ITO, Jaipur V. G.B.IMPEX, Jaipur

ITA 427/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4968 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S DAGUR CIT DHK
• Keywords: Rejection of books of accounts; Question of law; Wrong claim; Non compliance
• 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 DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA NO. 427/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER, WARD 6(2), JAIPUR CUKE VS. M/S G.B. IMPEX, B-172,RAJENDRA MARG, BAPU NAGAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAGFG 3052 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S. DAGUR.(ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 26.07.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/10/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), UDAIPUR DATED 03.02.2015 WHEREIN THE REVENUE HAS T AKEN THE FOLLOWING GROUND OF APPEAL: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE PENALTY OF RS. 25,41,578/- LEVIED U/S 271(1)(C). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM IS ENGAGED IN THE BUSINESS OF PRECIOUS AND SEMI PRECIOUS STONES. DURI NG THE YEAR, ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4 ,84,159/-. THE ASSESSEE DECLARED GROSS PROFIT OF RS.1,06,85,782/- ON THE TU RNOVER OF RS.19,71,89,378/- ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 2 GIVING A G.P. RATE OF 5.42%. THE ASSESSMENT WAS COM PLETED U/S 143(3) ON A TOTAL INCOME OF RS.87,09,325/- BY MAKING THE FOLLOW ING ADDITIONS:- S.NO. PARTICULARS OF ADDITION AMOUNT(INRS.) 1 TRADING ADDITION BY DISALLOWING 25% OF UNVERIFIABLE PURCHASES OF RS.3,28,40,664/- 82,10,166/- 2 DIFFERENCE IN INCOME AS PER COMPUTATION AND SHOWN IN E-FILED RETURN 15,000/- THE AO WHILE COMPLETING THE ASSESSMENT PROCEEDINGS STATED THAT SINCE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOM E AND FURNISHED INACCURATE PARTICULARS OF INCOME BY REDUCING ITS GROSS PROFIT BY INTRODUCING NON-GENUINE PURCHASES, IT IS A FIT CASE FOR INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 2.1 IN APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANC E OF 25% OF THE UNVERIFIABLE PURCHASES BY RELYING ON THE DECISION O F ITAT JAIPUR BENCH IN CASE OF DEEPAK DALELA V. ITO 50 DTR 502 AND ITAT DELHI B ENCH IN CASE OF UNIVER TELCOM LIMITED V. ADDL. CIT 45 DTR 433. 2.2 AFTER THE ORDER OF THE CIT(A), THE AO AGAIN ISS UED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PENALTY U/S 271(1)(C) S HOULD NOT BE IMPOSED ON THE ADDITION MADE IN THE ASSESSMENT ORDER. THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 09-03-2013. THE AO, HOWEVER, REJECTED THE SAM E BY HOLDING THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO PROVE TH AT PURCHASES SHOWN FROM THE ALLEGED SELLER PARTIES ARE GENUINE. HE ALSO HEL D THAT NO EXPLANATION ON THE ADDITION OF RS.15,000/- WAS GIVEN. HE THEREFORE, TR EATED THE DIFFERENCE BETWEEN RETURNED INCOME AND ASSESSED INCOME OF RS.8 2,25,166/- AS THE ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 3 INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED AND IMPOSED PENALTY OF RS.25,41,578/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 2.3 THE CO-ORDINATE BENCH IN QUANTUM PROCEEDINGS HA S SUBSEQUENTLY REDUCED THE DISALLOWANCE FROM 25% TO 15% OF UNVERIF IABLE PURCHASES. IN THE PENALTY PROCEEDINGS, LD CIT(A) HAS CONSIDERED THE D ECISION OF THE COORDINATE BENCH AND AFTER GOING THROUGH THE SUBMISSIONS OF TH E ASSESSEE DELETED THE IMPUGNED PENALTY. AGAINST THE SAID DELETION OF PE NALTY, THE REVENUE IS IN APPEAL BEFORE US. 2.4 IT WILL THEREFORE BE RELEVANT TO CONSIDER THE F INDINGS OF THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS AND THE SUBSEQUENT FINDINGS OF THE LD CIT(A) IN THE PENALTY PROCEEDINGS. 2.5 THE FINDING OF THE COORDINATE BENCH IN ITA NO. 241/JP/2012 DATED 22.10.2014 ARE CONTAINED AT PARA 11.5, PAGE 67-69 O F ITS ORDER WHICH IS REPRODUCED AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS NOT CHALLENGED THE REJECTION OF BOOK RESULT AS DEFECTS POINTED OUT BY THE ASSESS ING OFFICER ARE SUFFICIENT TO REJECT THE BOOK RESULT U/S 145(3) OF THE ACT. T HE DEPARTMENT HAD CONDUCTED SURVEY AND SEARCH IN VARIOUS CASES AS MEN TIONED BY THE AO AS WELL AS THE LD. CIT(A). ON INVESTIGATIONS, IT IS F OUND THAT FOUR PARTIES WERE ALSO INDULGED IN PROVIDING ACCOMMODATION BILLS. TH E SUFFICIENT OPPORTUNITIES HAVE BEEN GIVEN BY THE ASSESSING OFFI CER TO PROVE THE GENUINENESS OF THE PURCHASES. THE