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

ITA 429/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5316 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Bogus purchase; Assessment record
• Section: 54; 154

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 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. 429/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 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/GIR NO. AAGFG 3052 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : MRS. NEENA JEPH (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/03/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 13/05/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 06/02/2015 PASSED BY THE LEARNED C.I.T.(A)-2, JAIPUR FOR A.Y. 2010-11. THE EFFECTIVE GROUND OF THE APPEAL IS AS UNDER:- GROUND IN A.Y. 2010-11 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DIRECTING TO R ESTRICT TRADING ADDITION TO RS. 7,85,442/- I.E. 15% OF BOGU S PURCHASES AS AGAINST TRADING ADDITION OF RS. 57,28, 311/- 2 ITA NO. 429/JP/2015 ITO VS M/S G.B. IMPEX MADE BY THE ASSESSING OFFICER BY APPLYING GP RATE O F 8.32% OF TOTAL SALES. 2. THE REVENUES GROUND OF APPEAL IS AGASINT RESTRIC TING THE TRADING ADDITION TO RS. 7,85,442/- ON BOGUS PURCHASES AS AG AINST THE TRADING ADDITION OF RS. 57,28,311/- ON THE BASIS OF GP RATE APPLIED BY THE LD ASSESSING OFFICER @ 8.32% ON TOTAL SALE. THE LD ASSES SING OFFICER OBSERVED THAT THE ASSESSMENT FOR THE A.Y. WAS COMPLETED U/S 1 43(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON TOTAL INCOME OF RS. 14,06,070 VIDE ORDER DATED 25/3/2013. WHILE FRAMING THE ASSESSMENT, TRAD ING ADDITION OF RS. 13,50,711/- WAS MADE BY TAKING THE AVERAGE GROSS PRO FIT RATE FOR THE LAST FIVE YEARS AT 6.06%. WHILE DISCUSSING THE DEMAND MA TTER, ON PERUSAL OF THE ASSESSMENT RECORDS, FOR A.Y. 2007-08, 2008-09, 2009 -10 AND 2010-11, IT CAME TO LIGHT THAT THE AVERAGE GROSS PROFIT WAS NOT CALCULATED CORRECTLY INASMUCH AS THE TRADING ADDITIONS MADE FOR A.Y. 200 7-08, 2008-09 AND 2009-10 WERE NOT TAKEN INTO CONSIDERATION WHILE ADOP TING THE AVERAGE OF GP RATE. THEREFORE, THE ASSESSING OFFICER GAVE SHOW C AUSE NOTICE U/S 154 OF THE ACT. IT WAS CONTENDED BY THE ASSESSEE BEFORE HIM THAT THE APPEALS HAD BEEN FILED BY THE ASSESSEE AGAINST THE ADDITION MADE IN PRECEDING YEAR ARE PENDING AND THEREFORE, THE ISSUE HAS NOT REACHE D ITS FINALITY AND GP WORKED OUT IS CORRECT. IT IS ALSO STATED THAT THIS B EING A CALCULATION MISTAKE, 3 ITA NO. 429/JP/2015 ITO VS M/S G.B. IMPEX PROVISIONS OF SECTION 154 ARE APPLICABLE TO THE FAC TS OF THE CASE. ACCORDINGLY, HE CALCULATED GP RATE @ 8.32% AS AGAINS T 6.06% WORKED OUT WHILE FRAMING THE ASSESSMENT. THIS CALCULATION MISTAK E IS HEREBY RECTIFIED U/S 154 OF THE ACT AND ADDITION ON ACCOUNT OF GP WAS MADE AT RS. 57,28,311/- AS AGAINST RS. 13,50,711/- WAS MADE IN SCRUTINY ASSESSMENT. 3 BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFF ICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALLO WED THE APPEAL BY OBSERVING THAT THE LD ASSESSING OFFICER DISALLOWED 2 5% ON UNVERIFIABLE PURCHASES, WHICH WAS WORKED OUT TO RS. 13,09,070/- BY RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF M/S SANJAY OILCAKE INDUSTRIES VS CIT (2008) 10 DTR (GUJ) 153 AND THE ORD ER OF THE LD CIT(A) IN THE CASE OF ASSESSEE FOR A.Y. 2008-09. THE LD ASS ESSING OFFICER HAS ALSO APPLIED AVERAGE GP RATE OF LAST 5 YEARS, WHICH WAS WOR KED OUT AT 6.06%, ON THE BASIS OF THE BOOK RESULTS. APPLYING THIS GP RATE HAS RESULTED IN A TRADING ADDITION OF RS. 13,50,711/-. SINCE THE TRAD ING ADDITION ON THE BASIS OF THE GP RATE OF THE LAST FIVE YEARS WAS MORE THAN THE DISALLOWANCE OF 25% OUT OF UNVERIFIABLE PURCHASES. THEREFORE, THE LD ASS ESSING OFFICER MADE ADDITION OF RS. 13,50,711/-.. THE LD ASSESSING OFFIC ER U/S 154 HAS WORKED OUT GP RATE ON THE BASIS OF ADDITION CONFIRMED BY T HE LD CIT(A) @ 8.32% AS 4 ITA NO. 429/JP/2015 ITO VS M/S G.B. IMPEX AGAINST 6.06% WORKED OUT, IN THE ORDER U/S 143(3). TH E HONBLE ITAT, JAIPUR BENCH, JAIPUR IN ITA NO. 241/JP/2012 ORDER D ATED 22/10/2014 IN THE CASE OF ASSESSEE FOR A.Y. 2008-09, DISALLOWED 15% OF THE UNVERIFIABLE PURCHASES OF RS. 52,36,281/-, WHICH RESULTED AN ADD ITION OF RS. 7,85,442/-. CONSEQUENTLY, THE TRADING MADE ON THE BASIS OF AVER AGE GP RATE OF LAST FIVE YEARS WAS NOT SUSTAINED. SINCE THE TRADING ADDITION ON DISALLOWANCE OF 15% OF UNVERIFIABLE PURCHASES HAD BEEN SUSTAINED AND TR ADING ADDITION ON ACCOUNT OF AVERAGE GP RATE OF THE LAST FIVE YEARS H AD NOT BEEN SUSTAINED. ACCORDINGLY, HE DELETED THE ADDITION MADE U/S 54 OF THE ACT. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REI TERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND ARGUED THAT THE HONBL E ITAT, JAIPUR BENCH, JAIPUR HAD DECIDED 15% OF NP RATE ON UNVERIFIABLE P URCHASES, NOT AVERAGE GP APPLIED BY THE ASSESSING OFFICER. THEREFORE, HE P RAYED TO UPHOLD THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE COORDINATE BENCH HAS DECIDED THIS ISSUE IN THE CASE OF ASSESSEE BY APPLYING NP RATE @ 15% ON UNVERIFIABLE 5 ITA NO. 429/JP/2015 ITO VS M/S G.B. IMPEX PURCHASES AND HAD NOT FOUND APPLICABLE AVERAGE GP R ATE APPLIED BY THE LD ASSESSING OFFICER. THUS, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF THE LD CIT(A). ACCORDINGLY, WE CONFIRM THE ORDER O F THE LD CIT(A). 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 13/05/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13 TH MAY, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ 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 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. 429/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR