DEEPAK DALELA, Jaipur V. ITO, Jaipur

ITA 51/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5559 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Keywords: Bogus purchase; Rejection of books of accounts; Question of law; Accommodation entries
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR BEFORE: SHRI VIJAY PAL RAO, JM & DR. ARJUN LAL SAI NI, AM ITA NO. 51/JP/2014 ASSESSMENT YEAR : 2008-09 SHRI DEEPAK DALELA PROP. M/S TRISTAR INTERNATIONAL CORP. C-28, PEEYUSH PATH, BAPU NAGAR, JAIPUR. VS. INCOME TAX OFFICER, WARD 6(3), JAIPUR. PAN/GIR NO.: AAOPD6587H APPELLANT RESPONDENT ASSESSEE BY : SHRI MUKESH KHANDELWAL (C.A.) REVENUE BY : SHRI P.P. MEENA (J.CIT) DATE OF HEARING : 06/11/2017 DATE OF PRONOUNCEMENT : 26/12/2017 ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.11.2013 OF CIT (A), JAIPUR FOR THE ASSESSMENT YE AR 2008-09. THE APPEAL OF THE ASSESSEE WAS EARLIER DECIDED VIDE ORD ER DATED 28.01.2016 HOWEVER, SUBSEQUENTLY ON THE MISCELLANEOUS APPLICAT ION OF THE ASSESSEE THE SAID ORDER WAS RECALLED VIDE ORDER DATED 22.06. 2017 IN M.A. NO. 90/JP/2016. THEREFORE, THIS APPEAL WAS AGAIN PLACE BEFORE US FOR HEARING AND ADJUDICATION. THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED SERIOUSLY ON THE FACTS IN SUSTAINING THE TRADING ADDITION OF RS. 4,92,724/- M ADE BY THE AO. ITA NO. 51/JP/2014 SH. DEEPAK DALELA V ITO 2 2. THAT THE LD.CIT(A) HAS ERRED FURTHER SERIOUSLY O N FACTS IN SUSTAINING THE TRADING ADDITION BY RELYING ON ORDER OF THE HONBLE ITAT, JAIPUR BENCH, JAIPUR PASSED IN THE CASE OF TH E APPELLANT FOR THE ASSTT. YEAR 2006-07 OVERLOOKING THE FACT THAT T HE SAID ORDER HAS ALREADY BEEN RECALLED BY THE HONBLE ITAT. 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASS ESSEE IS REGARDING THE DISALLOWANCE OF 25% UNVERIFIABLE PURCHASES MADE BY THE AO WHICH WAS CONFIRMED BY THE LD. CIT(A). DURING THE COURSE OF ASSESSMENT PROCEEDING THE AO NOTED THAT THE PURCHASES OF THE A SSESSEE INCLUDES THE PURCHASES OF RS. 19,70,895/- MADE FROM 9 PARTIE S. THE AO OBSERVED THAT THESE PARTIES ARE FOUND AS PROVIDING ACCOMMODATION ENTRIES AND BOGUS BILLS WITHOUT ANY ACTUAL SALES OR PURCHASES. THE AO ACCORDINGLY MADE AN ADDITION OF 25% OF THE UNVERIFI ABLE PURCHASES MADE FROM 9 PARTIES. THE ASSESSEE CHALLENGED THE AC TION OF THE AO BEFORE THE LD. CIT(A) HOWEVER, THE LD. CIT(A) CONFO RMED THE ADDITION MADE BY THE AO BY FOLLOWING THE DECISION OF THIS TR IBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07. 3. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR OF THE ASSE SSEE HAS SUBMITTED THAT THE LD. CIT(A) HAS FOLLOWED THE DECISION OF TH IS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 , HOWEVER ITA NO. 51/JP/2014 SH. DEEPAK DALELA V ITO 3 SUBSEQUENTLY THE TRIBUNAL RECALLED ITS EARLIER ORDE R WHICH WAS FOLLOWED BY THE LD. CIT(A) AND SUBSEQUENTLY DECIDED THE MAT TER BY APPLY ONLY 15% OF THE UNVERIFIABLE PURCHASES. HE HAS FURTHER S UBMITTED THAT THE ASSESSEE HAS ALREADY DECLARED GP RATE 21.87% ON A T URNOVER OF RS. 90.94 LACS, THEREFORE, NO FURTHER ADDITION IS JUSTI FIED. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT WHEN THE ASSESSEE HAS FAILED ESTABLISH THE GENUINENESS OF THE PURCHASES MADE FROM THESE PA RTIES THEN THE AO AS WELL AS LD. CIT(A) WAS JUSTIFIED IN MAKING THE DISALLOWANCE OF 25% OF THE PURCHASES. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 22.10.2014 IN ITA NO 13/JP/2010 HAS RESTRICTED THE ADDITION ON ACCOUNT OF UNVERIFIABLE/ BOGUS PURCHASES TO 15% AS AGAINST 25% MADE BY THE AUTHORITIES BELOW IN PARA 10.6 AS UNDER:- 10.6 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH T HE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE A SSESSEE HAS NOT PRESSED GROUND OF REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. THE LEARNED A.R. NOT SUBMITTED ANY EVIDENC E THAT HE HAS CLOSING SOCK WITH HIM AFTER PHYSICAL VERIFICATION M ADE ON THE END OF THE PREVIOUS YEAR ON REPEATED DEMAND BY THE ASSE SSING OFFICER, IT HAS NOT BEEN SUBMITTED BEFORE HIM. NOW HE HAS PROVIDED ENTRY OF OPENING AND CLOSING STOCK IN QUAN TITATIVE NOT ITA NO. 51/JP/2014 SH. DEEPAK DALELA V ITO 4 QUALITATIVE WHERE HARDLY 21 ITEMS HAD BEEN SHOWN WH EREAS HE HAS CLAIMED BEFORE THE ASSESSING OFFICER THAT IT IS VERY BULKY THAT THE REASON ASSESSEE HAS NOT SUBMITTED CLOSING STOCK BEFORE THE ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER AP PLIED 25% N.P. DISALLOWANCE ON UNVERIFIABLE PURCHASES ON THE BASIS OF DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES (SUPRA) AND VIJAY PROTEINS (SUPRA). HOWEVER, THE LEARNED A.R. HAD ARGUED TO AP PLY PAST HISTORY OF THE CASE BUT WE FIND THAT PAST HISTORY O F THE ASSESSEE IS ALSO DOCTORED, THEREFORE, THE SAME CANNOT BE APPLIE D. WE ARE OF THE CONSIDERED VIEW THAT 15% N.P. RATE IS REASONABL E ON UNVERIFIABLE PURCHASES. THIS VIEW ALSO GOT SUPPORT FROM THE RECENT DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF VENUS ARTS & GEMS ORDER DATED 20/08/2014 WHEREIN G. P. ADDITION WAS CONFIRMED BY THE ITAT, HAD FOUND FACTUAL AND NO T QUESTION OF LAW INVOLVED IN IT. IT IS IMMATERIAL WHETHER THE ASSESSEE IS 100% EXPORTER. THE ASSESSING OFFICER CANNOT BE PREC LUDED FROM ENQUIRING INTO THE GENUINENESS OF THE UNVERIFIABLE PURCHASES. WHEREABOUTS OF THE PARTIES FROM WHOM THE PURCHASES WERE MADE ARE KNOWN TO THE ASSESSEE. HE SHOULD HAVE PRODUCED THESE PARTIES BEFORE THE ASSESSING OFFICER FOR VERIFICATI ON. THEREFORE, WE HAVE CONSIDERED VIEW THAT 15% N.P. ON UNVERIFIABLE PURCHASES IS REASONABLE IN THIS CASE. ACCORDINGLY, THE ASSESSEE S APPEAL IS PARTLY ALLOWED. FURTHER THE COORDINATE BENCHES IN THIS TRIBUNAL IN CASE OF SMT. ALKA JAIN VS. ITO IN ITA NO. 798/JP/2011 HAS ALSO TAKEN A SIMILAR VIEW 15% OF THE BOGUS PURCHASES IS REASONABLE AND PROPER HAS HELD IN PARA 6 AS UNDER:- 6. AS REGARDS DECISIONS RELIED UPON BY THE AUTHORI TIES BELOW AND FURTHER BY THE LD. DR WE FIND THAT IN THOSE CAS ES THERE WAS ITA NO. 51/JP/2014 SH. DEEPAK DALELA V ITO 5 CONCLUDING FINDING OF THE AO THAT THE ASSESSEE INFL ATED THE PURCHASES UPTO 25% AND THEREFORE, THE AO MADE A DIS ALLOWANCE OF 25% TO THAT EXTENT THE PURCHASES WERE FOUND TO B E INFLATED BY THE ASSESSEE. THIS FINDING WAS CONFIRMED UP TO THE STAGE OF THE TRIBUNAL THEREIN A CATEGORICAL FINDING HAS BEEN GIV EN BY THE TRIBUNAL ON THE BASIS OF THE FACTS AND RECORD THAT THE ASSESSEE INFLATED THE PURCHASED BY 25%. THEREFORE, IN THOSE CASES THE DECISION WAS BASED ON DEFINITE FINDING OF FACT REGA RDING INFLATED PURCHASE UPTO 25%. THEN FINDING WAS GIVEN BY THE AU THORITIES BELOW AND IT WAS CONFIRMED BY THE TRIBUNAL CANNOT B E APPLIED IN THE PRESENT CASE. IN THE CASE IN HAND, THE ASSESSIN G OFFICER HAS NOT GIVEN ANY FINDING OF HOW MUCH OF THE PURCHASES ARE INFLATED OR BOGUS. THE AO HAS DOUBTED THE PURCHASES TO THE E XTENT OF RS. 75,76,052/- AND THEN MADE A DISALLOWANCE OF 25% OF THESE PURCHASES. THE ASSESSING OFFICER HAS HELD THAT THES E PURCHASES MADE FROM THESE 7 PARTIES REMAINED UNVERIFIED WITHO UT GIVING A DEFINITE FINDING OF BOGUS PURCHASES. FURTHER, THE A O HAS RELIED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATIO N WING WITHOUT CONDUCTING FURTHER ENQUIRY TO REACH TO THE CONCLUSION THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE 7 PAR TIES ARE ACTUAL BOGUS. IN CASE THE PURCHASES MADE BY THE ASS ESSEE FROM THESE 7 PARTIES ARE FOUND TO BE BOGUS THEN INSTEAD OF ANY ADHOC DISALLOWANCE OF 25% THE TOTAL AMOUNT OF PURCHASES IS LIABLE TO DISALLOW AND ADDED TO THE INCOME OF THE ASSESSEE. B UT, IN THIS CASE, THE AO HAS HELD THAT THE PURCHASES ARE NOT VE RIFIABLE. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HAS RELI ED UPON THE DECISIONS WHEREIN THE BOOKS OF ACCOUNTS WERE REJECT ED AND THEN THE GP ADDITION WAS MADE. HOWEVER, IN THIS CASE OF THE ASSESSEE THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND A DDITION WAS MADE ONLY ON THE ACCOUNTS OF PURCHASES WHICH WERE U NVERIFIED. IT IS PERTINENT TO NOTE THAT WHEN THE ASSESSEE HAS CLA IMED THE PURCHASES MADE FROM THESE 7 PARTIES THEN THE ONUS I S ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSA CTIONS. THE ASSESSING OFFICER THOUGH ISSUED SUMMONS U/S 131 HOW EVER, THESE SUMMONS WERE RETURNED UN-SERVED AS THE PARTIE S COULD NOT ITA NO. 51/JP/2014 SH. DEEPAK DALELA V ITO 6 FOUND AT THE GIVEN ADDRESS. THEREFORE, THERE WAS A REASON FOR THE ASSESSING OFFICER TO DOUBTED THE TRANSACTION OF PUR CHASES FROM THESE PARTIES BUT THERE WAS NO FINDING GIVEN BY THE AO THAT THE PURCHASES MADE FROM THESE PARTIES ARE BOGUS TRANSAC TIONS. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE AS WELL AS ON THE PART OF THE ASSESSING OFFICER TO DISCHARGE THEIR RESPECTIVE BU RDEN AND ONUS IN RESPECT OF THESE TRANSACTIONS. WE FIND THAT THE DISALLOWANCE MADE BY THE AO OF 25% ON ACCOUNT OF UNVERIFIABLE PU RCHASES IS ON THE HIGHER SIDE WHEN THE SALE OF THE ASSESSEE IS DOUBTED. ACCORDINGLY, BY CONSIDERING THE VARIOUS PRECEDENT O F THIS TRIBUNAL WE RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 15% OF THE PURCHASES. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND BY FOLLOWING THE EARLIER DECISIONS OF THIS TRIBUNAL WE RESTRICTED THE DISALLOWANCE MADE ON ACCOUNT OF UNVERIFIABLE/BOGUS PURCHASES TO 15% OF SUCH PURCHASES . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/12/2017 SD/- SD/- (DR. ARJUN LAL SAINI) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED:- /12/2017. * SANTOSH. COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI DEEPAK DALELA, JAIPUR. 2. THE RESPONDENT- ITO, WARD 6(3), JAIPUR 3. CIT ITA NO. 51/JP/2014 SH. DEEPAK DALELA V ITO 7 4. CIT(A) 5. DR, ITAT, JAIPUR. 6. GUARD FILE {ITA NO. 51/JP/2014} BY ORDER, ASST. REGISTRAR