVEN IN DETAIL IN PARA 4 ABOVE. THEREFORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISI ON OF THE HONBLE GUJARAT HIGH COURT (SUPRA), DISALLOWANCE OF 25% OF THE UNVERIFIABLE PURCHASES OF RS. 1,47,77,507/- IS MADE WHICH RESULT S IN TRADING ADDITION OF RS. 36,94,376/- TO THE DECLARED GROSS P ROFIT OF THE ASSESSEE. IN ESTIMATING THE INCOME OF THE ASSESSEE RELIANCE I S FURTHER PLACED ON THE FOLLOWING CASE LAWS :- I) COMMISSIONER OF SALES TAX VS. H.M.ESUFALI, 90 ITR 2 71 (SC) II) M/S. KANSARA BEARING PVT. LTD. VS. ACIT, 270 ITR 23 5 (RAJ.) III) CIT VS. W. HUSSAIN, 171 ITR 405 (PATNA) IV) K.M. MUDALIYAR VS.CIT, 61 ITR 644 (MADRAS) V) CIT VS. RAYALA CORPORATION P. LTD., 215 ITR 883 (MA DRAS) SINCE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME BY REDUC ING ITS GROSS PROFITS BY INTRODUCING NON-GENUINE PURCHASES, IT IS A FIT C ASE FOR INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IT ACT, 19 61 WHICH ARE BEING DONE SEPARATELY. WITH THE ABOVE REMARKS, THE TOTAL INCOME IS COMPUTE D AS UNDER : INCOME AS SHOWN RS. 5,94,070/- ADD: TRADING ADDITION RS. 36,94,376/- TOTAL INCOME : RS. 42,88,446/- ========== OR RS. 42,88,450/- ========== 3. AGAINST THE SAID OF THE AO, THE ASSESSEE FILED A PPEAL BEFORE LD. CIT (A). THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL AND GIVEN THE RELIEF OF RS. 14,77,750/-. THE CONCLUDING PARA OF LD. CIT (A) IS REPRODUCED HE REIN BELOW :- CONSIDERING THE FACT THAT THE GP RATE IN THE YEAR UNDER CONSIDERATION HAS GONE DOWN AND ALSO THE FACT THAT PURCHASES AMOU NTING TO RS. 1,47,77,507/- HAVE REMAINED UNVERIFIED, RESPECTFULL Y, FOLLOWING JURISDICTIONAL ITAT JAIPUR BENCHS DECISION IN CASE OF ITA 187/JP/2012, 15% (AMOUNTING TO RS. 22,16,626/-) OF THE BOGUS PUR CHASES WHICH REMAINED UNVERIFIABLE IS DISALLOWED AND ADDED TO TO TAL INCOME OF THE ASSESSEE. ACCORDINGLY TRADING ADDITION RS. 22,16,6 26/- TO THAT EXTENT 5 ITA NO. 413 & 364/JP/2015 ITO VS. ANIL KUMAR DANGAYACH HUF IS SUSTAINED AND THE REST OF THE ADDITION IS HEREBY DELETED. ASSESSEE GETS PART RELIEF OF (RS. 36,94,376 22,16,626)= RS 14,77,750/-. 4. AGAINST THE SAID ORDER OF LD. CIT (A), THE REVEN UE AS WELL AS ASSESSEE FILED APPEALS BEFORE US. 4.1. AT THE OUTSET, THE LD. A/R HAS SUBMITTED THAT THIS HONBLE TRIBUNAL HAS BEEN REMANDING THE MATTER TO THE FILE OF THE AO TILL THE APPEAL IN THE MATTER OF ANUJ KUMAR VARSHNEY IN ITA NO. 187/JP/2012 IS DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT. 4.2. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED T HAT THE MATTER IS REQUIRED TO BE DECIDED ON MERIT AND THIS TRIBUNAL SHOULD NOT RE MAND THE MATTER TO THE FILE OF THE AO TILL THE OUT-COME OF THE APPEAL IN THE MATTER OF ANUJ KUMAR VARSHNEY (SUPRA) IS KNOWN TO THE DEPARTMENT. 4.3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IN OUR VIEW, TRIBUNAL IS BOUND BY THE JUDGMENT PASSED IN THE MATTER OF ANUJ KUMAR VARSHNEY IN ITA NO. 187/JP/2012 WHEREIN THIS TRIBUN AL HAS HELD AS UNDER :- 8.6 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. A S DISCUSSED IN ABOVE CASES, THE MATERIAL AVAILABLE ON RECORD ESTAB LISHED THAT IN JAIPUR, A RAMPANT PRACTICE IS IN VOGUE TO GET AND I SSUE ACCOMMODATION BILLS OF PURCHASES TO DEFLATE THE PRO FIT. THE LEARNED ASSESSING OFFICER MADE DISALLOWANCE @ 25% O F SUCH BOGUS PURCHASES ON THE BASIS OF DECISION IN THE CAS E OF SANJAY OIL CAKE INDUSTRIES AND VIJAY PROTEIN LTD. (SUPRA). IN OUR VIEW THE 25% DISALLOWANCE APPEARS TO BE HIGHER SIDE, THEREFO RE, KEEPING IN VIEW OF THE FACTS OF THE ASSESSEES CASE AS WELL AS OTHER CASES AS DISCUSSED ABOVE, WE FEEL THAT 15% DISALLOWANCE O UT OF BOGUS PURCHASES IS REASONABLE ON UNVERIFIABLE PURCHASES A ND WILL MEET 6 ITA NO. 413 & 364/JP/2015 ITO VS. ANIL KUMAR DANGAYACH HUF THE ENDS OF JUSTICE. THE REJECTION OF BOOKS OF ACCO UNT IS JUSTIFIED. THE ASSESSEE GETS RELIEF PARTLY. WE HAVE ALREADY HELD THAT IN CASE OF UNVERIFIABLE P URCHASES, THE INCOME IS TO BE ESTIMATED @ 15% OF THE UNVERIFIABLE AMOUNT. IN THE PRESENT CASE THE UNVERIFIABLE AMOUNT AS NOTICED BY THE AO WAS RS. 1,47,77,507/-, THEREFORE, BY APPLYING THE RATIO LAID DOWN BY THE TRIBUNAL IN ITA NO. 187/JP/2012, 1 5% OF THE BOGUS PURCHASES WHICH REMAINED UNVERIFIABLE IS DISALLOWED. 5. IN THE RESULT, APPEALS OF THE REVENUE AS WELL AS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/05/2016 . SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/05/2016 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO WARD 3(2), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SHRI ANIL KUMAR DANGAYACH HUF, JAIP UR. 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. 413 & 364/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR