RAINBOW JEWELLERS, Jaipur V. ITO, Jaipur

ITA 49/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5491 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 23-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133A

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 NOS. 49/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2005-06 . M/S. RAINBLOW JEWELLERS, NEW RAM GARH ROAD, AMER ROAD, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 5(1) JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ADDFR 1300 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI K.L. MOOLCHANDANI (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.01.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 5/02/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THE PRESENT APPEAL FILED BY THE ASSESSEE IS ARISIN G FROM THE ORDER DATED 18.11.2013 PASSED BY THE LEARNED CIT (A)-II, JAIPUR FOR THE A.Y. 2005-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED AUTHORITIES BELOW HAVE FACTUALLY AND LEGALLY ERRED IN IMPOSING AND CONFIRMING THE PENALTY OF RS. 1,85,000/- LEVIED U/S 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPECTIVE. 2 ITA NO. 49/JP/2014 A.Y. 2005-06. M/S. RAINBOW JEWELLERS VS. ITO 2. IN THE PRESENT CASE THE ASSESSMENT HAS BEEN MADE ON THE BASIS OF ESTIMATION INITIALLY BY INVOKING PROVISIONS OF SECTION 145(3) AND THEREAFTER ON APPEAL BEFORE THE TRIBUNAL IN QUANTUM PROCEEDINGS, THE TRIBUNAL ESTIM ATED THE INCOME ON THE BASIS OF PAST HISTORY BY APPLYING GP RATE OF 20%. THE RELEV ANT PARA OF TRIBUNAL TO THIS EFFECT CONFIRMING THE ADDITION IS MENTIONED HEREIN BELOW : - 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEE D IN THIS GROUND IN PART. WE NOTED THAT TURNOVER OF THE ASSESSEE HA S BEEN INCREASED BY MORE THAN 2 TIMES FOR THE YEAR UNDER C ONSIDERATION AS COMPARED TO EARLIER. NO DOUBT, THE INCOMPLETE BOOK S OF ACCOUNT WERE FOUND DURING THE COURSE OF SURVEY AND SALES MA DE TO VARIOUS PARTIES WERE NOT ENTERED. SOME OF THE STOCKS FOUND DURING THE COURSE OF SURVEY WAS ALSO NOT FOUND PLACE IN THE BO OKS OF ACCOUNT. HOWEVER, WHEN THE BOOKS OF ACCOUNT WERE COMPLETED, THERE WAS A MINOR DIFFERENCE BETWEEN THE STOCKS AS PER BOOKS OF ACCOUNT AND AS PHYSICALLY FOUND. THE APPLICATION OF PROVISIONS OF SECTION 145(3) ARE APPLICABLE ON THE FACTS OF THE PRESENT CASE BUT IF ANY ADDITION HAS TO BE MADE THAT HAS TO BE MADE ON THE BASIS OF PAST HISTORY. IN EARLIER YEAR THE ASSESSEE HAS SHOWN G.P. RATE OF 16.52% TO19.95%. HOWEVER, THE AO HAS APPLIED 30% G.P. RATE FOR THE YEAR UNDER CONSIDERATION WHICH, IN OUR CONSIDERED VIEW, IS WITHOUT ANY BASIS. IT IS A SETTLED POSITION IN LAW THAT WHILE APPLYING G.P. RATE THE PAST HISTORY HAS TO BE TAKEN INTO CONSIDERATION . NO DOUBT CERTAIN PURCHASES WERE REMAINED UNVERIFIABLE ALSO F OR WHICH THE PROVISIONS OF SECTION 145(3) ARE APPLICABLE. HOWEV ER, AS STATED ABOVE, THE ADDITION CAN BE MADE ONLY AFTER TAKING I NTO CONSIDERATION THE PAST HISTORY OF THE CASE. KEEPIN G IN VIEW ALL THESE FACTS AND CIRCUMSTANCES, WE FEEL THAT IF A G. P. RATE OF 20% IS APPLIED ON THE TURNOVER OF RS. 1.8 CRORES AGAINST T URNOVER ESTIMATED BY AO AT RS.1.90 CRORES THAT WILL MEET TH E ENDS OF JUSTICE AS AO HAS NOT BROUGHT OUT ANY MATERIAL TO ESTIMATE THE TURNOVER AT RS. 1.9 CRORES. AS BOOKS OF ACCOUNT WERE NOT COMPLE TE AND THE ASSESSEE HAS SHOWN TURNOVER OF RS. 1.78 CRORES OR O DD, THEREFORE, WE FEEL THAT IN THESE CIRCUMSTANCES IF THE TURNOVER IS TAKEN AT RS. 1.8 CRORES THAT WILL MEET THE ENDS OF JUSTICE. ACC ORDINGLY WE DIRECT 3 ITA NO. 49/JP/2014 A.Y. 2005-06. M/S. RAINBOW JEWELLERS VS. ITO THE AO TO RECOMPUTED THE PROFIT @20% OF G.P. ON TOT AL TURNOVER OF RS.1.8 CRORES. WE ORDER ACCORDINGLY. 3. THE AO HAS CONFIRMED THE PENALTY AFTER GIVING TH E SHOW CAUSE NOTICE ALLEGING THAT THE ADDITION WAS NOT MADE MERELY ON ESTIMATE B UT ON THE BASIS OF DETECTION MADE DURING THE SURVEY U/S 133A AND SPECIFIC DEFECTS VIZ . URD PURCHASES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SAME REASONING WAS AD OPTED BY LD. CIT (A) WHILE CONFIRMING THE PENALTY. 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR VIEW, AS IS CLEAR FROM THE ORDER REPRODUCED HEREINA BOVE, IN THE QUANTUM, ASSESSMENT HAS BEEN CONFIRMED BY THIS TRIBUNAL, AFTER REJECTIN G THE BOOKS OF ACCOUNT AND THEREAFTER ESTIMATING THE INCOME BY APPLYING THE GP RATE OF 20 %. SINCE THE ADDITIONS WERE MADE AND CONFIRMED ON ESTIMATE BASIS, THEREFORE, THERE I S NO CLEAR CUT CONCEALMENT OF INCOME NOR FURNISHING THE INACCURATE PARTICULARS OF INCOME . THE LAW ON ADDITION ON ESTIMATE BASIS IS CLEAR AS MATTER IS DEBATABLE AS HELD BY HO NBLE JURISDICTIONAL HIGH COURT DECISIONS IN THE CASES OF CIT VS. AGARWAL MISTHAN B HANDAR, 131 ITR 619 (RAJ.), SHIVLAL TAK VS. CIT, 251 ITR 373 AND VARIOUS OTHER JUDGMENT S. IN VIEW OF THE ABOVE, WE HEREBY CANCEL THE PENALTY IMPOSED BY THE AO. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5/02/2016. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER P TK;IQJ@ JAIPUR 4 ITA NO. 49/JP/2014 A.Y. 2005-06. M/S. RAINBOW JEWELLERS VS. ITO FNUKAD@ DATED:- 05/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. RAINBOW JEWELLERS, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD 5(1), 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. 49/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 5 ITA NO. 49/JP/2014 A.Y. 2005-06. M/S. RAINBOW JEWELLERS VS. ITO