Shri Ramesh Verma, Prop.M/s.Kush International, Surat V. The Income tax Officer,Ward-6(3), Surat

ITA 540/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0512 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 05-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL CITA
• Assessee Lawyers: J P SHAH
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI T.K. SHARMA, J.M. AND D.C. AGARWAL, A/M ITA NO.540/AHD/2007 ASSESSMENT YEAR : 2001-02 SHRI RAMESH VERMA, PROP. KUSH INTERNATIONAL, 15 SHAKTI CHAMBERS, RUGHNATHPURA, MAIN ROAD, SURAT -395003 V/S . INCOME-TAX OFFICER, WARD 6(3), SURAT. PAN NO.ABCPV 7139 G (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI J.P. SHAH, ADVOCATE RESPONDENT BY:- SHRI SHELLEY JINDAL, CIT(A), DR O R D E R PER D.C. AGARWAL, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) WHEREIN HE HAS CONFIRMED THE LEVY OF PENALTY OF RS.16,46,014/- UNDER SECTION 271(1)(C) OF THE I.T.ACT, 1961. THE F ACTS OF THE CASE ARE THAT ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF PURCHASE AND SALE OF DIAMONDS. FOR THE ASST. YEAR UNDER APPE AL IT FILED ITS RETURN OF INCOME ON 31.10.2001 DECLARING TOTAL INCOME OF RS.7 3,260/-. THE ITA NO. PAGE 2 ASSESSEE HAS SHOWN TURNOVER OF RS.1,80,36,447/- AND G.P. OF RS.1,93,105/-. THE A.O. WHILE EXAMINING THE ACCOUNT S FOUND THAT ASSESSEE HAS MADE CASH PURCHASE OF DIAMONDS FOR MOR E THAN RS.84 LAKH AND NONE OF THE SINGLE TRANSACTION EXCEEDED RS.20,0 00/-. SUCH PURCHASES WERE MADE ON 21 DIFFERENT OCCASIONS FROM DIFFERENT PARTIES WHOSE NAMES AND ADDRESSES WERE NOT MADE AVAILABLE TO THE A.O. E VEN BOOKS OF ACCOUNTS WERE NOT PRODUCED. THE RATE OF PURCHASES O F DIAMONDS VARIED FROM RS.2,000/- TO RS.66,000/- PER CARAT. THE AO DI SALLOWED A SUM OF RS.21,24,445/- OUT OF CASH PURCHASES BY APPLYING TH E DECISION OF HONBLE ITAT, AHMEDABAD BENCH IN THE CASE OF ACIT VS. M/S V IJAY PROTEINS LTD. 1996 55 TTJ (AHD) 76; 58 ITD 428. THE AO ALSO VERIF IED THE CREDIT PURCHASES OF 2487.3 CARATS OF DIAMONDS WORTH RS.1,0 2,60,220/- MADE FROM M/S JAYESH TRADING CO., M/S SWETA EXPORTS AND M/S J.M. JEWELLERS FOR A SUM OF RS.34,52,220/-, RS.60,00,000/- & RS.8, 08,000/- RESPECTIVELY. THE AO ENQUIRED ABOUT THESE PARTIES BUT NEITHER THE BOOKS OF ACCOUNTS NOR THOSE PARTIES WERE PRODUCED BEFORE HIM. THE CLA IM OF THE ASSESSEE WAS THAT IT HAS SUBMITTED THE PAN(S) AND ADDRESSES OF THE PARTIES AND THE AO COULD HAVE SUMMONED THEM FOR VERIFICATION. THE M ATTER WENT TO THE TRIBUNAL IN QUANTUM PROCEEDINGS AND VIDE ITS ORDER OF EVEN DATE THE ISSUE HAS BEEN PARTLY RESTORED TO THE FILE OF AO FOR VERI FICATION OF THE PARTIES. 2. WE HAVE HEARD THE LD. A.R. AND THE LD. D.R. THE ARGUMENT OF THE LD. A.R. IS THAT THE ADDITION HAS BEEN MADE ONLY ON ESTIMATE BASIS AND THEREFORE, THERE IS NO CASE OF LEVY OF PENALTY. WHE REAS THE LD. DR SUBMITTED THAT ASSESSEE HAS ADOPTED INGENUINE DEVIC E FOR INFLATING THE PURCHASE PRICE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. SINCE THE QUANTUM ADDITIONS HAVE BEEN PARTL Y RESTORED TO THE FILE ITA NO. PAGE 3 OF AO IT WOULD BE APPROPRIATE THAT AO SHOULD CONSID ER THE LEVY OF PENALTY IN THE LIGHT OF THE FINDINGS GIVEN BY THE T RIBUNAL AND ALSO AFTER NECESSARY VERIFICATION OF THE PARTIES FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE MADE PURCHASES OF DIAMONDS ON CREDIT. THE A O WILL DECIDE THE PENALTY AFRESH DE NOVO. 4. AS A RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 6/11 /2009 SD/- SD/- (T.K. SHARMA) (D.C. AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 6/11/2009 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD