TRIDENT JEWELLERS, Jaipur V. ITO, Jaipur

ITA 552/JPR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3003 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 10-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANITA RI TESH
• Keywords: Bogus purchase; Question of law; Reasonable cause; Accommodation entries; Onus to prove
• Section: 131; 145; 144

Judgement Text

ITA 552/JP/2013 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC, JAIPUR (BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER) ITA NO. 552/JP/2013 ASSESSMENT YEAR 2008-09 PAN NO. AABFT9245P M/S TRIDENT JEWELLERS, VS. THE INCOME TA X OFFICER 54, ATREY FARM, GURJAR GHATI WARD 5(1), JAIPUR AMER ROAD, JAIPUR. APPELLANT RESPONDENT APPELLANT BY : SHRI VIJAY GOYAL RESPONDENT BY : MS. ANITA RITESH DATE OF HEARING: 10.07.2013 DATE OF PRONOUNCEMENT: 10.07.2013 O R D E R PER B.R. JAIN, AM:- THIS APPEAL BY ASSESSEE AGAINST ORDER DATED 12/3/2 013 OF LD. CIT(A)-II, JAIPUR RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE REJECTION OF BO OKS OF ACCOUNT BY THE LD. AO U/S 145(3) OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 1,52,105/- @ 25% OF RS. 6,08,414/- TREATING THE PURCHASES FROM M/S ASHU GEMS (RS. 3,82 ,988), M/S CENTURY GEMS (RS. 75,000/-) AND M/S RANKA JEWELS AND IMPEX (RS. 1,50,426/-) AS NON GENUINE. 3. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, T O DELETE, TO MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF A PPEAL. 2. BRIEFLY THE FACTS ARE THAT THE APPELLANT DERIVES INCOME FROM PURCHASE AND SALE OF HANDICRAFT ITEMS, SILVER AND GOLD JEWELLERY, IN PAR TNERSHIP OF SHRI SHIV KUMAR GOYAL AND 2 SHRI DHARAM CHAND KOTHARI. DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE HAS DECLARED A GROSS PROFIT RATE OF 18.96% ON THE TOTAL TURNOVER OF RS. 76,77,454/- AS AGAINST THE GROSS PROFIT RATE OF 18.29% IN THE IMMEDIATELY PRECEDING YEAR AND 21.43% IN THE YEAR PRIOR TO THE IMMEDIATELY PRECEDING YEAR I.E. IN THE ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MAINTAINED ANY STOCK REGISTER AS IS EVIDENT FROM COLUMN NO. 12B AND 28A OF THE TAX AUDIT REPORT. THE VALUATION OF CLOSING STOCK HAS BEEN CERTIFIED BY THE PARTNERS. NO QUANTITATIVE DETAILS OF OPENING STOCK, CLOSING STOCK, PURCHASES AND SALES WERE PROVIDED. IN THE COURSE OF VERIFICAT ION OF THE PURCHASES MADE AT RS. 64,06,723/-, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE HAS MADE PURCHASES OF RS. 6,08,414/- FROM THE FOLLOWING THREE PARTIES, WHO WE RE KNOWN IN PROVIDING BOGUS BILLS AND ARE NOT MAKING ACTUAL SALE OF GOODS: 1. M/S ASHU GEMS RS. 3,82,988/- 2. M/S CENTURY GEMS RS. 75,000/- 3. M/S RANKA JEWELLS AND IMPEX RS. 1,50,426 TOTAL RS. 6,08,414/- 2.1 THE ASSESSING OFFICER, THEREFORE, ISSUED SUMMO NS U/S 131 OF THE ACT TO THE ABOVE THREE PARTIES AND REQUIRED THEM TO PRODUCE TH E FOLLOWING DETAILS: 1. COPY OF ITR, FINAL ACCOUNT, I.E TRADING AND P & L A/C AND BALANCE SHEET FOR A.Y. 2007-08, RELEVANT TO A.Y. 2008-09. 2. BANK STATEMENT FOR 01.04.2007 TO 31/03/2008. 3. COPY OF ACCOUNT OF M/S./ TRIDENT JEWELLERS FOR F.Y. 2007-08. 4. COMPLETE SET OF BOOKS OF ACCOUNT FOR F.Y. 2007 -08. DESPITE SERVICE OF SUMMONS, NEITHER THE PARTIES AP PEARED NOR MADE ANY COMPLIANCE THERETO. THE ASSESSING OFFICER VIDE ORDERSHEET ENTR Y DATED 06/12/2010 REQUIRED THE ASSESSEE TO PRODUCE ABOVE THREE PARTIES AND SUBSTAN TIATE ITS CLAIM. THE COUNSEL OF THE ASSESSEE IN ASSESSMENT PROCEEDINGS ON 13/12/2010 SH OWED HIS INABILITY TO PRODUCE THE 3 ABOVE PARTIES AND FILED CONFIRMATIONS OF ACCOUNT CL AIMING THEREBY THAT DIRECT VERIFICATION CAN BE MADE AS THESE PARTIES ARE ASSESSED TO TAX AN D PAYMENT TO THEM HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THE ASSESSING OFFICER INFORM ED THE LEARNED COUNSEL THAT THESE PARTIES HAD NOT CARRIED OUT ANY ACTUAL BUSINESS AND THEY ARE ENGAGED IN ISSUE OF BOGUS BILLS AND HENCE THE PURCHASES ARE NOT GENUINE. IT WAS ALS O INFORMED THAT IN RESPONSE TO NOTICE U/S 131 OF THE ACT, THESE PARTIES HAVE NOT RESPONDED. H E, THEREFORE, REMINDED THE APPELLANT THAT ONUS OF PROVING PURCHASES AS GENUINE LIES ON THE AS SESSEE. MERELY BECAUSE THE PAYMENT WAS MADE THROUGH CHEQUES OR THE PERSONS ARE INCOME TAX PAYEES DO NOT DISCHARGE THE BURDEN TO PROVE GENUINENESS. STILL THE ASSESSEE DID NOT PRODU CE EITHER OF THE PARTIES. THE ASSESSING OFFICER, THEREFORE, KEEPING IN VIEW THE JUDGMENT RE NDERED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE (P) LTD. 208 ITR 465(CAL.), JUDGMENT BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDIAN WOO LEN CARPET FACTORY VS. ITAT & OTHERS 178 CTR (RAJ.) 420 AND THE JUDGMENT BY JAIPUR BENCH OF TRIBUNAL IN THE CASE OF M/S KACHWALA GEMS VS. JCIT IN ITA NO. 134 IN DECEMBER, 2003 AS WELL AS THE JUDGMENT BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAN JAY OIL CAKE INDUSTRIES VS. CIT REPORTED IN 10 DTR HON'BLE GUJARAT HIGH COURT IN THE CASE OF . 153 (2008) AND ALSO THE HON'BLE APEX COURT IN THE CASE OF CIT VS. BRITISH PAINTS IN DIA LTD. 188 ITR 44, REACHED A FINDING THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS BURDE N TO PROVE THAT THE PURCHASES ARE GENUINE. IN THE LIGHT OF THE FACT THAT THE PURCHASES ARE UNV ERIFIABLE AND THERE BEING SERIOUS DEFECTS IN THE BOOKS OF ACCOUNT, SUCH ACCOUNTS WERE TAKEN TO B E NOT FOUND CORRECT AND COMPLETE. IT WAS HELD THAT THE TRUE AND CORRECT PROFITS THEREFRO M CANNOT BE DEDUCED. ACCORDINGLY BY APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT, THE ACCOUNTS STOOD REJECTED. AFTER REJECTING THE BOOKS OF ACCOUNT, THE ASSESSING OFFIC ER FOUND THAT THE ASSESSEE HAS MANAGED 4 THE BOGUS BILL ONLY TO SUPPRESS ITS PROFITS. HE, TH EREFORE, CONSIDERING OVERALL FACTS OF THIS CASE AND IN FITNESS OF THINGS FOUND IT JUSTIFIED TO ESTIMATE THE ASSESSED INCOME BY MAKING ADDITION EQUAL TO 25% OF SUCH PURCHASES OF RS. 6,08 ,414/-. ACCORDINGLY AN ADDITION OF RS. 1,52,104/- HAS BEEN MADE TO THE DECLARED TRADING RE SULTS OF THE ASSESSEE. THE ASSESSMENT STOOD COMPLETED AT AN INCOME OF RS. 3,19,134/-. 