ASSESSING OFFICE R HIMSELF ISSUED THE NOTICES TO THESE PARTIES BUT NOTICES WERE RETURNED BACK BY THE POSTAL DEPARTMENT WITH REMARK NO SUCH PARTY EXISTS AT GI VEN ADDRESS. THE ASSESSEE COULD NOT PRODUCE THESE PARTIES FOR VERIFI CATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. EVEN THE AO PROVIDED S UFFICIENT TIME TO THE ASSESSEE. THE UNVERIFIABLE PURCHASE WERE RS 3,28,4 0,664 WHEREAS THE ASSESSEE EXPORTED THE GOODS DURING THE YEAR AT RS 93,42,720 DURING THE YEAR UNDER CONSIDERATION. THEREFORE THE ASSESSEES CLAIM THAT ALL THE GOODS WERE EXPORTED DURING THE YEAR IS NOT CORRECT. FURT HER THE LD. ASSESSING OFFICER HAD NOT PRECLUDED BY THE LAW IF THE ASSESS EE EVEN EXPORTED THE ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 4 GOODS 100% TO INVESTIGATE THE UNVERIFIABLE PURCHASE S. THE LD. AO SENT NOTICES TO THESE PARTIES WHICH WERE RETURNED BACK U NSERVED WITH REMARK PARTY IS NOT EXISTENT. THE ASSESSEE HAS ALSO NOT PRODUCED THESE PARTIES FOR VERIFICATION WHATEVER EVIDENCE WERE PRODUCED B Y THE ASSESSEE ARE NOT SUFFICIENT TO PROVE THE PURCHASE GENUINE EVEN PAYM ENT THROUGH ACCOUNTS PAYEE CHEQUES IS NOT SACROSANCT AND HAD NOT DISCH ARGED ONUS ON IT. DURING THE COURSE OF INVESTIGATION CONDUCTED BY TH E DEPARTMENT, THESE PARTIES WERE FIGURED IN THE LIST OF ENTRY PROVIDES AND THEY HAD ADMITTED THAT THEY ONLY PROVIDED BILLS NO ANY REAL BUSINESS WITH DELIVERY OF GOODS. THE LD. AO APPLIED HONBLE GUJARAT HIGH COURT DECISION IN T HE CASE OF SANJAY OIL CAKE INDUSTRIES (SUPRA) AND ITAT AHMEDABAD BENCH DE CISION IN THE CASE OF VIJAY PROTEINS WHEREIN 25% DISALLOWANCE HELD REASON ABLE ON UNVERIFIABLE PURCHASES. THE AR OF THE ASSESSEE TRIED TO DISTINGU ISH THIS CASE WITH FACTS AND CIRCUMSTANCES AND ARGUED TO APPLY PAST HISTORY OF THE CASE. THE ONUS IS ON THE ASSESSEE TO PROVE THESE PURCHASES AS GENUINE AND SUFFICIENT PURCHASES FROM THESE PARTIES HAVE BEEN CLAIMED TO BE MADE BY HIM. THE ASSESSEE ALSO COULD NOT BE ABLE TO LEAD ANY EVIDENC E IN FURTHERANCE OF FILING OF CONFIRMATORY LETTER OR MERELY SHOWING THAT THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. THE ASSESSEE WAS AWARE OF T HE WHEREABOUTS OF THE PARTIES AND HE SHOULD HAVE PRODUCED THESE PARTIES B EFORE THE ASSESSING OFFICER FOR VERIFICATION OF PURCHASES, WHICH COULD NOT BE DONE AT THE STAGE OF ASSESSMENT PROCEEDINGS. THE ADDITION ON ACCOUNT OF UNVERIFIABLE PURCHASES WERE MADE IN A.Y.2006-07. THUS, PAST HISTORY OF T HE ASSESSEE IS NOT RELIABLE AND DOCTORED. THIS FINDING IS ALSO GOT SU PPORT FROM THE RECENT DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF VENUS ARTS & GEMS ORDER DATED 20.8.2014 WHEREIN IT HAS BEEN HELD THAT ORDER PASSED BY THE ITAT FOR CONFIRMING G.P. AFTER REJECTION OF BOOKS OF ACCOUNTS ON THE BASIS OF VARIOUS DISCREPANCIES FOUND BY THE ASSESSING OFFICE R, THERE IS NO QUESTION OF LAW INVOLVED IN SUCH PROFIT ESTIMATES. EVEN THE ASS ESSEE MAY BE 100% EXPORTER WHICH DOES NOT PRECLUDE THE ASSESSING OFFI CER FROM ENQUIRING INTO THE GENUINENESS OF THE PURCHASES. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT 15% NP ON UNVERIFIABLE PURCHASES IS REASONABLE IN THIS CASE. ACCORDINGLY, THE ASSESSEES APPEAL IS PARTLY ALLOWE D. 2.6 THEREAFTER, IN THE PENALTY PROCEEDINGS, THE LD. CIT(A) AFTER CONSIDERING THE ABOVE DECISION OF THE COORDINATE BENCH IN QUANT UM PROCEEDINGS HAS DELETED THE IMPUNGED PENALTY AND GIVEN HIS FINDINGS BY STATING AS UNDER: 2.4 AS REGARDS, LEVY OF PENALTY ON UNVERIFIABLE PU RCHASES, IT IS TO BE STATED THAT THE FOUR CONCERNS WERE NOT AVAILABLE AT THE A DDRESSES GIVEN IN THE ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 5 PURCHASE BILLS. IT WAS ALSO FOUND DURING THE INQUI RIES CONDUCTED BY THE INVESTIGATION WING THAT THESE CONCERNS INDULGED IN PROVIDING ACCOMMODATION BILLS, WITHOUT DELIVERY OF ANY GOODS. ALSO, THE ASSESSEE FAILED TO PRODUCE THESE SUPPLIERS. THE APPELLANT H AS STATED IT MAINTAINS STOCK RECORDS ON A DAY TO DAY BASIS AND THAT IT HAS SUBMITTED QUANTITATIVE AND QUALITATIVE DETAILS OF RAW MATERIA L AND FINISHED GOODS IN THE TAX AUDIT REPORT. THE SAME HAS BEEN GIVEN IN THE PAPER BOOK. THE APPELLANT HAS STATED THAT THE ADDITION WHICH HAS BE EN SUSTAINED BY THE ITAT VIZ 15% OF THE PURCHASES IS ON THE BASIS OF RE ASONABLENESS AND NOT ANY MATERIAL ON RECORD THAT THE ASSESSEE HAS INFLAT ED ITS PURCHASES. IT HAS FURTHER BEEN STATED THAT ADDITION HAS BEEN SUST AINED ON ESTIMATE BASIS AND THERE ARE SEVERAL CASE LAWS WHICH STATE T HAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED IN CASES OF ESTIMATION. 2.5.1 IN VIEW OF THE QUANTITATIVE DETAILS MAINTAINED BY THE ASSESSEE, IT CANNOT BE SAID THAT PURCHASES, DEBITED IN THE BOOKS FROM T HE FOUR UNVERIFIABLE CONCERNS, HAVE NOT BEEN MADE IT ALL. THE PURCHASES HAVE BEEN MADE BUT FROM SOME OTHER CONCERNS. THE ITAT, MUMBAI IN THE CASE OF M/S CHEMPURA VS. ITO(ITA NO. 451, 452, 453/M/2006) HAS HELD THAT PENALTY IN SUCH CASES IS NOT LEVIABLE. THE ITAT MUMBAI HAS STATED IN THIS CASE BUT IN THE CASE UNDER CONSIDERATION THERE WAS NO DISPUTE THAT PURCHASES WERE MADE, THOUGH THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM TO THE EXTENT THAT THE PURCHASES WERE MADE FROM THAT PARTICULAR PARTY. THEREFORE, IN THE CASE UNDER CONSIDERATION T HE WORD PARTICULAR USED IN THE SECTION 271(1)(C) WOULD EMBRACE THE MEA NING OF THE PURCHASES MADE AND NOT THE PARTY FROM WHOM IT WAS MADE. AS STATED ABOVE THAT WORDS CONCEALED, PARTICULARS AND IN ACCURATE ARE WITH REGARD TO INCOME NOT WITH REGARD TO ANY OTHERS. FROM WHICH PARTY THE PURCHASES WERE MADE IS NOT MUCH IMPORTANT WHILE CO MPUTING THE INCOME. THE IMPORTANT ASPECT IN COMPUTING INCOME I S PURCHASES . THEREFORE , IN VIEW OF THIS JUDGEMENT, IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 2.5.2 IN THE CASE OF KAMLESH DANGAYACH (ITA NO. 18 & 19/JP/2012), THE ITAT, JAIPUR HAS HELD THAT ONCE IT IS ACCEPTED AS A FACT THAT THE GOODS HAVE INDEED BEEN PURCHASED, AN ADDITION ON ACCOUNT OF A POSSIBILITY OF HAVING INCURRED A LOWER EXPENDITURE THAN CLAIMED, THOUGH D EFINITELY VALID FOR EFFECTING DISALLOWANCE OF THE EXPENDITURE, THE ASSE SSEE HAVING FAILED TO ESTABLISH THE ACTUAL COST INCURRED, CANNOT LEAD TO AN INFERENCE OF A WRONG CLAIM, JUSTIFYING LEVY OF PENALTY U/S 271(1)(C). ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 6 2.5.3 THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THESE PURCHASES FROM UNVERIFIABLE CONCERNS ARE INFLATED. IN THE QUANTUM PROCEEDINGS, THE ITAT JAIPUR, IN THIS CASE OF THIS ASSESSMENT YEAR (ITA NO. 241/JP/2014) HAS HELD THAT THEREFORE WE ARE OF THE CONSIDERED VIEW THAT 15% NP ON UNVERIFIABLE PURCHASES IS REASONABLE IN THIS CASE. IT IS A PRESUMPTION THAT SUCH PURCHASES MAY BE INFLATED AS THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE ACTUAL COST INCURRED ON THESE PURCHASES. THEREFORE, A PERCENTAGE OF THESE PURCHASES (25% BY THE ASSESSING OFFICER AND 15% BY THE ITAT) HAS BEEN ESTIMATED AS TRADING ADDITION. THE RAJASTHAN HIGH COURT, IN THE CASE OF SHIV LAL TAK( 251 ITR 353) AND KRISHI TYRE RETRADING AND RUBBER INDUSTRIES (360 ITR 580) AND THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH (258 ITR 85) HAVE HELD THAT PROVISIONS OF SECTION 271(1)(C) ARE NOT A TTRACTED IN CASES WHERE INCOME IS ESTIMATED. 2.6 IN VIEW OF THE ABOVE DISCUSSION THAT (I) THERE IS NO DISPUTE THAT THE IMPUGNED PURCHAS ES HAVE BEEN MADE, (II) THE ASSESSING OFFICER HAS NOT BROUGHT ANY MAT ERIAL ON RECORD TO SHOW THAT THE PURCHASES HAVE BEEN INFLATED. (III) DISALLOWANCE OUT OF UNVERIFIABLE PURCHASES H AS BEEN MADE ON ESTIMATED BASIS, SINCE THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE ACTUAL COST OF THE PURCHASES. AND FOLLOWING THE CASE LAWS, DISCUSSED ABOVE IN PAR AS, 2.5.1 TO 2.5.3, IT IS HELD THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED ON THIS ISSUE OF VERIFIABLE PURCHASES SINCE NO CASE HAS BEEN MADE OUT SHOWING T HAT THE ASSESSEE HAS CONCEALED PARTICULAR OF INCOME OR FURNISHED INA CCURATE PARTICULARS OF INCOME. 2.7 AS REGARDS THE LEVY OF PENALTY ON DIFFERENCE OF RS.15,000/- BETWEEN THE STATEMENT OF COMPUTATION OF INCOME AND THE INCOME D ISCLOSED IN THE E- RETURN, IT HAS BEEN STATED BY THE APPELLANT THAT PE NALTY U/S 271(1)(C) HAS NOT BEEN INITIATED ON THIS ISSUE. THE CONTENTION OF THE APPELLANT IS CORRECT. IT HAS ALSO BEEN STATED THAT THIS DIFFERE NCE IS DUE TO TYPOGRAPHICAL MISTAKE. IN VIEW OF THE ABOVE, IT IS HELD THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED ON THIS AMOUNT. 2.7 WE NOW REFER TO THE SUBMISSIONS OF THE LD AR. THE LD. AR SUBMITTED THAT AT THE OUTSET, IT MAY BE NOTED THAT AO HAS NOT INIT IATED ANY PENALTY ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 7 PROCEEDINGS WITH REFERENCE TO THE ADDITION OF RS.15 ,000/- AS IS EVIDENT FROM THE ASSESSMENT ORDER. THIS ADDITION WAS ON ACCOUNT OF TYPOGRAPHICAL MISTAKE WHEREBY IN THE RETURN FILED BY THE ASSESSEE THE TOT AL INCOME IS SHOWN AT RS.4,84,159/- WHEREAS IN THE COMPUTATION OF TOTAL I NCOME FILED BY THE ASSESSEE HIMSELF IN COURSE OF ASSESSMENT PROCEEDING THE TOTA L INCOME IS STATED AT RS.4,99,159/-. THEREFORE THIS DIFFERENCE, ON WHICH NO PENALTY PROCEEDINGS WERE INITIATED WHILE COMPLETING THE ASSESSMENT ORDER HAS BEEN RIGHTLY BEEN DELETED BY CIT(A). 2.7.1 IN RESPECT OF PENALTY ON TRADING ADDITION OF RS.82,10,166/-, IT IS TO SUBMIT THAT THAT THE HONBLE ITAT HAS REDUCED THE TRADING ADDITION TO RS.49,26,100/- BY DISALLOWING ON ESTIMATED BASIS, 15% OF THE ALLEG ED UNVERIFIABLE PURCHASES. HENCE, THE PENALTY LEVIED BY THE AO ON THE ADDITION OF RS.32,84,066/- (82,10,166-49,26,100) WHICH IS DELETED BY HONBLE I TAT IS OTHERWISE UNCALLED FOR. 2.7.2 IN RESPECT OF THE REMAINING TRADING ADDITION OF RS.49,26,100/- CONFIRMED BY HONBLE ITAT BY DISALLOWING 15% OF THE PURCHASES MADE FROM THE 4 PARTIES, NO PENALTY IS LEVIABLE IN VIEW OF THE FOLLOWING:- (A) ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT O N DAY-TO-DAY BASIS WHICH ARE SUBJECT TO TAX AUDIT. THESE BOOKS A RE DULY SUPPORTED BY BILLS AND VOUCHERS. ALL THE TRANSACTION OF PURCHASE S & SALES ARE FULLY VERIFIABLE FROM THE SUPPORTING BILLS, VOUCHERS & DO CUMENTS MAINTAINED BY ASSESSEE. EXPORT SALES ARE ALSO SUBJECT TO CONTR OL OF CUSTOM AUTHORITIES AND RESERVE BANK OF INDIA. ALL THE EXPO RTS ARE THROUGH BANKING CHANNEL AND REALIZATION OF EXPORTS PROCEEDS IS ALSO THROUGH BANKING CHANNEL. THE ASSESSEE ALSO MAINTAINS THE ST OCK RECORDS ON DAY TO DAY BASIS & HAS SUBMITTED THE TAX AUDIT REPORT A LONG WITH THE QUANTITATIVE/QUALITATIVE DETAILS OF RAW MATERIAL & FINISHED GOODS. ALL THE PURCHASE AND SALES ARE DULY RECORDED IN THE STOCK R EGISTER. THE AO HAS ACCEPTED THE SALES. THERE CANNOT BE SALE WITHOUT PU RCHASE. THE AO HAS ALSO ACCEPTED THE STOCK REGISTER/ QUANTITATIVE DETA ILS. WHAT IS DISPUTED IS THE GENUINENESS OF THE PARTIES AND THE VALUE OF PURCHASE IN RESPECT OF 4 PARTIES. IN THESE CIRCUMSTANCES, EVEN IF SOME OF THE PURCHASES AS PER LOWER AUTHORITIES ARE UNVERIFIABLE AND ON THAT ACCOUNT A PERCENTAGE OF THE AMOUNT OF PURCHASE IS DISALLOWED PRESUMABLY THAT THE PURCHASES ARE INFLATED TO SOME EXTENT, THE SAME CANT BE SAID TO BE A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME IN AS MUCH AS IT IS NOT THE CASE OF THE AO THAT THE PURCHASES ARE BOGUS BUT AFTER ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 8 ACCEPTING THAT PURCHASES HAS BEEN MADE, HE ON ESTIM ATE IS PRESUMING THAT PURCHASES ARE INFLATED TO SOME EXTENT WHICH IS QUANTIFIED BY HIM ON ESTIMATE AT 25% BUT REDUCED BY THE HONBLE ITAT AT 15%. THEREFORE, ON SUCH ADDITION WHICH IS MADE ON PRESUMPTION AND E STIMATION AND NOT ON THE BASIS OF ANY MATERIAL ON RECORD THAT THE PURCHASES HAVE BEEN INFLATED CANNOT BE CONSIDER AS CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME. (B) IT IS SUBMITTED THAT AGAINST THE ORDER OF THE AO DI SALLOWING 25% OF THE PURCHASES WHICH IS CONFIRMED BY CIT(A), ASSESSEE FI LED AN APPEAL BEFORE THE HONBLE ITAT. HONBLE ITAT VIDE ITS ORDER DATED 22-10-2014 IN PARA 11.5 HELD THAT IN ITS CONSIDERED VIEW, 15% NET PROF IT ON UNVERIFIABLE PURCHASES IS REASONABLE. FROM THESE FINDINGS IT IS CLEAR THAT THE ADDITION HAS BEEN CONFIRMED BY THE ITAT AT 15% OF THE UNVERI FIABLE PURCHASES AS AGAINST 25% DISALLOWED BY THE AO BY CONSIDERING THE REASONABILITY AND NOT ON ACCOUNT OF ANY MATERIAL ON RECORD THAT ASSES SEE HAS INFLATED THE PURCHASES. (C) IN RESPECT OF ALLEGED UNVERIFIABLE PURCHASES, THE C OMPLETE DETAILS OF 4 PARTIES ALONG WITH THEIR ADDRESS, PAN, SALES TAX RE GISTRATION NO., CONFIRMATION, COPY OF THE PURCHASE BILLS, MODE OF P AYMENT WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. IF THESE PARTIES HAVE NOT APPEARED BEFORE THE AO IN RESPONSE TO SUMMON U/S 131, THE AO HAS OTHER POWER UNDER THE ACT TO ENFORC E ATTENDANCE AND TO IMPOSE PENALTY FOR NON COMPLIANCE. ALL THESE PAR TIES ARE ASSESSED AT JAIPUR AND THEIR PAN WAS PROVIDED. IT IS TO BE NOTE D THAT BCTT WING AND INVESTIGATION DEPARTMENT CONDUCTED SURVEY AT THE PL ACES OF THESE PARTIES AND THEY WERE FOUND THERE. THIS SHOWS THAT THE OBSERVATION OF THE LOWER AUTHORITIES THAT NO CONCERN WAS TRACED AT THE GIVEN ADDRESS IS AN INCORRECT FINDING OF FACT. EVEN IN PENALTY PROCE EDINGS NO MATERIAL IS BROUGHT BY THE AO TO ESTABLISH THE QUANTUM OF INFLA TION IN PURCHASES. THIS PROVES THAT THE DISALLOWANCE IS MADE SIMPLY ON ESTIMATION WHICH IS SCALED DOWN BY THE HONBLE ITAT AGAIN ON ESTIMATION . (D) NO EVIDENCE IS BROUGHT BY THE AO THAT THE PURCHASE RATE/QTY. OF VARIOUS ITEMS PURCHASED FROM ALLEGED UNVERIFIABLE PARTIES O N DIFFERENT DATES WAS LOWER THAN THE RATE AT WHICH IT WAS PURCHASED F ROM OTHER PARTIES WHOSE PURCHASES ARE ACCEPTED TO BE VERIFIABLE PURCH ASES. THEREFORE, THE ADDITION FINALLY CONFIRMED BY HONBLE ITAT AT 1 5% OF THE ALLEGED UNVERIFIABLE PURCHASES IS ON ESTIMATION. ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 9 (E) HONBLE ITAT IN ASSESSEES OWN CASE IN AY 2006-07 I N ITA NO.1263/JP/2010 WHERE TRADING ADDITION OF RS.17,92, 158/- WAS MADE BY DISALLOWING 25% OF THE ALLEGED UNVERIFIABLE PURC HASES OF RS.71,68,631/- UPHOLD THE TRADING ADDITION CONFIRME D BY CIT(A) AT RS.61,839/- BY APPLICATION OF G.P. RATE. HONBLE IT AT HAS ALSO TAKEN A CONSISTENT VIEW IN NUMBER OF CASES WHERE AGAINST DI SALLOWING 25% OF THE ALLEGED UNVERIFIABLE PURCHASES, G.P. RATE CONSI DERING THE PAST HISTORY OF THE CASE HAS BEEN APPLIED. FOR THIS, REF ERENCE CAN BE MADE TO THE FOLLOWING DECISION OF ITAT:- DCIT VS. GEMS PARADISE 700/JP/2009 DATED 18-12-2009 ITO VS. NEERAJ LAKHI ITA NO. 22/JP/2010 DT. 12.01.2 011 ACIT VS. M/S KLF ENTERPRISES PVT. LTD. 421/JP/2010 DT. 10.12.2010 ACIT VS. M/S JAIPUR GEM CRAFTS 804/ JP/2009 DT. 21. 09.2010 ACIT VS. ROYAL INDIA JEWELLERY 424/JP/2010 DT. 24.0 9.2010 (F) FROM THE ABOVE FACTS IT CAN BE NOTED THAT THE E NTIRE ADDITION MADE BY THE AO AND CONFIRMED BY THE ITAT IS ON ESTIMATE BAS IS. NO EVIDENCE WAS FOUND WHICH INDICATES THAT THE ASSESSEE HAS INF LATED THE PURCHASES TO THE EXTENT OF 15%. HENCE, ON SUCH ESTIMATED ADDI TION, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. FOR THIS PURPOSE RELIANCE IS PLACED ON THE FOLLOWING CASES:- M/S CHEMPURE VS. ITO 451 TO 453/MUM/2006 DATED 07.0 5.2010 29 CCH 400 SHRI KAMLESH DANGAYACH VS. ACIT 32 CCH 258 (JAIPUR) (TRIB.) [ITA NO.18 & 19/JP/2012 DT. 16.05.2012] SHIV LAL TAK V. CIT 251 ITR 353 (RAJ.) HARIGOPAL SINGH V. CIT 258 ITR 85 (P&H) 2.7.3 IT MAY BE NOTED THAT AO HAS ISSUED THE PENALT Y NOTICE U/S 271(1)(C ) WITHOUT SPECIFYING WHETHER ASSESSEE IS GUILTY FOR C ONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY ORDER ALSO DOES NOT INDICATE WHETHER THE PENALTY IS LEVIED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. SUCH PENALTY NOTICE ISSUED BY THE AO AND THE CONSEQUENT PENALTY IMPOSED IS INVALID AS HELD BY KARNATAKA HC IN CASE OF CIT VS. M/S MANJ UNATHA COTTON & GINNING FACTORY & ORS. VIDE ITS ORDER DATED 13.12.2 012. THE RELEVANT ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 10 EXTRACT OF THIS DECISION AS CONTAINED IN PARA 61 OF THE ORDER IS REPRODUCED AS UNDER:- THE AO IS EMPOWERED UNDER THE ACT TO INITIATE PENA LTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS TH AT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PART ICULARS OF INCOME IS DIFFERENT. THUS, THE AO WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED A ND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE AO PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE N OTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOU T STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NO N-APPLICATION OF MIND. IN PRESENT CASE ALSO, NEITHER IN THE ASSESSMENT ORD ER NOR IN THE PENALTY NOTICE ISSUED BY AO, AO HAS MADE ANY SPECIFIC CHARG E THAT THE INITIATION IS FOR CONCEALING PARTICULARS OF INCOME OR FOR FURN ISHING INACCURATE PARTICULARS OF INCOME . HE HAS ALSO NOT RECORDED THE SATISFACTION THAT PENALTY PROCEEDINGS ARE INITIATED BOTH FOR CONCEALM ENT AND FILING OF INACCURATE PARTICULARS OF INCOME. EVEN IN THE PENAL TY ORDER, AO HAS NOT STATED AS TO WHETHER THE LEVY OF PENALTY IS FOR CON CEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. ON CE THE AO HAS NOT RECORDED HIS SATISFACTION FOR A SPECIFIC CHARGE WHI LE INITIATING THE PENALTY PROCEEDINGS, HE CANNOT ASSUME A JURISDICTION TO IMP OSE THE PENALTY BY STATING IN THE PENALTY ORDER THAT IT IS FOR CONCEAL MENT OF INCOME. RELIANCE IN THIS CONNECTION IS PLACED ON THE FOLLOW ING CASES:- CIT VS. MANU ENGINEERING WORKS 122 ITR 306 (GUJ.) ( HC) NEW SORATHIA ENGINEERING CO. VS. CIT 282 ITR 642 (G UJ.) (HC) CIT VS. JYOTI LTD. 216 TAXMAN 64 (GUJ.) (HC) (MAGZ. ) CIT VS. VIRGO MARKETING PVT. LTD. 171 TAXMAN 156 (D EL.) (HC) ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 11 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAS RETURNED A FINDING TH AT IN VIEW OF THE QUANTITATIVE DETAILS MAINTAINED BY THE ASSESSEE, IT CANNOT BE SA ID THAT THE PURCHASES DEBITED IN THE BOOKS FROM THE FOUR UNVERIFIABLE CON CERNS HAVE NOT BEEN MADE AT ALL. THE PURCHASES HAVE BEEN MADE BUT FROM SOME OTHER CONCERNS AND THUS, THERE IS NO DISPUTE THAT THE IMPUGNED PURCHASES HAV E BEEN MADE. FURTHER, LD CIT(A) HAS HELD THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE PURCHASES HAVE BEEN INFLAT ED AND DISALLOWANCE OUT OF UNVERIFIABLE PURCHASES HAS BEEN MADE ON ESTIMATED B ASIS, SINCE THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE ACTUAL COST OF THE PU RCHASES AND FOLLOWING THE DECISION OF THE COORDINATE BENCH IN CASE OF M/S CHE MPURE VS ITO (SUPRA) AND HONBLE RAJASTHAN HIGH COURT IN CASE OF SHIV LAL TA K(SUPRA), HE HAS DELETED THE IMPUNGED PENALTY. 3.1 IN THIS REGARD, WE HAVE GONE THROUGH THE ASSESS MENT ORDER AND IN RESPECT OF UNVERIFIABLE PURCHASES, WE FIND THAT THE DETAILS OF FOUR PARTIES NAMELY, M/S ANUPAM EXPORTS & IMPORTS, M/S K.S. EXPO RTS, M/S RISHAB INTERNATIONAL AND M/S ROYAL GEMS & ARTS ALONG WITH THEIR ADDRESS, PAN, SALES TAX REGISTRATION NO., CONFIRMATION, COPY OF THE PUR CHASE BILLS, MODE OF PAYMENT WAS SUBMITTED DURING THE COURSE OF ASSESSME NT PROCEEDINGS. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF THE PURCHASES OF RS 3,28,40,664 SHOW N TO HAVE BEEN MADE FROM THESE FOUR PARTIES. THE ASSESSING OFFICER FUR THER STATED IN HIS ORDER THAT FROM THE ENQUIRIES MADE BY THE INVESTIGATING WING, IT WAS FOUND THAT THE ALLEGED SELLERS WERE NOT CARRYING ON THE GENUINE BU SINESS OF SELLING GOODS AND ALL THESE FACTS SHOWN BY THE ASSESSEE IN THE NAME O F NON-EXISTENT/NON- COOPERATIVE PARTIES ARE NOT GENUINE AND OTHER EVIDE NCE REGARDING PURCHASE INVOICE, SALES TAX REGISTRATION, PAN AND MAKING PAY MENTS BY CHEQUES ETC ARE IRRELEVANT WITH REFERENCE TO NON-EXISTENT/NON-COOPE RATIVE PARTIES. THE ASSESSING OFFICER FURTHER STATED THAT THE ASSESSEE NEITHER PRODUCED THE ABOVE SELLERS PARTIES NOR PRODUCED BOOKS OF ACCOUNTS OF T HESE SELLERS PARTIES AND EVEN THE SUMMONS ISSUED U/S 131 OF THE ACT WERE REC EIVED BACK UNSERVED. HENCE, IN ABSENCE OF VERIFICATION OF PURCHASES, GEN UINENESS OF THE PURCHASES SHOWN TO HAVE BEEN MADE FROM THE ABOVE ALLEGED SELL ERS HAVE NOT BEEN PROVED. THE ASSESSING OFFICER THEREAFTER FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF M/S SANJAY OIL CA KE INDUSTRIES (SUPRA) DISALLOWED 25% OF UNVERIFIABLE PURCHASES AND MADE A TRADING ADDITION OF RS 82,10,166. ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 12 3.2 THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS HAVING CONSIDERED ALL THESE FACTS AND SUBMISSION OF THE ASSESSEE AND ALSO TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE GUJARAT HIGH COURT (SUP RA) HAS REDUCED THE TRADING ADDITION TO 15% OF UNVERIFIABLE PURCHASES HOLDING T HE SAME AS REASONABLE. IN ITS DECISION, THE COORDINATE BENCH HAS HELD THAT THE ONUS IS ON THE ASSESSEE TO PROVE THESE PURCHASES AS GENUINE AND SUFFICIENT PUR CHASES FROM THESE PARTIES HAVE BEEN CLAIMED TO BE MADE BY HIM. THE ASSESSEE ALSO COULD NOT BE ABLE TO LEAD ANY EVIDENCE IN FURTHERANCE OF FILING OF CONFI RMATORY LETTER OR MERELY SHOWING THAT THE PAYMENTS WERE MADE BY ACCOUNT PAY EE CHEQUES. THE ASSESSEE WAS AWARE OF THE WHEREABOUTS OF THE PARTIE S AND HE SHOULD HAVE PRODUCED THESE PARTIES BEFORE THE ASSESSING OFFICER FOR VERIFICATION OF PURCHASES, WHICH COULD NOT BE DONE AT THE STAGE OF ASSESSMENT PROCEEDINGS. ...EVEN THE ASSESSEE MAY BE 100% EXPORTER WHICH DOE S NOT PRECLUDE THE ASSESSING OFFICER FROM ENQUIRING INTO THE GENUINENE SS OF THE PURCHASES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT 15% N P ON UNVERIFIABLE PURCHASES IS REASONABLE IN THIS CASE. 3.3 IN CASE OF M/S SANJAY OIL CAKE INDUSTRIES (SUPR A) WHICH HAS BEEN FOLLOWED BY THE ASSESSING OFFICER AS WELL AS CONSIDERED BY T HE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS, THE FACTS OF THE CASE WERE THA T THE SELLERS WHO HAD ISSUED BILLS WERE NOT TRACEABLE. THE GOODS WERE RE CEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED BILLS FOR SUC H GOODS. THE CHEQUES HAVE BEEN DEPOSITED IN THE NAME OF THE APPARENT SELLERS AND THEREAFTER, THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY THE BEARER CHEQUES A ND THERE WAS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FR OM THE BANK ACCOUNTS. IN THOSE FACTS, THE HONBLE HIGH COURT HELD THAT THE L IKELIHOOD OF PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERIAL TO DISLODGE SUCH FINDING. FURTHER, IN ABSENCE OF ALLEGED SUPPLIERS FOR VERIFICATION, THE HONBLE HIGH COURT HAS CONFIRMED DISALLOWANCE OF 25% OF UNV ERIFIABLE PURCHASES. 