ITO, Jaipur V. SMT. MEENA TIWARI, P/O M/S SMGL, Jaipur

ITA 430/JPR/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0470 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR
• Keywords: Bogus purchase; Rejection of books of accounts; Corroborative evidences
• 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 BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 430/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 I.T.O. WARD 1(2), JAIPUR. CUKE VS. MEENA TIWARI, P/O- M/S SMGL CORPORATION, 830, SBBJ STREET, CHAURA RASTA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ADLPT 3018 M VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR (ADV) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 07/04/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 23/04/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 16/02/2012 PASSED BY THE LEARNED CIT (A)-I, JAIPUR FOR A.Y. 2008-09 THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A)-1, JAIPUR IS JUSTIFIED IN : - ITA 430/JP/2012_ ITO VS. MEENA TIWARI 2 1. REDUCING THE TRADING ADDITION OF RS. 21,578/- AG AINST RS. 9,97,571/- MADE BY THE A.O. WITHOUT APPRECIATING THE FACT THAT THE A.O. HAS FOUND CERTA IN DISCREPANCIES IN MAINTAINING OF BOOKS OF ACCOUNTS AND CERTAIN PURCHASES REMAINED UNVERIFIED. 2. REDUCING THE TRADING ADDITION IN A SITUATION WHER E REJECTION OF BOOKS OF ACCOUNTS WAS UPHELD. 2. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PRECIO US, SEMI PRECIOUS STONES AND JEWELLERY. THE ASSESSEE FILED RETURN OF IN COME FOR A.Y. 2008- 09 ON 21/08/2009 DECLARING TOTAL INCOME OF RS. 3,20 ,340/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED AS THE ACT). DURING THE YEAR UNDER CONSIDE RATION, THE ASSESSEE HAD DISCLOSED GROSS PROFIT AT RS. 27,10,518/- ON TO TAL SALES OF RS.1,95,16,258/-, WHICH GIVES A GP RATE OF 13.89%, WHICH IS LOW IN COMPARISON TO GROSS PROFIT RATE DECLARED IN IMMEDIA TE PRECEDING YEAR, WHICH WAS 22.45% ON TURNOVER OF RS. 1,65,64,756/- AND GROSS PROFIT OF RS. 36,96,783/-. THE ASSESSEE MADE THE PURCHASES OF RS. 1,71,11,215/- FROM VARIOUS PARTIES, WHICH INCLUDES PURCHASES FROM THE FOLLOWING SELLER PARTIES. ITA 430/JP/2012_ ITO VS. MEENA TIWARI 3 S.NO. NAME OF PARTIES FROM WHOM PURCHASES MADE AMOUNT 1. SHRI BHAGWAN SAHAI, 1215 PRATAP NAGAR, JAIPUR. RS. 3,43,840/- 2. SHRI ASHOK KALA, S-1A SAWARDA COMPLEX, JAIPUR RS. 1,29,200/- 3. M/S R.K.M., GOPAL JI KA RASTA, JOHRI BAZAR, JAIPUR. RS. 1,91,119/- 4. SHRI PUNIT (BANWARI THAKURIA), 1499 MUKHIA BHAWAN, C.P. JAIPUR RS. 6,72,700/- 5. MYU GEMS, PROP SH. MOHAMMAD UNUS, GHAT GATE, JAIPUR. RS. 2,58,354/- IN ORDER TO VERIFY THE GENUINENESS OF PURCHASES, TH E ASSESSING OFFICER ASKED TO FILE THE EVIDENCES, WHICH HAS NOT BEEN COMP LIED BY THE ASSESSEE ON 28/10/2010. THEREAFTER, THE LD ASSESSING OFFICER ISSUED SUMMONS TO THE SELLERS U/S 131 OF THE ACT TO ATTEND THE PROCEEDINGS PERSONALLY, WHO HAD ISSUED THE SALES BILLS TO THE AS SESSEE THROUGH WARD INSPECTOR BUT OUT OF FIVE PARTIES AS MENTIONED ABOV E, ONLY PARTY ON SERIAL NO. 5 COMPLIED THE SUMMON AND REMAINING PART IES HAD NOT RESPONDED AND IT WAS REPORTED BY THE WARD INSPECTOR THAT NO PARTIES WERE FOUND AT THE ADDRESSES GIVEN BY THE ASSESSEE. H E FURTHER OBSERVED THAT THE ASSESSEE WAS NOT PRODUCED THE STOC K REGISTER. THE LD ASSESSING OFFICER AGAIN ASKED THE ASSESSEE TO PRODU CE THESE PARTIES FOR VERIFICATION BEFORE HIM. IN ABSENCE OF THIS, HE PRO POSED TO APPLY NET PROFIT @ 25% ON BOGUS SALES AND ALSO REJECTION OF BO OK RESULT U/S ITA 430/JP/2012_ ITO VS. MEENA TIWARI 4 145(3) OF THE ACT. THE ASSESSEE FILED REPLY VIDE LE TTER DATED 22/10/2010 WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER A ND HELD THAT NO ITEMWISE DETAILS OF STOCK WAS MAINTAINED, NO QUANTITA TIVE AND QUALITATIVE TALLY OF STOCK WAS MAINTAINED ON DAY TO DAY BASIS, NO SUPPORTING EVIDENCE WAS FURNISHED IN SUPPORT OF CONT ENTION REGARDING RISE IN THE SILVER PRICE BUT SALE PRICE OF ITEM WAS NOT INCREASED, FOUR SELLER PARTIES WERE NOT FOUND IN EXISTENCE ON THE GI VEN ADDRESS AND THESE PARTIES COULD NOT BE PRODUCED FOR VERIFICATIO N OF ALLEGED PURCHASES. THE LD ASSESSING OFFICER FURTHER RELIED O N THE DECISIONS IN THE CASES OF CIT VS. PRECISION FINANCE (P) LTD. 208 ITR 4 65 (CAL.) AND CHUHAR MAL VS. CIT 172 ITR 250 (SC) AND REJECTED THE BOOKS RESULT U/S 145(3) OF THE ACT AND ESTIMATED THE PROFIT OF THE A SSESSEE BY RELYING ON THE HON'BLE SUPREME COURT DECISION IN THE OF CIT VS. BRITISH PAINTS INDIA LTD. 188 ITR 44, M/S VIJAY PROTEIN LTD. VS. ACIT 58 I TD 428 AHMEDABAD, M/S KANCHWALA GEMS VS. JCIT, ITD NO. 134 I TAT, JAIPUR BENCH, M/S INDIAN WOOLEN CARPET FACTOR VS. ITAT & OR S. (2002) 178 CTR 420 (RAJ. H.C.) AND VISP (P) LTD. VS. CIT & ANR 1 86 CTR 718 (MP H.C.). THEREFORE, THE LD ASSESSING OFFICER APPLIED G .P. 19% RATE AFTER CONSIDERING THE PAST HISTORY OF THE ASSESSEE AND AD DITION OF RS. 9,97,571/- WAS ADDED IN THE INCOME OF THE ASSESSEE. ITA 430/JP/2012_ ITO VS. MEENA TIWARI 5 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL PARTLY BY OBSERVING AS UNDER:- I HAVE CAREFULLY PERUSED THE ORDER OF THE A.O.. THE FACT OF THE MATTER IS THAT DURING THE YEAR, THE APPELLANT HAS S HOWN PURCHASES FROM 4 PARTIES THAT WERE FOUND TO NONEXIS TENT AS BUSINESS ENTITIES. THUS, THESE PURCHASES REMAINED UN PROVED. THE HONBLE ITAT JAIPUR BENCH HAS CONSISTENTLY HELD UNVERIFIABLE PURCHASES IN THE CASE OF GEM STONES TR ADERS TO BE A SUFFICIENT JUSTIFICATION FOR REJECTION OF BOOKS O F ACCOUNTS U/S 145(3). THEREFORE, THE DECISION OF THE A.O. TO REJEC T THE BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF SEC. 145(3) I S UPHELD. REGARDING ESTIMATION OF INCOME, I CONCUR WITH THE SU BMISSIONS OF THE AR REGARDING PAST HISTORY BEING THE BEST