3. THE LD. CIT(A) CONSIDERING THE FACTS AND SUBMISS IONS AND UPON PERUSAL OF RECORD FOUND THAT THE ASSESSEE HAS NOT MAINTAINED COMPLETE QUANTITATIVE AND QUALITATIVE DETAILS. CO-RELATION BETWEEN THE PURCHASES AND STOCK HAS NOT BEEN ESTABLISHED. THE VALUATION OF CLOSING STOCK HAS BEEN MADE ONLY ON ESTIMATE BASIS AND THE SAME IS NOT CAPABLE OF VERIFICATION. AS REGARD, PURCHASES FROM THE THREE P ARTIES NAMELY M/S ASHU GEMS, M/S CENTURY GEMS AND M/S RANKA JEWELLS AND IMPEX THE SA ME MERELY PROVED THE PAPER EXISTENCE OF THESE FIRMS. THE VERIFICATION OF TRANS ACTIONS CARRIED WITH THE APPELLANT WAS NOT GOT DONE DUE TO NON PRODUCTION OF SUCH PARTIES. THE RE WERE THUS SERIOUS DEFECTS IN THE BOOKS OF ACCOUNT. THE REJECTION OF ACCOUNTS STOOD C ONFIRMED BY HIM. AS REGARD THE ADDITION ON ACCOUNT OF BOGUS PURCHASES, THE ASSESSEE COULD N OT CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER. THE PLEA OF THE ASSESSEE THAT GR OSS PROFIT RATE HAS INCREASED FROM 18.29% TO 18.96% WAS NOT FOUND TENABLE FOR DELETING THE AD DITION AS THE ASSESSEE WAS FOUND REGULARLY INDULGING IN BOGUS PURCHASES AND THEREBY DECREASING ITS TRUE PROFITS. HE, THEREFORE, CONFIRMED THE ADDITION OF RS. 1,52,104/- AND DISMISSED THE ASSESSEES APPEAL. 4. ASSESSEE COUNSEL SHRI VIJAY GOYAL ASSAILING THE IMPUGNED ORDER MADE WRITTEN SUBMISSIONS AS UNDER:- 1. GROUND NO. 1 REJECTION OF BOOKS OF ACCOUNT:- NOT PRESSED. 2.3 SUBMISSIONS OF THE ASSESSEE :- 5 1. UNVERIFIABLE PURCHASES:- THE ALLEGATION OF TH E LD. AO IS THAT THE ASSESSEES PURCHASES TO THE EXTENT OF RS. 6,08,414/ - OUT OF THE TOTAL PURCHASES OF RS. 64,06,723/- ARE UNVERIFIABLE. THE FINDINGS OF THE L D AO IN THIS REGARD ARE WRONG, WITHOUT BASIS AND ON SURMISES AND CONJECTURES. THE LD. AO HAS NOT MATERIAL TO HOLD THAT THE ABOVE SAID PURCHASES ARE UNVERIFIABLE. IN THIS REGARD, WE SUBMIT AS UNDER:- A) CONFIRMATION, PAN AND ACKNOWLEDGMENT OF RETURN W AS FURNISHED: - THE ASSESSEE HAS SUBMITTED THE CONFIRMATION LETTER OF T HE PARTIES BESIDES THEIR PAN AND COPY OF ACKNOWLEDGEMENT OF RETURN. THE LD. AO HAS NOT MATERIAL TO DISPROVE THE EVIDENCES SUBMITTED BY THE ASSESSEE . B) SUMMONS ISSUED BY AO WERE SERVED ON THE PARTIES: - FURTHER THE SUMMONS ISSUED BY THE LD. AO BY REGISTERED POST AS WELL AS THROUGH THE INSPECTOR WERE SERVED ON THE PARTY, WHICH SHOWS THAT THE PART IES WERE EXISTING AT THE GIVEN ADDRESS AND THESE PARTIES HAVE NOT DENIED FOR MAKING SALES TO THE ASSESSEE. THE DEPARTMENT HAS VAST STATUTORY POWERS TO ENFORCE THE COMPLIANCE OF THE SUMMONS. C) INQUIRIES MADE BY THE INVESTIGATION WING IN OTHE R CASES WERE NOT BROUGHT TO NOTICE OF ASSESSEE:- FURTHER, THE INQUIRIES MADE BY INVESTIGATION WING IN OTHER CASES CANNOT BE UTILIZED AGAINST THE ASSESSEE WITHOUT GIVING OPPORTUNITY OF CONFRONTATION. THE LD. AO HAS NOT GI VEN THE COPY OF MATERIAL COLLECTED BY HIM FROM INVESTIGATION WING AND NO OPP ORTUNITY OF CONFRONTATION WAS GIVEN TO THE ASSESSEE. FURTHER, IN ALL THESE CASES, THE ASSESSEE HAS MADE PAYMENT BY ACCOUNT PAYEE CHEQUES. THE LD. AO COULD HAVE INQUIRED FROM BANKS OF THESE PARTIES. FURTHER THE LD. AO HAS NOT BROUGHT ANY MATERIAL TO SHOW THAT THESE PARTIES HAVE PAID CASH TO THE ASSESSEE AGAINST THE CHEQUES GIVEN TO THEM BY THE ASSESSEE. THEREFORE, IN ABSENCE OF ANY POSITIVE MAT ERIAL, THE PURCHASES CANNOT BE HELD AS UNVERIFIABLE MERELY ON SUSPICION, SURMISES AND CONJECTURES. D) ADDITION OF RS. 1,52,104/- BY DISALLOWING 25% OF ALLEGED UNVERIFIABLE PURCHASES:- IN CASE OF REJECTION OF THE BOOKS OF A CCOUNT, SECTION 145 DOES NOT GIVE UNFETTERED POWER TO THE AO TO ESTIMATE THE PROFITS AT HIS WHIMS AND 6 FANCY. THERE MUST BE SOME LOGICAL BASIS TO ESTIMATE THE PROFITS. IN THE CASE OF THE ASSESSEE THE TRADING RESULTS OF CURRENT YEAR WAS BETTER THAN THE LAST YEAR. IN AY 2007-08 THE GP RATE WAS 18.29% WHEREAS IN CURRENT YEAR IT WAS 18.96%. THE TRADING RESULTS OF THE ASSESSEE CANNOT BE COMPARED WITH AY 2006-07 BECAUSE THE TURNOVER OF THE ASSESSEE IN AY 2008-09 IS BETTER THAN AY 2006-07 I.E. INCREASED BY MORE THAN 15%. THE G P CHART OF THE ASSESSEE IS AS UNDER:- A.Y. TURNOVER GROSS PROFIT G.P. RATIO 2008-09 76,77,453/- 14,55,630/- 18.96% 2007-08 86,21,071/- 15,77,049/- 18.29% 2006-07 66,65,374/- 14,78,501/- 21.43% THE LD. AO HAS NOT CONSIDERED THE PAST HISTORY OF T HE ASSESSEE. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BHAWAN VA PATH NIRMAN (BOHRA) & CO (NO.1) 258 ITR 431 HAS HELD THAT THE P AST HISTORY OF THE ASSESSEE IS BEST GUIDING FACTOR. THEREFORE, NO TRAD ING ADDITION DESERVES TO BE MADE. 2.4 CASES RELIED UPON THE AO ARE NOT APPLICABLE TO THE FACTS OF THE CASE:- THE LD. AO HAS RELIED ON THE FOLLOWING CASES, WHICH ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. CIT VS. PRECISION FINANCE (P). LIMITED 208 ITR 465 RELATES TO SECTION 68. LEGAL FICTION IS ONLY FOR A DEFINITE PURPOSE AND THEY ARE LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND CANNOT BE EXTENDED BEYOND THE LEGITIMATE FIELD. M/S INDIAN WOOLEN CARPET FACTORY VS. ITAT & ORS. 178 CTR 420 IN THIS CASE THE PAYMENTS WERE NOT MADE BUT IN THE CASE OF THE ASSESSEE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUES. FURTHER IN THE CASE OF THE ASSESSEE PARTIES WERE EXISTING AT THE GIVEN ADDRESS AND SUMMONS ISSUED BY THE LD. AO WERE SERVED ON THE PARTIES. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS FILED CONFIRMATION LETTERS, COPY OF ACKNOWLEDGEMENT OF THEIR INCOME TAX RETURN. SANJAY OIL CAKE INDUSTRIES VS. CIT 10 DTR 153 (GU J) IN THIS CASE, IT WAS HELD BY THE AO THAT THE SUPPLI ES WERE CREATION OF THE ASSESSEE AND THE SUPPLIERS WERE NOT TRACEABLE. IN T HE CASE OF THE ASSESSEE, THE ASSESSEE HAS FILED CONFIRMATION LETTERS OF THE PART IES AND COPY OF 7 ACKNOWLEDGEMENT OF THEIR INCOME TAX RETURN. FURTHER THE SUMMONS ISSUED BY THE AO WAS SERVED BUT THE LD. AO DID NOT USE HIS ST ATUTORY POWERS TO ENFORCE THEIR ATTENDANCE. THE ENTIRE FINDING OF THE LD. AO IS BASED ON THE REPORT OF DDIT AND SURVEY CONDUCTED BY BCIT AND TH E MATERIAL COLLECTED IN THE INVESTIGATION OF OTHER ASSESSEE WHICH WERE USED AGAINST THIS ASSESSEE WITHOUT PROVIDING AN OPPORTUNITY OF CONFRONTATION. RECENTLY HONBLE ITAT JAIPUR BENCH HAS DECIDED SEVE RAL CASES AS REGARD THE ISSUE OF ADDITION ON THE BASIS OF DISALL OWING 25% OF UNVERIFIABLE PURCHASES. ONE OF THE CASE IS REFERRED HERE IS ITO VS. M/S AGRASEN JEWELLERS (ITA NO. 861/JP/2010 DATED 10.06.2011). IN THIS CAS E, THE FINDINGS OF HON'BLE ITAT JAIPUR BENCH ON THE ISSUE OF ADDITION @ 25% OF BOGUS/UNVERIFIABLE PURCHASES WAS GIVEN AS PAGE 7 OF ITS ORDER, REPRODUCED AS UNDER:- THE AO HAS MADE ADDITION @ 25% OF BOGUS/UNVERIFIE D PURCHASES RELYING ON THE DECISION OF HON'BLE GUJARAT HIGH CO URT IN THE CASE OF M/S SANJAY OIL CAKE IND. (SUPRA) AND THE DECISION OF HO N'BLE ITAT AHD. BENCH IN THE CASE OF M/S VIJAY PROTEINS (SUPRA). THE HON' BLE ITAT JAIPUR BENCH IN THE CASE OF M/S GEM PARADISE IN ITA NO. 700/JP/2 009 HAS CONSIDERED THE CASE OF SANJAY OIL CAKE IND. (SUPRA) AND HELD THAT IN THE CASE OF SANJAY OIL CAKE A SPECIFIC FINDING WAS GIVEN BY THE AO THAT PU RCHASES WERE MADE FROM THE ALLEGED BOGUS SUPPLIERS AT HIGHER RATE AS COMP ARED TO OTHER PARTIES. THE HONBLE TRIBUNAL HELD THAT THE DECISION OF HONBLE GUJARAT HIGH COURT WAS NOT APPLICABLE IN THAT CASE. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ITAT JAIPUR BENCH IT IS HELD THAT WITHOUT ESTABLISH ING THAT THE PURCHASES WERE INFLATED ADDITION CANNOT BE MADE @ 25% OF THE BOGUS PURCHASES. THE HONBLE GUJARAT HIGH COURT ITSELF IN THE CASE OF SA NJAY OIL CAKE (SUPRA) HAS CLEARLY INDICATED THAT ESTIMATE AT PARTICULAR RATE IS NOT A QUESTION OF LAW AND HENCE, LEGAL PROPOSITION LAID DOWN BY THE AO FROM T HESE CASES CANNOT BE APPROVED. THE FACT SHOULD BE CONSIDERED INDEPENDENT LY IN EACH CASE. FURTHER HONBLE TRIBUNAL HAS HELD THAT IN CASE OF U NVERIFIABLE PURCHASES THE ADDITION SHOULD BE MADE CONSIDERING THE PAST HISTOR Y OF THE ASSESSEE. THE FINDING OF HON'BLE ITAT IN THIS CASE WAS AS UNDER: - ONCE THE AO REJECTED BOOKS OF ACCOUNTS THE BEST CO URSE OF ACTION AVAILABLE WITH THE AO IS TO MAKE ESTIMATION OF PROFIT. ANY AD DITION/DISALLOWANCE CAN BE MADE INDEPENDENTLY BUT ONLY AFTER ESTIMATING THE GROSS PROFIT. FOR ESTIMATING THE PROFIT PAST HISTORY OF THE CASE CANN OT BE IGNORED. IN THE 8 PRESENT CASE THE DECLARED G.P. RATE OF 1.95% IS LOW ER THAN G.P. RATE OF 20.41% DECLARED IN THE IMMEDIATELY PRECEDING YEAR A ND THEREFORE, ENHANCEMENT OF G.P. RATE IS JUSTIFIED. HOWEVER, CO NSIDERING THE EXPLANATION OFFERED BY THE APPELLANT THAT IN THE IMMEDIATE PREC EDING YEAR THERE WERE ONLY RETAIL SALES WHEREAS IN THE YEAR UNDER CONSIDE RATION THERE ARE WHOLESALE SALES, THE FALL IN G.P. RATE TO SOME EXTENT IS ACCE PTED. FURTHER, THE TURNOVER IS NOT COMPARABLE AS THE TURNOVER HAS INCREASED BY 443 6%. THE G.P. HAS ALSO INCREASED BY 333%. HOWEVER, CONSIDERING THE FACT TH AT IN THE ACCEPTED PURCHASES THE DECLARED G.P. RATE COMES TO 2.62%. WHEREAS IN THE CASE OF UNVERIFIABLE PURCHASES THE G .P. RATE COMES TO ONLY 1.44% OVERALL G.P. RATE OF 3% WILL BE MORE REA SONABLE. THE AO IS THEREFORE, DIRECTED TO APPLY G.P. RATE OF 3% AS AGA INST 1.95% DECLARED BY THE APPELLANT ON THE DECLARED TURNOVER OF RS. 6,99,90,4 93/-. THE TRADING ADDITION OF RS. 1,05,58,554/- IS THEREFORE, REDUCED CONSIDE RABLY. THE APPELLANT THUS GETS PARTIAL RELIEF. THE GROUNDS OF APPEAL ARE DECI DED PARTLY IN FAVOUR OF THE APPELLANT. THEREFORE, EVEN IF THE BOOKS OF ACCOUNTS ARE REJECT ED ON THE BASIS OF DEFECTS POINTED OUT BY THE LD. AO, NO ADDITION DESE RVES TO BE MADE BECAUSE THE TRADING RESULT OF THE ASSESSEE FOR THE CURRENT YEAR IS BETTER THAN THE LAST YEAR. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS : I) CIT VS. GOTAN LIME KHANIJ UDHOG (2002) 256 ITR 243 (RAJ.) II) J.C. SHARMA VS. ITO 33 TAXWORLD 80 ITAT JAIPUR BENCH. IT WAS, THEREFORE, CONTENDED THAT THERE IS NO JUSTI FICATION IN SUSTENANCE OF ADDITION OF RS. 1,52,104/- BY THE LD. CIT(A). THE SAME, THEREFO RE, REQUIRES TO BE DELETED. 5. ON THE OTHER HAND, LD. D.R. SUPPORTING THE FINDI NGS AND CONCLUSION REACHED BY THE AUTHORITIES BELOW, CONTENDS THAT THE GROUNDS RAISED IN APPEAL ARE REQUIRED TO BE REJECTED SO THAT THE APPEAL IS DISMISSED. THE FINDINGS OF FACT REACHED BY THE AUTHORITIES BELOW ARE NOT SHOWN TO BE PERVERSE AND THE ASSESSEE HAS NOT DISCH ARGED ITS BURDEN TO PROVE THAT THE PURCHASES ARE GENUINE. THE ASSESSEES PLEA THAT THE IR INCOME WAS ESTIMATED BY APPLICATION OF GROSS PROFIT RATE DOES NOT ADVANCE CASE AS MAKIN G OF BOGUS PURCHASES HAS BECOME A REGULAR FEATURE OF THE ASSESSEE AND THERE IS INCREA SING TREND IN RECORDING OF BOGUS PURCHASES 9 IN ORDER TO REDUCE ITS TRUE PROFITS FROM TAXATION. EVEN THE TURNOVER OF THE ASSESSEE HAS REDUCED DURING THE YEAR UNDER CONSIDERATION. ASSES SMENT AFTER REJECTION OF ACCOUNTS HAS TO BE MADE ON ESTIMATION BY ASSESSING AUTHORITY, WHICH , IN THIS CASE IS BONAFIDE. 6. I HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND CASE LAWS BROUGHT TO MY NOTICE. THE ASSESSING OFFICER FOUND THAT THE ASS ESSEE HAS NOT MAINTAINED STOCK REGISTER NOR QUANTITATIVE DETAILS WITH RESPECT TO PURCHASES, SALES, OPENING AND CLOSING STOCK ARE AVAILABLE. THAT APART PURCHASES FROM THREE PARTIES NAMELY M/S ASHU GEMS, M/S CENTURY GEMS AND M/S RANKA JEWELLS AND IMPEX AGGREGATING TO RS. 6,08,414/- ARE NOT GENUINE. HE WAS, THUS, SATISFIED THAT TRUE AND CORRECT PROFITS CANNOT BE DEDUCED FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE. ACCORDINGLY BOOKS OF ACCOU NT STOOD REJECTED BY APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT. IN THIS VI EW OF THE MATTER AND AS THE ASSESSEES COUNSEL THROUGH WRITTEN SUBMISSIONS LAID ON RECORD, DOES NOT PRESS GROUND NO. 1 IN APPEAL, THE SAME STANDS REJECTED. 7. THE ASSESSING OFFICER, THEREAFTER RESORTED TO TH E POWERS AS ARE PROVIDED U/S 145(3) OF THE ACT IN ESTIMATING THE INCOME OF THE ASSESSEE IN THE MANNER PROVIDED UNDER SECTION 144 OF THE ACT. THE ASSESSING OFFICER CONSIDERING O VERALL FACTS OF THE CASE AND IN FITNESS OF THINGS FOUND IT JUSTIFIED TO ESTIMATE PROFITS BY DI SALLOWING 25% OF SUCH PURCHASES OF RS. 6,08,414/- AS WERE CONSIDERED BOGUS IN ORDER TO RED UCE ITS TRUE PROFITS. THE APPELLANTS CASE IS NOT THAT THE ASSESSING OFFICER ACTED BEYOND THE SCOPE OF POWERS CONTAINED U/S 145(3) OF THE ACT. HIS CASE IS THAT HE HAD BROUGHT ON RECORD THE PERMANENT ACCOUNT NUMBER AND ACKNOWLEDGEMENT OF RETURN FILED BY THE PARTIES AND SUMMONS ON THEM ALSO STOOD SERVED, THEREFORE, THE ASSESSING OFFICER OUGHT TO HAVE ENFO RCED HIS STATUTORY POWER FOR COMPLIANCE OF SUMMONS BY SUCH PARTIES. WITHOUT DOING THAT THE FINDING OF BOGUS PURCHASES BEING 10 UNVERIFIABLE IS WRONG, WITHOUT BASIS AND ON SURMISE S AND CONJECTURES. I, HOWEVER, DO NOT AGREE WITH THE CONTENTIONS OF THE APPELLANT, INASMU CH AS THE FINDING THAT THE PURCHASES FROM THE AFORESAID THREE PARTIES NAMELY M/S ASHU GEMS, M /S CENTURY GEMS AND M/S RANKA JEWELLS AND IMPEX ARE BOGUS WAS TAKEN AS ONE OF THE REASON FOR REJECTING THE ACCOUNTS BY APPLICATION OF SECTION 145(3) OF THE ACT. THE ASSES SEE HAS NOT ASSAILED THE SAID FINDING OF REJECTION OF ACCOUNTS NOR THERE IS ANY GROUND IN AP PEAL BEFORE LD. CIT(A). BEFORE THIS APPELLATE TRIBUNAL ALSO NO SUCH GROUND ON THE PERVE RSITY OF THE FACTS REQUIRING INDULGENCE OF THIS TRIBUNAL THEREON HAS BEEN RAISED. THE APPEL LANT WAS APPRISED OF THE FACT OF ISSUE OF SUMMONS THAT STOOD SERVED ON THE AFORESAID THREE PA RTIES BUT REMAINED UNRESPONDED. HE WAS, THEREFORE, REQUIRED TO PRODUCE THESE THREE PAR TIES FOR VERIFICATION OF FACTS ON THE POINTS MENTIONED IN THE SUMMONS. THE ASSESSEES COUNSEL I N ASSESSMENT PROCEEDINGS, HOWEVER, HAS SHOWN HIS INABILITY TO DO SO WITHOUT ASSIGNING ANY GOOD REASON THERETO. HE THUS DID NOT AVAIL OPPORTUNITY NOR BROUGHT ANY RELIABLE MATERIAL TO SHOW THAT THE PURCHASES ENTERED IN THE BOOKS OF ACCOUNT IN THE NAME OF SUCH THREE PART IES ARE GENUINE. THE ONUS TO PROVE THAT SUCH PURCHASES ARE GENUINE LAY UPON THE ASSESSEE. T HIS BURDEN COULD NOT HAVE BEEN SHIFTED ON THE REVENUE MERELY BY PROVIDING THEIR PERMANENT ACCOUNT NUMBER/ACKNOWLEDGEMENT OF RETURN OR SHOWING THAT THE PAYMENTS IN RESPECT OF S UCH ACCOMMODATION ENTRIES WERE MADE BY CHEQUE. IN ORDER TO TESTIFY AS TO WHETHER THE A PPELLANT CAN REALLY BE SAID TO HAVE ENTERED INTO A GENUINE PURCHASES. LEARNED COUNSEL SHRI VIJA Y GOYAL WAS REQUESTED AS TO WHETHER HE CAN PRODUCE SOME COGENT MATERIAL AND RELIABLE EV IDENCE TO SUBSTANTIATE THAT THE GOODS AS ARE ENTERED IN THE BOOKS OF ACCOUNT IN THE NAME OF THESE THREE PARTIES AND THAT HAVE BEEN HELD AS BOGUS ARE THE SAME GOODS, WHICH CAN BE SAID TO HAVE BEEN SUPPLIED BY THEM. HE WAS ALSO AFFORDED OPPORTUNITY TO FIND OUT THIS FACT FROM THE APPELLANT AND STATE THE CASE ON A 11 DIFFERENT DATE FOR WHICH HEARING CAN BE ADJOURNED A S PER HIS CONVENIENCE. THE LEARNED COUNSEL, HOWEVER, REFUSED TO TAKE ANY OPPORTUNITY A ND IN HIS WISDOM STATED CATEGORICALLY THAT THE APPELLANT HAS NOT TAKEN ANY VIDEOGRAPHY OF SUCH GOODS RECEIVED BY HIM FROM THE CAPTIONED PARTIES NAMELY M/S ASHU GEMS, M/S CENTURY GEMS AND M/S RANKA JEWELLS AND IMPEX. HE ALSO ADMITS THAT THERE IS NO EVIDENCE OTH ER THAN BILLS AND PAYMENT BY CHEQUE TO SUBSTANTIATE HIS CLAIM OF ACTUAL PURCHASES MADE FRO M SUCH PERSONS. IN THIS VIEW OF THE MATTER AND AS THE FINDING THAT PURCHASES ARE BOGUS IS NOT SHOWN TO BE PERVERSE, THE SAME IS NOT REQUIRED TO BE INTERFERED WITH AT THIS STAGE. 8. IN SO FAR AS THE ESTIMATION OF INCOME, I HAVE AL READY FOUND THAT THE ASSESSING OFFICER HAS ACTED WITHIN THE SCOPE OF HIS POWERS AS ARE CONTAINED UNDER SECTION 145(3) OF THE ACT. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAS MANAGED THESE BOGUS BILLS ONLY TO SUPPRESS ITS TRUE PROFITS. HE, THEREF ORE, TOOK OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND MERELY DISALLOWED 25% OF SUCH PURCHASE S OF RS. 6,08,414/- FOR BONAFIDE ESTIMATION OF PROFITS FROM BUSINESS OF THE ASSESSEE . THE ESTIMATE SO MADE, THEREFORE, IS FOUND RESTED ON RELEVANT BASIS IN THE CIRCUMSTANCES WHEN THE APPELLANT DESPITE OPPORTUNITY FAILED TO PROVE THAT THE PURCHASES AS AFORESAID ARE GENUINE. THE ASSESSING OFFICER IS NOT SHOWN TO HAVE ACTED WITH BIAS NEITHER VINDICTIVE NO R CAPRICIOUS. THE ESTIMATE MADE BY HIM IS A BONAFIDE AS HE IS FOUND TO HAVE ACTED ON RELEV ANT MATERIALS AND CONSIDERATIONS ONLY. THERE IS AN IMMINENT DANGER TO ALLOW SANCTION OF SU CH FICTITIOUS ARRANGEMENT AS THE ENTRIES OF PURCHASE AS ARE APPEARING IN THE BOOKS OF ACCOUN T OF THE APPELLANT ARE MERELY THE ACCOMMODATION ENTRIES CARRIED BY IT FOR SUPPRESSING ITS TRUE PROFITS. ALLOWING DEDUCTION OF THE FULL AMOUNT OF SUCH PURCHASES ON IRRELEVANT CON SIDERATIONS AS ARE BEING CONTENDED THROUGH WRITTEN SUBMISSIONS, TO MY MIND, WOULD TANT AMOUNT TO MISUSE, WHICH WILL 12 DEGENERATE INTO AN EXERCISE OF UNREGULATED ACTIVITY . IT, THEREFORE, WAS NEITHER POSSIBLE NOR PROPER FOR THE ASSESSING OFFICER TO HAVE ALLOWED TH E ASSESSEE TO CONTINUE WITH THE SIMILAR ACTIVITY OF RECORDING BOGUS PURCHASES IN THE YEAR U NDER CONSIDERATION AND ASSESS HIM BY APPLICATION OF NET PROFIT RATE ONLY AS WAS DONE IN THE IMMEDIATELY PRECEDING YEAR. THE ASSESSING OFFICER THUS HAS SHOWN DEVIATION AND DEPA RTURE IN NOT APPLYING A NET PROFIT RATE FOR JUST AND REASONABLE CAUSE, MORE SO WHEN THE ASS ESSEE HIMSELF WAS TO BE BLAMED AS HE DID NOT SUBMIT PROPER ACCOUNTS. THERE BEING NO ARBI TRARINESS IN ESTIMATING THE INCOME BY DISALLOWING ONLY A PERCENTAGE OF BOGUS PURCHASES AN D THE ESTIMATE BEING HONEST AND FAIR, NO MERIT IS FOUND IN DISTURBING SUCH BONAFIDE ESTIM ATE. THE APPELLANTS RELIANCE TO THE JUDGMENTS IN THE CASE OF CIT VS. GOTAN LIME KHANIJ UDHOG (2002) 256 ITR 243 (RAJ.) IS NOT FOUND TO BE ADVANCING HIS CASE INASMUCH AS THAT WAS NOT A CASE OF SUPPRESSION OF INCOME. IN THE CASE OF J.C. SHARMA VS. ITO AND OTHE R TRIBUNAL JUDGMENTS WERE RUNNING ONLY ON THE FACT OF PURCHASES BEING UNVERIFIABLE AN D NOT IN A CASE OF SUPPRESSION OF TRUE PROFITS BY MANAGING BOGUS BILLS BY THOSE THREE PART IES. THE HON'BLE APEX COURT IN THE CASE OF KACHWALA GEMS VS. JCIT 2007 288 ITR 10 (SC), WHI CH TRAVELLED FROM THE JUDGMENT BY APPELLATE TRIBUNAL CONSIDERED BY THE ASSESSING OFFI CER, HAS APPROVED THE ESTIMATION OF INCOME IN THE FOLLOWING WORDS:- IT IS WELL-SETTLED THAT IN A BEST JUDGMENT ASSESSM ENT THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT THE AUTHORIT IES CONCERNED SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME E VEN IN A BEST JUDGMENT ASSESSMENT, AND SHOULD NOT ACT TOTALLY ARBITRARILY, BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGME NT ASSESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID N OT SUBMIT PROPER ACCOUNTS. IN OUR OPINION THERE WAS NO ARBITRARINESS IN THE PR ESENT CASE ON THE PART OF THE INCOME TAX AUTHORITIES. THUS, THERE IS NO FORCE IN THIS APPEAL, AND IT IS DISMISSED ACCORDINGLY. NO COSTS. 13 IN THE ENTIRE CONSPECTUS OF THE CASE AND THE ESTIMA TE BEING BONAFIDE AND RESTED ON REASONABLE BASIS, NO INTERFERENCE IS CONSIDERED NEC ESSARY. I, THEREFORE, FIND NO MERIT IN THE GROUNDS RAISED IN APPEAL BY THE ASSESSEE. THE SAME STAND REJECTED. 9. IN THE RESULT, THE APPEAL STANDS DISMISSED AS AN NOUNCED IN THE OPEN COURT IMMEDIATELY AFTER CONCLUSION OF HEARING ON 10 TH JULY, 2013. SD/- (B.R. JAIN) ACCOUNTANT MEMBER JAIPUR, DATED 10 /07/2013 *RANJAN COPY FORWARDED TO:- 1. M/S TRIDENT JEWELLERS, JAIPUR. 2. THE INCOME TAX OFFICER, WARD 5(1), JAIPUR. 3. THE CIT(A) 4. THE CIT 5. THE D.R. GUARD FILE (ITA NO. 552/JP/2013. BY ORDER, AR, ITAT JAIPUR.