3.4 IN THE INSTANT CASE, WE THEREFORE DONT SEE ANY PERVERSITY IN THE FINDINGS OF THE LD CIT(A) THAT IN VIEW OF THE QUANTITATIVE D ETAILS MAINTAINED BY THE ASSESSEE, IT CANNOT BE SAID THAT THE PURCHASES DEBI TED IN THE BOOKS FROM THE FOUR UNVERIFIABLE CONCERNS HAVE NOT BEEN MADE AT AL L. THE PURCHASES HAVE BEEN MADE BUT FROM SOME OTHER CONCERNS. FURTHER, T HE FACT THAT ONLY 25% OF THE PURCHASES HAVE BEEN DISALLOWED BY THE AO WHICH HAS SUBSEQUENTLY BEEN REDUCED TO 15% BY THE COORDINATE BENCH, APPARENTLY, THE AO AS WELL AS THE COORDINATE BENCH SEEMS TO BE GUIDED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CASE OF M/S SANJAY OIL CAKE INDUSTRIE S (SUPRA) WHERE IT WAS HELD ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 13 THAT IT IS ON THE LIKELIHOOD OF PURCHASE PRICE BEIN G INFLATED THAT THE ADDITION HAS BEEN MADE. 3.5 WITH THE ABOVE FACTUAL MATRIX AND THE FACT THAT NOTHING FURTHER HAS BEEN BROUGHT ON RECORD BY EITHER PARTIES IN THE CONTEXT OF PENALTY PROCEEDINGS, THE QUESTION THAT ARISE FOR CONSIDERATION IS WHERE THE PURCHASES ARE MADE BUT REMAIN UNVERIFIABLE AND ON THAT ACCOUNT A PERCENTAG E OF THE AMOUNT OF PURCHASE IS DISALLOWED ON THE LIKELIHOOD THAT THE P URCHASES ARE INFLATED TO SOME EXTENT, WHETHER IT CAN BE SAID THAT IT IS A CA SE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3.6 IN THIS REGARD, IT IS THE CONTENTION OF THE LD AR THAT IT IS NOT THE CASE OF THE AO THAT THE PURCHASES ARE BOGUS BUT AFTER ACCEP TING THAT PURCHASES HAS BEEN MADE, HE ON ESTIMATE IS PRESUMING THAT PURCHAS ES ARE INFLATED TO SOME EXTENT WHICH IS QUANTIFIED BY HIM ON ESTIMATE AT 25 % BUT REDUCED BY THE HONBLE ITAT AT 15%. THEREFORE, ON SUCH ADDITION WH ICH IS MADE ON PRESUMPTION AND ESTIMATION AND NOT ON THE BASIS OF ANY MATERIAL ON RECORD THAT THE PURCHASES HAVE BEEN INFLATED CANNOT BE CON SIDER AS CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCO ME. 3.7 IN THIS REGARD, WE REFER TO THE DECISION OF THE COORDINATE BENCH IN CASE OF M/S CHEMPURE VS. ITO (SUPRA) WHERE THE FACTS OF THE CASE BRIEFLY WERE THAT THE AO MADE ADDITION OF RS. 15,99,255/- BY TREATING THE ENTIRE PURCHASES FROM 4 PARTIES AS BOGUS/UNVERIFIABLE. IN APPEAL THE CIT( A) REDUCED THE ADDITION TO 20% OF PURCHASE & FINALLY ITAT REDUCED IT TO 12.5% OF PURCHASES. ON THE ADDITION CONFIRMED AO IMPOSED PENALTY U/S 271(1)(C) WHICH WAS CONFIRMED BY CIT(A). ON APPEAL THE HONBLE ITAT DELETED THE PENA LTY BY GIVING FOLLOWING FINDINGS AT PARA 11 & PARA 14:- 11. ....BUT IN THE CASE UNDER CONSIDERATION, THERE WAS NO DISPUTE THAT PURCHASES WERE MADE, THOUGH THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM TO THE EXTENT THAT THE PURCHASES WERE MADE FROM THAT P ARTICULAR PARTY. THEREFORE, IN THE CASE UNDER CONSIDERATION THE WORD 'PARTICULA RS' USED IN THE S. 271(1)(C) WOULD EMBRACE THE MEANING OF THE PURCHASES MADE AND NOT THE PARTY FROM WHOM IT WAS MADE. AS STATED ABOVE THAT WORDS 'CONCE ALED', 'PARTICULARS' AND 'INACCURATE' ARE WITH REGARD TO INCOME NOT WITH REG ARD TO ANY OTHERS. FROM WHICH PARTY THE PURCHASES WERE MADE IS NOT MUCH IMP ORTANT WHILE COMPUTING THE INCOME. THE IMPORTANT ASPECT IN COMPUTING INCOME IS PURCHA SES. IN THE CASE UNDER CONSIDERATION, THE PURCHASES WERE RECORD ED REGULARLY IN THE BOOKS OF ACCOUNT ON DAY TO DAY BASIS. THE TRIBUNAL WHILE DECIDING THE QUANTUM ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 14 MATTER OBSERVED THAT THE ASSESSEE MUST HAVE MADE PU RCHASES FROM THE MARKET FROM UNREGISTERED DEALERS IN CASH AND DETAILS COULD NOT BE OBTAINED FROM SUCH DEALERS. THE ASSESSEE, THEREFORE, OBTAINED HAWALA B ILLS FROM MR. F.H. RIZWI, THE TRIBUNAL FURTHER OBSERVED THAT THE CIT(A) WAS OF TH E VIEW THAT IN THESE CIRCUMSTANCES, THE ASSESSEE MUST HAVE INFLATED THE PURCHASE BILLS AND ON THAT ACCOUNT THE DISALLOWANCE TO THE EXTENT OF 25 PER CE NT WAS FOUND TO BE REASONABLE. THE CASE OF THE AO IN QUANTUM MATTER WA S THAT THE ENTIRE PURCHASES WERE DISALLOWABLE WHEREAS THE APPELLATE A UTHORITIES FOUND THAT THE ASSESSEE MUST HAVE MADE THE PURCHASES BUT THE SAME MAY NOT BE FROM MR. F.H. RIZWI. ACTUAL PURCHASES MADE BY THE ASSESSEE W ERE NOT DOUBTED BY THE APPELLATE AUTHORITIES WHILE DECIDING THE QUANTUM MA TTER. HOWEVER, CONSIDERING THE CIRCUMSTANCES, THEY CONFIRMED THE ADDITION TO T HE EXTENT OF 25 PER CENT OF RELEVANT PURCHASE ON THE BASIS OF THE FACTS, FIGURE S AND PARTICULARS PROVIDED BY THE ASSESSEE. THUS, THE MAIN BASIS ON WHICH THE AO LEVIED PENALTY WAS NOT SUSTAINED BY THE APPELLATE AUTHORITIES.(EMPHASIS SU PPLIED) 14. IF WE CONSIDER THE FACTS OF THE CASE UNDER CONSIDE RATION FROM THE POINT OF VIEW OF A BUSINESSMAN FOR THAT PURPOSES WE WOULD LI KE TO REFER A GENERAL HUMAN PROBABILITY/TENDENCY IN BUSINESS CIRCLE. THAT WHEN TRANSACTIONS WITH A PARTICULAR PARTY ARE OVER THAT PARTY MAY NOT READY TO CO-OPERATE IN GIVING INFORMATION WHICH WERE EXACTLY ASKED BY THE AO TO T HE ASSESSEE WHICH WERE TO COLLECT FROM THE PARTY BY THE ASSESSEE. AS STATED A BOVE THAT UNDER THESE CIRCUMSTANCES, THE REVENUE AUTHORITIES HAVE AMPLE S UCH POWERS UNDER THE ACT AND IF THEY ARE NOT EXERCISING SUCH POWERS, THE ASS ESSEE CANNOT BE BLAMED FOR CONCEALING PARTICULARS AND/OR FURNISHING INACCURATE PARTICULARS OF INCOME. FURTHER, THE BUSINESS IS MANAGED THROUGH EMPLOYEES/ STAFF IN THAT CIRCUMSTANCES, THE ASSESSEE MAY MORE INTERESTED IN COST THEN PARTIES TO WHOM IT WAS PURCHASED. IN RESPECT OF QUANTUM MATTER IF T HE ASSESSEE FAILED TO SUBMIT SUCH MATERIAL INFORMATION TO SUBSTANTIATE THEIR CLA IM ADDITION COULD BE SUSTAINED BUT THIS ASPECT OF HUMAN PROBABILITY TEND ENCY OF NON-CO-OPERATION BY THE PARTIES AFTER BUSINESS TRANSACTION IS OVER, IS REQUIRED TO BE CONSIDERED WHILE DECIDING BONA FIDE ASPECT OF THE ASSESSEE IN PENALT Y MATTER UNDER S. 271(1)(C) OF THE ACT. THE CASE OF THE ASSESSEE FALLS UNDER TH E ESSENCE OF PART B OF THE EXPLANATION. THE ASSESSEE OFFERED REASONABLE EXPLAN ATION. THE AO HAS NOT GIVEN FINDING BASED ON SOME CONTRADICTORY EVIDENCE TO DISAPPROVE THAT EXPLANATION OFFERED BY THE ASSESSEE WHICH THE ASSES SEE IS NOT ABLE, TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. PENALTY UNDER S. 271(1)(C) CANNOT BE LEVIED UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO NS OF S. 271(1)(C). ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 15 3.8 THE FACTS OF THE PRESENT CASE ARE PARI-MATERIA WITH THE ABOVE REFERRED DECISION OF THE COORDINATE BENCH AND THE DECISION T AKEN BY THE CO-ORDINATE BENCH SUPPORTS THE CASE OF THE ASSESSEE. FURTHER, NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE. WE THEREFORE SEE NO IN FIRMITY IN THE ORDER OF THE LD CIT(A) WHERE HE HAS RELIED UPON THE SAID DECISIO N AND THE DELETED THE IMPUNGED PENALTY. 3.9 FURTHER, REGARDING BASIS OF 15% OF THE UNVERIFI ABLE PURCHASES AS CONFIRMED BY THE COORDINATE BENCH, WE FIND THAT NEC ESSARY GUIDANCE HAS BEEN SOUGHT FROM THE DECISION OF SANJAY OIL CAKE (SUPRA) AND CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE ALONG WITH OTHER CASES, T HE COORDINATE BENCH HAS CONFIRMED ADDITION OF 15% OF UNVERIFIABLE PURCHASES FOLLOWING THE TEST OF REASONABILITY. HOWEVER, WE FIND THAT THERE IS NO E VIDENCE ON RECORD TO SUGGEST THAT THE PURCHASE RATE/QTY. OF VARIOUS ITEMS PURCHA SED FROM ALLEGED UNVERIFIABLE PARTIES ON DIFFERENT DATES WAS LOWER T HAN THE RATE AT WHICH IT WAS PURCHASED FROM OTHER PARTIES WHOSE PURCHASES ARE AC CEPTED TO BE VERIFIABLE PURCHASES. THEREFORE, WE AGREE WITH THE CONTENTION OF THE LD AR THAT THE ADDITION FINALLY CONFIRMED BY HONBLE ITAT AT 15% O F THE ALLEGED UNVERIFIABLE PURCHASES IS ON ESTIMATION BASIS AND NOT ON ACCOUNT OF ANY MATERIAL ON RECORD THAT ASSESSEE HAS INFLATED THE PURCHASES. WHERE THE ADDITION HAS BEEN MADE ON AN ESTIMATION BASIS, THE DECISION OF HONBLE RAJ ASTHAN HIGH COURT IN CASE OF SHIV LAL TAK (SUPRA) AND HONBLE PUNJAB &HARYANA HI GH COURT IN CASE OF HARIGOPAL SINGH (SUPRA) SUPPORTS THE CASE OF THE AS SESSEE THAT PENALTY CANNOT BE LEVIED IN SUCH CASES. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD DR. THEREFORE, RESPECTFULLY FOLLOWING TH ESE DECISIONS, THE IMPUNGED PENALTY LEVIED ON ADDITION ON ESTIMATION BASIS HAS RIGHTLY BEEN DELETED BY THE LD CIT(A). 3.10 IN LIGHT OF ABOVE DISCUSSION, WE DO NOT SEE AN Y PERVERSITY IN THE ORDER OF THE LD CIT(A) WHO HAS RIGHTLY DELETED THE PENALTY T AKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/1 0/2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 427/JP/15 ITO, WARD 6(2), JAIPUR VS. M/S G.B. IMPEX, JAIPUR 16 JAIPUR DATED:- 25/ 10/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD 6(2), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S G.B. IMPEX, JAIPUR 3. VK;DJ VK;QDR@ CIT II, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-II, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.427 /JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.