GUI DE FOR ESTIMATING THE INCOME. RELIANCE IS PLACED ON THE CA SE OF GOTAN LIME KHANIJ UDHYOG 256 ITR 243 (RAJ.). IN THE CASE O F THE ASSESSEE G.P. RATE HAS DECREASED FROM 22.45% IN THE PREVIOUS ASSESSMENT YEAR TO 13.89% DURING THIS ASSESSMENT YE AR. HOWEVER, THE TURNOVER HAS INCREASED FROM RS. 1.64 CR ORES TO RS. 1.95 CRORES. IT IS A GENERALLY ACCEPTED PRINCIP LE THAT WHEN THERE IS INCREASE IN TURNOVER THE GP FALLS. THEREFOR E, THE G.P. IS ESTIMATED AT 14% WHICH GIVES GROSS PROFIT OF RS. 27 ,32,276/-. THE IMPUGNED TRADING ADDITION OF RS. 9,97,571/- IS R EDUCED TO ITA 430/JP/2012_ ITO VS. MEENA TIWARI 6 RS. 21,758/- (AFTER GIVING SET OFF OF DECLARED GROS S PROFIT OF RS. 27,10,518/- BY THE APPELLANT). 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARN ED D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER ALSO ARGUED THAT THE HONBLE ITAT, JAIPUR BENCH HAS DECIDED THIS ISSUE IN DETAIL IN THE CASE OF SHRI ANUJ KUMAR VARSHNEY VS. I.T.O. AND OTHER CASES IN ITA NO. 187/JP/2012 ORDER DATED 22/10/2014 WHEREIN 15% N .P> ON UNVERIFIABLE/BOGUS PURCHASES HAS HELD REASONABLE IN COME. THEREFORE, SAME FORMULA MAY PLEASE BE FOLLOWED ON THESE BOGUS P URCHASES. 5. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AS THE ASSESSEE S SALE HAS INCREASED, THEREFORE, IT IS NECESSARY TO FALL IN TH E GP RATE. THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD ASS ESSING OFFICER HAD ALLOWED SUFFICIENT TIME TO PROVE THE PURCHASES AS GE NUINE TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE ASSE SSING OFFICER ALSO TRIED TO SERVE THE NOTICE ISSUED U/S 131 OF THE ACT THROUGH WARD INSPECTOR, WHICH WERE ALSO NOT SERVED AS NO PARTIES WE RE FOUND ON THE GIVEN ADDRESSES. IN THE LINE OF GEMS AND JEWELLERY B USINESS, THIS BENCH ITA 430/JP/2012_ ITO VS. MEENA TIWARI 7 HAS ALREADY GIVEN A DETAILED ORDER IN THE CASE OF S HRI ANUJ KUMAR VARSHNEY VS. I.T.O. AND OTHER CASES IN ITA NO. 187/J P/2012 ORDER DATED 22/10/2014 WHEREIN 15% N.P. HAS HELD REASONABL E ON UNVERIFIABLE/BOGUS PURCHASES. IN ASSESSEES CASE, F ROM FOUR SUPPLIERS, TOTAL PURCHASES HAD BEEN SHOWN BY THE ASSESSEE AT R S. 13,36,859/- AND THE 15% OF THIS AMOUNT COMES TO RS. 2,05,028/-. THER EFORE, WE CONFIRM THE ADDITION OF RS. 2,05,028/- AS 15% ON TOTAL UNVE RIFIABLE/BOGUS PURCHASES OF RS. 13,36,859/-. THE ASSESSING OFFICER IS DIRECTED TO RECALCULATE THE INCOME AS PER ABOVE DIRECTION. 7. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/04/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 23 RD APRIL, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- ITO, WARD 1(2), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SMT. MEENA TIWARI, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) ITA 430/JP/2012_ ITO VS. MEENA TIWARI 8 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 430/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR