ARPAN PRABHACHAND, Ajmer V. ITO, BEAWAR

ITA 427/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1990 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 26-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Assessee Lawyers: PRAKUL KHURANA
• Keywords: Additional evidence
• Section: 133(6); 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 FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 427/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 SHRI ARPAN PRBHACHAND BARJATYA SAJJAN VILLA, GURJAR MOHALLA, STHANA BAZAR, BIJAINAGAR- 305627. CUKE VS. THE ITO, WARD-1 BEAWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AKKPB 2567 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI PRAKUL KHURANA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 07/03/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 13/03/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 15.03.2017 OF CIT(A), AJMER FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- GROUND NO. 1: OPPORTUNITY OF HEARING NOT GRANTED TO THE ASSESSEE: THE LEARNED CIT(A), NOT CONSIDERED THE FACTS THAT T HE LEARNED ITO WARD-1, BEAWAR ISSUED SHOW CAUSE FOR ADDITION ON 13.12.2016, BUT ASSESSMENT WAS ALREADY COMPLETED ON 06.12.2016 (BEFORE ISSUANCE OF THE SHO W ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 2 CAUSE), WHICH IS AGAINST THE PRINCIPLE OF NATURAL J USTICE- SUCH ADDITION IS UNWARRANTED, UNJUSTIFIED & BAD IN LAW IN THE EYES OF LAW. GROUND NO. 2: DISALLOWANCE OF LOSS FOR RS. 54,43,91 3/-: THE LEARNED CIT(A), NOT JUSTIFIED IN STATING THAT T HE CLAIM OF LOSS ON THE BASIS OF UNVERIFIABLE PURCHASES IS H ELD TO BE BOGUS. THE LEARNED CIT(A), NOT CONSIDERED THE FACT THAT AS SESSEE DOES NOT HAVE CONTROL ON THE SUPPLIERS OF THE GOODS AFTER 3-4 YEARS OF TRANSACTION, PAYMENT BY BANKING CHANNE L, NEXUS OF PURCHASE AND SALES, DEFINITION OF PROFIT I NCLUDED THE LOSS. THE LEARNED CIT(A), DOES NOT HAVE ANY BASE FOR DISALLOWANCE OF LOSS. GROUND NO. 3: ADHOC 15% DISALLOWANCE IN PURCHASES F OR RS. 61,45,937/-: THE LEARNED CIT(A), NOT JUSTIFIED IN CONFIRMING THE ADHOC ADDITION @ 15% OF TOTAL PURCHASES ON ESTIMATION BAS IS AND WITHOUT REJECTING BOOKS OF ACCOUNT U/S 145. GROUND NO. 4: WE RESERVE OUR RIGHTS TO ADD, AMEND & ALTER ANYTHIN G AS STATED HERE IN ABOVE OR MAY BE STATED HERE IN AFTER . 2. THE ASSESSEE IS AN INDIVIDUAL AND WAS ENGAGED IN THE TRADING OF DIAMOND AND FILED HIS RETURN OF INCOME ON 01.10.201 4 DECLARING TOTAL INCOME OF RS. 3,29,540/-. THE AO NOTED DURING THE Y EAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN INCOME FROM BU SINESS OF TRADING OF DIAMOND, SHORT TERM CAPITAL GAIN ON SALE OF FLAT S AND INTEREST INCOME. AS PER COMPUTATION OF TOTAL INCOME THE ASSESSEE HAS SHOWN NET LOSS OF RS. 54,47,417/- FROM DIAMOND BUSINESS WHICH HAS BEE N SET OFF AS ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 3 AGAINST THE SHORT TERM CAPITAL GAIN OF RS. 58,51,10 8/-. THE AO FURTHER NOTED THAT THE ASSESSEE HAD SHOWN ONLY 5 TRANSACTIO NS OF PURCHASES AND 7 TRANSACTIONS OF SALE OF POLISHED DIAMONDS DUR ING THE YEAR UNDER CONSIDERATION. THE PURCHASES OF POLISHED DIAMONDS W ERE SHOWN ONLY FROM TWO PARTIES AND SALE OF DIAMONDS WERE MADE TO TWO PARTIES ONLY. THE ASSESSEE HAS ANY SHOWN DIAMOND BUSINESS NEITHER IN PRECEDING YEARS NOR IN SUBSEQUENT YEARS. THEREFORE, THE AO OB SERVED THAT THE PURCHASE AND SALE TRANSACTIONS OF THE ASSESSEE SEEM TO BE DUBIOUS. THE AO ISSUE SUMMONS U/S 131 OF THE INCOME TAX ACT TO THE ASSESSEE AND RECORDED THE STATEMENT WHICH HAS BEEN REPRODUCE D IN THE ASSESSMENT ORDER. AFTER CONDUCTING THE INVESTIGATI ON THROUGH ADIT, SURAT THE AO HELD THAT THE PURCHASE AND SALE TRANSA CTIONS OF DIAMONDS DURING THE YEAR UNDER CONSIDERATION ARE BOGUS AND A CCORDINGLY, THE AO MADE AN ADDITION EQUIVALENT TO 15% OF THE PURCHASES AMOUNTING RS. 61,45,937/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY T HE AO FOR WANT OF ANY VERIFIABLE EVIDENCE. 3. BEFORE THE TRIBUNAL, THE ASSESSEE FILED AN APPLI CATION FOR ADMITTING THE ADDITIONAL EVIDENCE UNDER RULE 29 OF THE INCOME TAX RULES, 1963. THE LD. AR OF THE ASSESSEE HAS SUBMITT ED THAT THE AO AND ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 4 LD. CIT(A) HAS CONCLUDED THAT THE PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE AND THEREFORE, THE TRANSACTIONS OF PURC HASE AND SALE OF DIAMOND IS NOT REAL BUSINESS ACTIVITY BUT THESE ARE BOGUS TRANSACTIONS SHOWN BY THE ASSESSEE TO THE BOOK LOSS AND SSET OFF AGAINST THE SHORT TERM CAPITAL GAIN ARISING FROM SALE OF FLATS. HE H AS POINTED OUT THAT THE AO HAS ADOPTED THE INVESTIGATION THROUGH ADIT, SURA T AND AS PER THE REPORT THE PARTIES FROM WHICH THE ASSESSEE HAS PURC HASED THE DIAMONDS WERE NOT FOUND AT THE GIVEN ADDRESS. ACCORDINGLY, T HE AO CONCLUDED THAT THE PURCHASES MADE BY THE AO ARE NOT VERIFIABL E. THUS, THE LD. AR HAS SUBMITTED THAT THE ASSESSEE HAS NOW FILED THE ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAIM OF PURCHASE OF DIAMONDS WHI CH COMPRISES THE COPY OF PAN CARD OF THE PARTIES/SUPPLIERS AND ACKNO WLEDGEMENT OF INCOME TAX RETURN FOR THE A.Y. 2014-15 THE PROVE OF CHANGE THE ADDRESS THESE PARTIES, CONFIRMATIONS FROM THESE PARTIES REG ARDING THE TRANSACTION OF PURCHASE MADE BY THE ASSESSEE AS WEL L AS BANK ACCOUNTS STATEMENT OF THESE PARTIES SHOWING THE ENTRIES OF PAYMENT MADE BY THE ASSESSEE. THUS, THE LD. AR HAS SUBMITTED THAT T HE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE ARE REL EVANT FOR ADJUDICATION OF THE ISSUE OF GENUINENESS OF THE TRA NSACTIONS. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE VARIOUS DE CISIONS AS UNDER:- ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 5 RAM LAL SHARMA VS. ITO 87 TAXMANN.COM248. SMT. BINA MALPANI VS. ITO 82 TAXMANN.COM 231. CIT VS. KU. PA. KRISHNAN 345 ITR 38 CIT VS. TEXT HUNDRED INDIA (P.) LTD. 197 TAXMAN 128 . CIT VS. GANI BHAI WAHAB BHAI 97 TAXMAN 310. 4. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS NEVER DONE ANY BUSINESS OF TRADING OF DIAMONDS AND WAS DOING SOME JOB OF ACCOUNTANCY. NEITHER IN EARLIER YEARS NOR IN THE SUBSEQUENTLY YEARS THE ASSESSEE HAS CARRIED OUT ANY TRADING OF D IAMONDS THEREFORE, THE TRANSACTIONS DURING THE YEAR ARE NOT GENUINE AS THE ONLY PURPOSE TO SHOW THE TRADING IN DIAMONDS IS TO SETTING OF THE B OGUS LOSS AGAINST THE SHORT TERM CAPITAL GAIN ARISING FROM SALE OF FLAT. THUS, THE LD. DR HAS SUBMITTED THAT IT IS ADMITTED CASE THAT THE ASSESSE E HAS NEVER DONE ANY BUSINESS ACTIVITY EXCEPT DURING THE YEAR UNDER CONS IDERATION THAT TOO ONLY 5 TRANSACTIONS OF PURCHASES AND 7 TRANSACTIONS OF SALE OF POLISHED DIAMONDS. THERE IS NO OPENING STOCK OR CLOSING STOC K SHOWN BY THE ASSESSEE WHICH CLEARLY SHOWS THAT THESE TRADING TRA NSACTIONS CLAIMED BY THE ASSESSEE ARE BOGUS IN NATURE TO CLAIM BUSINESS LOSS TO BE SET OFF AGAINST THE SHORT TERM CAPITAL GAIN AND TO AVOID TH E TAX ON THE INCOME. THE LD. DR HAS REFERRED TO THE STATEMENT OF THE ASS ESSEE RECORDED BY THE AO U/S 131 OF THE ACT AS REPRODUCED IN THE ASSE SSMENT ORDER AND ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 6 SUBMITTED THAT THE ASSESSEE HAS ADMITTED THAT THE A SSESSEE WAS MADE DOING DAIRY FARM OCCUPATION AND THEREAFTER, HE WAS DOING ACCOUNTING JOB IN VIJAI NAGAR. THUS, THE FACTS AND CIRCUMSTANC ES OF THE CASE CLEARLY REVEAL THAT THE TRANSACTIONS IN QUESTION ARE NOT GE NUINE AND THE SOLE PURPOSES SHOWING THESE TRANSACTIONS IS TO CLAIM THE BUSINESS LOSS BE SET OFF AGAINST SHORT TERM CAPITAL GAIN. FURTHER, THE L D. DR HAS SUBMITTED THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE FURNISHED BY THE ASSESSEE WAS NEVER FURNISHED BEFORE THE AUTHORITIES BELOW DESPIT E SUFFICIENT OPPORTUNITIES GIVEN TO THE ASSESSEE. EVEN THE ASSES SEE HAS NOT EXPLAINED THE REASONS WHICH HAVE PREVENTED THE ASSE SSEE FROM FILING THE EVIDENCE WHICH IS PROPOSED TO BE FILED AT THIS STAGE. SHE HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY THE TRADING IN DIA MOND HAS BEEN CLAIMED BY THE ASSESSEE ONLY DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE HAS MADE 5 PURC HASES AND 7 SALES TRANSACTIONS ONLY WITH TWO PARTIES EACH FOR PURCHAS ES AND SALES. TO VERIFY THE GENUINENESS OF THE TRANSACTIONS AND PART ICULARLY IN VIEW OF THE FACTS THAT THE ASSESSEE HAS CLAIMED LOSS OF RS. 54, 43,913/- TO BE SET OFF AGAINST THE SHORT TERM CAPITAL GAIN THE AO CONDUCTE D THE ENQUIRY AND ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 7 INVESTIGATION THROUGH ADIT, SURAT AS THESE TWO PART IES NAMELY M/S MAKODA EXIM PVT. LTD. AND M/S PULKIT IMPEX PVT. LTD . WERE STATED FROM SURAT. EVEN THE NOTICES ISSUED U/S 133(6) WERE RECE IVED BACK WITH THE POSTAL REMARKS THE PARTIES WERE NOT AVAILABLE AT TH E GIVEN ADDRESS. THE AO ISSUED COMMISSION U/S 131(B) OF THE I.T. ACT TO THE ADIT INVESTIGATION, SURAT TO VERIFICATION THE GENUINENES S OF THE TRANSACTIONS OF PURCHASE AND SALE OF DIAMONDS. IN ITS REPORT THE ADIT HAS STATED THAT NONE OF THE PARTIES FROM WHOM THE ASSESSEE HAS CLAI MED TO HAVE PURCHASED THE DIAMONDS WERE AVAILABLE AT THE ADDRES SES GIVEN BY THE ASSESSEE. THEREFORE, THE AO HAS GIVEN ITS FINDING O N THE BASIS OF THE REPORT OF THE ADIT THAT THESE PARTIES ARE NOT FOUND AT THE GIVEN ADDRESS AND THEREFORE, THERE WAS NONE EXISTENCE OF THE PART IES. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO WHEN THE ASSESSE E HAS FAILED TO FILE ANY EVIDENCE TO CONTROVERT THE FACTS AS REVEALS IN THE INVESTIGATION CARRIED OUT BY THE AO. 6. NOW THE ASSESSEE HAS FILED THE ADDITIONAL EVIDEN CE IN SUPPORT OF THE CLAIM THAT THESE PARTIES HAVE SHIFTED THEIR ADD RESSES AND THEREFORE, THEY WERE NOT FOUND AT THE GIVEN ADDRESS. THE ASSES SEE HAS ALSO SOUGHT TO PRODUCE PAN AND RETURN OF INCOME FILED BY THESE TWO PARTIES TO SHOW THE IDENTITY AND EXISTENCE OF THESE PARTIES. THE AS SESSEE HAS ALSO ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 8 SOUGHT TO PRODUCE THE BANK STATEMENT OF THESE PARTI ES SHOWING THE ENTRIES OF THE PAYMENTS MADE BY THE ASSESSEE. THUS, THE ADDITIONAL EVIDENCE SOUGHT TO BE PRODUCED BY THE ASSESSEE ARE VERY MUCH RELEVANT FOR ADJUDICATION OF THE ISSUE AND MOST OF THESE EVIDENCES ARE INDEPENDENT AND NOT CREATED BY THE ASSESSEE OR THE OTHER PARTIES EXCEPT THE CONFIRMATION AND LETTER OF CHANGE OF ADD RESS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES TO BE RECONSIDERED AND ADJUDICATED AFTER CARRYING OUT PROPER VERIFICAT ION IN RESPECT OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. ACCORDIN GLY IN THE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE WE ADM IT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE SUBJECT TO COST OF R S. 10,000/-. THE MATTER IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR RE- ADJUDICATION CONSIDERATION THE ADDITIONAL EVIDENCE AND FURTHER INVESTIGATION AND ENQUIRY IF REQUIRED PARTICULARLY FOR VERIFICATION OF THE TRANSACTIONS FROM THE BOOKS OF ACCOUNTS OF THE SUPP LIERS. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13/03/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER ITA NO. 427/JP/2017 SHRI ARPAN PRABHACHAND BARJATYA VS. ITO 9 TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/03/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ARPAN PRBHACHAND BARJATAYA, BIJAINAGAR. 2. IZR;FKHZ@ THE RESPONDENT - ITO, WARD-1, BEAWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 427/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR