SHRI HABIB KHAN, Jaipur V. PRINCIPAL COMMISSIONER OF INCOME TAX, JAIPUR-1, Jaipur

ITA 598/JPR/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9012 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Bogus purchase; Rejection of books of accounts; Question of law; Accommodation entries; Reassessment proceedings
• Section: 143(3); 133(6); 148; 263; 63; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 598/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI HABIB KHAN PROP. M/S H.K. EXPORT CORPORATION, 2261, TOPKHANA HAZURI, GHATGAME, JAIPUR. CUKE VS. THE PR.CIT, JAIPUR-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABPPK 5855 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B. K. GUPTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 12/11/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 11/12/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. PR.CIT, JAIPUR DATED 21.03.2018 FOR ASSESSMENT YEAR 2008-09 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY LD. CIT U/S 263 IS ILLEGAL & IN LAW AND BE QUASH ED. 2. THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT THE AO IN COURSE OF REASSESSMENT PROCEEDING HAS ACCEPTE D THE ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 2 GENUINENESS OF PURCHASES OF RS. 60,30,610/- MADE FR OM VARIOUS PARTIES MECHANICALLY WITHOUT VERIFICATION AND THUS, ORDER PASSED BY AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2.1 THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN MA KING VARIOUS INCORRECT OBSERVATIONS IN HOLDING THAT AO HAS NOT M ADE PROPER ENQUIRY IN ACCEPTING THE PURCHASES AS GENUINE. 2.2 THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT INCOME OF ASSESSEE IS UNDER ASSESSED TO THE EXTENT OF RS. 15,07,653/- BEING 25% OF ALLEGED UNVERIFIABLE PURCH ASES OF RS. 60,30,610/-. 2. THE LD. AR SUBMITTED THAT THE ASSESSEE IS THE PR OPRIETOR OF H.K. EXPORT CORPORATION AND IS ENGAGED IN THE BUSINESS O F MANUFACTURING AND EXPORT OF GEM STONES AND FILED HIS RETURN OF IN COME ON 30.09.2008 DECLARING TOTAL INCOME OF RS. 9,57,900/-. IN THE AS SESSMENT FRAMED U/S 143(3) DATED 29.11.2010, THE AO HELD THAT THE PURCH ASE OF RS. 9,18,148/- MADE FROM M/S LOTUS IMPEX IS UNVERIF IABLE. HE THEREFORE DISALLOWED 25% OF SUCH PURCHASES AND MADE ADDITION OF RS. 2,29,537/-. THIS ADDITION WAS CHALLENGED BY THE ASSESSEE IN APP EAL IN ITA NO. 415/JP/2013 BEFORE THE TRIBUNAL AND IT WAS DECIDED BY TRIBUNAL ON 29.08.2018 WHERE AO WAS DIRECTED TO APPLY GP RATE O F PAST YEARS WHICH HAS ATTAINED FINALITY. 3. THE LD. AR FURTHER SUBMITTED THAT THE AO SUBSEQU ENTLY INITIATED PROCEEDINGS U/S 148 ON 31.03.2015 FOR THE REASON TH AT ASSESSEE HAS MADE PURCHASES OF RS. 60,30,610/- FROM FIVE PARTIES WHO ARE THE BOGUS CONCERNS OPERATED BY SHRI RAJENDRA JAIN, MUMBAI. IN REASSESSMENT ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 3 PROCEEDINGS, ASSESSEE FURNISHED AFFIDAVIT, INCOME T AX RETURNS, PAN, LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THES E CONCERNS, AND THE BANK STATEMENT OF THESE PARTIES IN EVIDENCE OF THE GENUINENESS OF THE PURCHASES. THE ASSESSEE ALSO FURNISHED THE STOCK RE CORDS IN EVIDENCE OF RECEIPT OF GOODS FROM THESE PARTIES. THE AO AFTER C ONSIDERING THESE EVIDENCES, VERIFICATION OF BOOKS / DETAILS / DOCUME NTS AND AFTER MAKING NECESSARY ENQUIRIES / VERIFICATION HELD THAT ASSESS EE HAS DISCLOSED ALL THE PURCHASES AT THE TIME OF THE ORIGINAL ASSESSMEN T COMPLETED U/S 143(3) AND THEREFORE, IT IS NOT A CASE WHERE ASSESS EE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT. HE ACCORDINGLY, VIDE ORDER DT. 30.03.2016 ASSESSED THE INCOME AS ORIGINALLY ASSESSED BY HIM VIDE ORDER DATED 29.11.2010. 4. THE LD. AR SUBMITTED THAT THE LD. CIT THEREAFTER , ISSUED NOTICE U/S 263 ON 20.02.2018 AND HELD AT PARA 7 OF THE ORD ER THAT A ROUTINE ACCEPTANCE OF MATERIAL WITHOUT FURTHER ANALYSIS IND ICATES A FAILURE ON PART OF THE AO TO MAKE CORRECT ASSESSMENT AND THERE FORE, ORDER PASSED BY THE AO WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN PARA 8, THE AO WAS DIRECTED TO FINALISE THE ASSESSMENT BY DISALLOWING 25% OF THE UNVERIFIABLE PURCHASES OF RS .60,30,610/- I.E., TO DISALLOW RS.15,07,653/- BUT AN OPPORTUNITY WAS GIVE N TO THE ASSESSEE TO STATE ITS CASE IN THE INTEREST OF THE NATURAL JUSTI CE. 5. IT WAS SUBMITTED BY THE LD AR THAT THE VERY ISSU E FOR WHICH NOTICE U/S 263 HAS BEEN TAKEN HAS BEEN EXAMINED BY THE AO IN DETAIL IN COURSE OF REASSESSMENT PROCEEDINGS AND AFTER MAKING NECESSARY ENQUIRIES FOLLOWING FINDING IS GIVEN AT PAGES 7-8 O F THE ORDER: ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 4 I HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND REPLIES / EVIDENCES MADE BY THE AR OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. IN THE OWN CASE OF ASSESSEE , ORIGINAL ASSESSMENT WAS COMPLETED UNDER SCRUTINY VIDE ORDER DATED 29.11.2010 ON TOTAL INCOME OF RS.13,54,351/- AS AGA INST THE DECLARED INCOME OF RS.9,57,900/- AND TRADING ADDITI ON WAS MADE ON ACCOUNT OF FAKE / BOGUS PURCHASES MADE DURING THE F INANCIAL YEAR 2007-08 FROM PARTIES IDENTIFIED AS ENTRY PROVIDERS. DURING ASSESSMENT PROCEEDINGS COMPLETED UNDER SCRUTINY, TH E ASSESSEE HAD MADE AVAILABLE REQUIRED DETAILS / SUPPORTING EV IDENCES CONSISTING OF P&L ACCOUNT, BALANCE SHEET, CAPITAL A CCOUNT, LIST OF TRADE CREDITORS, AUDIT REPORT IN 3CD, STOCK OF QUAN TITY DETAILS OF FINISHED STONES (INCLUDING DIAMOND FACETED BEADS) E TC. FOR THE FINANCIAL YEAR 2007-08 RELATING TO REASSESSMENT PRO CEEDINGS. THE ASSESSE HAS ALSO FURNISHED AFFIDAVITS OF ALL CONCER NING PARTIES FROM WHOM HE HAS MADE PURCHASE IN ACTUAL DELIVERY OF GOO DS AND FACTS MENTIONED THEREIN THAT THE GOODS, SO PURCHASED ARE TALLIED IN QUANTITY WISE AND VALUE WISE AS REQUIRED VIDE SHOW CAUSE LETTERSISSUED FROM TIME TO TIME. DUE VERIFICATION A LSO MADE FROM THE BOOKS AND DETAILS / DOCUMENTS PRODUCED DURING ASSES SMENT PROCEEDINGS. AFTER VERIFICATION FACTS FOUND VERIFIE D. THE ASSESSE HAS ALSO MENTIONED THAT ASSESSE HAS MADE PURCHASES IN A CTUAL DELIVERY OF GOODS AND THE SAME HAS BEEN TAKEN IN HIS STOCK R EGISTER. AS PER STOCK REGISTER, THE GOODS PURCHASES / SOLD BY THE A SSESSE DURING FINANCIAL YEAR 2007-08 SHOWN UNDER THE HEAD DIAMOND FACETED BEADS WHICH IS REPRODUCED AS UNDER:- ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 5 ANNEXURE - C M/S H.K. EXPORTS CORPORATION (QUANTITATIVE DETAILS OF FINISHED GOODS) FINANCIAL ENDING AS ON 31.03.2008 (ALL QUANTITATIVE IN GRAMS) S.NO. PARTICULARS OPENING STOCK RECEIPTS ISSUE CLOSING STOCK 33 DIAMOND FACETED BEADS 3178.866 2185.318 2934.882 2429.302 DUE VERIFICATION HAS BEEN MADE ON EACH AND EVERY IT EMS RELATES TO PURCHASES SHOWN BY THE ASSESSE IN FINANCIAL YEAR 20 07-08 WHICH HAS COVERED IN THE REASONS OF PENDING RE-ASSESSMENT PRO CEEDINGS. IN THIS CONNECTION SHOW CAUSE NOTICE U/S 133(6) OF IT ACT, 1961 VIDE LETTER DATED 11.06.2015 WERE ISSUED IN ALL THE CONC ERNED PARTIES WHO HAS FURNISHED THEIR CONFIRMATIONS BY SUBMITTING COPY OF ITR, PAN, BANK STATEMENT AND COPY OF ASSESSEES LEDGER A CCOUNT WHICH ARE ON RECORD. INFORMATION RECEIVED U/S 133(6) FROM RELATED PARTIES HAVE BEEN TEST CHECKED AND FACTS FOUND DULY VERIFIE D. 6. THE LD. AR FURTHER SUBMITTED THAT FROM THE ABOVE , IT CAN BE NOTED THAT AO HAS CONDUCTED NECESSARY ENQUIRIES / VERIFIC ATION WHICH SHOULD HAVE BEEN MADE BY HIM. THE LD. CIT HAS NOT SPECIFIE D THAT WHICH ENQUIRY / VERIFICATION IS NOT CONDUCTED BY THE AO. IN FACT, THE LD. CIT BY ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 6 PASSING ORDER U/S 263 HAS DIRECTED THE AO TO DISALL OW 25% OF THE ALLEGED UNVERIFIABLE PURCHASES EVEN WHEN THE SAME I S DULY CONFIRMED BY THE PARTIES AND THESE PURCHASES ARE DULY RECORDE D IN THE BOOKS OF ACCOUNTS / STOCK RECORDS. IN ASSESSEES OWN CASE FO R THIS VERY ASSESSMENT YEAR, THE TRIBUNAL IN ITA NO.415/JP/13 O RDER DT. 29.08.2018 HAS HELD THAT ONCE BOOKS ARE REJECTED, THE ONLY REC OURSE TO AO IS TO ASSESS INCOME ON ESTIMATION & BEST JUDGMENT BY APPL YING G.P. RATE OF PAST YEARS WHICH HAS ATTAINED FINALITY. THEREFORE, THE ORDER PASSED BY AO BY NO STRETCH OF IMAGINATION CAN BE CONSIDERED A S ERRONEOUS. 7. IN SUPPORT RELIANCE WAS PLACED ON THE DECISION I N CASE OF HONDA MOTORCYCLE & SCOOTERS INDIA PVT. LTD. VS. PCIT (201 8) 53 CCH 0241 (TRIB) (DEL) AND GE CAPITAL SERVICES INDIA VS. ACIT (2018) 52 CCH 0372 (TRIB) (DEL). 8. THE LD. AR FURTHER SUBMITTED THAT THE HONBLE SU PREME COURT HAS DISMISSED THE SLP FILED BY THE DEPARTMENT AGAINST O RDER OF THE HONBLE HIGH COURT OF GUJARAT IN CASE OF PCIT VS. TEJUA ROH IT KUMAR KAPADIA WHERE IT WAS HELD THAT NO QUESTION OF LAW ARISES SI NCE THE APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL HAD COME TO THE C ONCLUSION THAT THE PURCHASES MADE WERE DULY SUPPORTED BY BILLS AND PAY MENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. MOREOVER, THE SELLER ALSO CONFIRMED THE TRANSACTIONS. THERE WAS NO EVIDENCE TO SHOW THAT TH E AMOUNT WAS RECYCLED BACK TO THE ASSESSE. PARTICULARLY, WHEN IT WAS FOUND THAT THE ASSESSE HAD ALSO SHOWN THE SALES OUT OF THE PURCHAS ES MADE WHICH WERE ACCEPTED BY THE REVENUE. ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 7 IN THE PRESENT CASE ALSO, (A) THE PURCHASES ARE DUL Y SUPPORTED BY BILLS, (B) ALL PAYMENTS ARE MADE BY ACCOUNT PAYEE CHEQUES, (C) THE SUPPLIER HAS CONFIRMED THE TRANSACTIONS, (D) THERE IS NO EVI DENCE TO SHOW THAT THE PURCHASE CONSIDERATION HAS COME BACK TO THE ASS ESSEE IN CASH, (E) THE SALES OUT OF PURCHASES HAVE BEEN ACCEPTED & (F) THE SUPPLIER HAS ACCOUNTED FOR THE PURCHASES MADE BY THE ASSESSEE AN D PAID TAXES THEREON. THEREFORE, THE ORDER PASSED BY CIT TO THRU ST UPON HIS OWN OPINION ON THE AO BY WAY OF ORDER U/S 263 IS ILLEGA L AND BAD IN LAW. 9. THE LD. AR ACCORDINGLY SUBMITTED THAT EVEN THE ITAT, JAIPUR BENCH HAS CONSISTENTLY HELD THAT IN CASE OF ALLEGED UNVERIFIABLE PURCHASES WHERE THE BOOKS OF ACCOUNTS ARE REJECTED, THE ONLY COURSE OF ACTION IS TO ESTIMATE THE INCOME OF THE ASSESSEE BY APPLYING GROSS PROFIT RATE AS HELD IN CASE OF DCIT VS. GEMS PARADISE AY 2 009-10ITA NO. 747/JP/2012ORDER DATED 26.12.2017. IN THIS CASE, TH E AO AFTER INVOKING THE PROVISIONS OF SECTION 145(3) DISALLOWED 25% OF THE UNVERIFIABLE PURCHASES MADE FROM FOUR PARTIES. THE LD. CIT(A) UP HELD THE REJECTION OF BOOKS BUT RESTRICTED THE TRADING ADDITION BY APP LYING GP RATE OF 25.50% ON TOTAL TURNOVER INSTEAD OF GP RATE OF 25% DECLARED BY THE ASSESSEE. THE ITAT HELD THAT AFTER REJECTION OF BOO KS OF ACCOUNTS, MAKING FURTHER ADDITION OF 25% OF THE TAINTED PURCH ASES TO THE BOOKS RESULTS IS NOT PERMISSIBLE. ACCORDINGLY, IT UPHELD THE VIEW OF THE LD. CIT(A) IN APPLYING THE GP RATE FOR ASSESSMENT OF IN COME AFTER REJECTION OF BOOKS OF ACCOUNTS. 10. IN VIEW OF ABOVE, THE ORDER PASSED U/S 263 BY T HE LD. CIT IS ONLY TO THRUST UPON HIS OWN OPINION AGAINST THE FINDING OF THE AO. THEREFORE, ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 8 THE ORDER PASSED BY THE AO IS NOT ERRONEOUS AS THE SAME IS ONE OF THE POSSIBLE VIEWS. ACCORDINGLY, THE ORDER PASSED U/S 2 63 BE QUASHED. 11. PER CONTRA, LD CIT DR VEHEMENTLY ARGUED THE MA TTER AND SUPPORTED THE ORDER OF LD CIT IN EXERCISING HER JUR ISDICTION UNDER SECTION 263 OF THE ACT AND OUR ATTENTION WAS DRAWN TO THE F OLLOWING FINDINGS OF THE LD CIT WHICH READS AS UNDER: ' KEEPING THE ABOVE DISCUSSION IN VIEW BY THE VIRTU E OF THE POWERS CONFERRED ON THE UNDERSIGNED UNDER THE PROVISIONS O F SECTION 263 OF THE IT ACT 1961 I HOLD THAT THE ORDER UNDER SECTION 147/14 3(3) DATED 30/03/2016 FOR ASSESSMENT YEAR 2008-09 PASSED BY TH E ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE IN TEREST OF REVENUE AS THE ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER IN A ROUTINE AND PERFUNCTORY MANNER WITHOUT MAKING ENQUIRIES/VERIFIC ATION WHICH OUGHT TO HAVE BEEN MADE BEFORE ACCEPTING THE SUBMISSION MADE BY THE ASSESSEE REGARDING THE GENUINENESS OF PURCHASES MADE BY IT F ROM A GROUP OF CONCERNS WHICH ADMITTEDLY PROVIDED BOGUS BILLS TO F ACILITATE ACCOMMODATION ENTRIES. IT IS THEREFORE LIABLE TO RE VISION UNDER EXPLANATION (2) CLAUSE (A), CLAUSE (B) OF SECTION 263 OF THE IN COME TAX ACT. HENCE THE ASSESSMENT ORDER IS SET ASIDE ON THIS ISSUE WITH A DIRECTION TO THE ASSESSING OFFICER TO ASSESS THE CASE OF THE ASSESSE E DE NOVO IN ACCORDANCE WITH LAW AFTER MAKING THE NECESSARY ENQUIRIES, EXAM INATION AND VERIFICATION IN RESPECT OF THE CLAIM MADE BY THE AS SESSEE REGARDING THE ISSUE UNDER DISCUSSION. THE STAND TAKEN WHILE ASSES SING THE CASE OF THE ASSESSEE FOR A. Y 2009-10 ON IDENTICAL ISSUE SHOULD BE KEPT IN VIEW. THE AO IS DIRECTED TO FINALISE THE ASSESSMENT KEEPING I N VIEW THE INFORMATION RECEIVED FROM THE OFFICE OF ADDL. CIT SURAT DATED 1 3/03/2015 REGARDING ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 9 AVAILING OF ACCOMMODATION ENTRY BY THE ASSESSEE TO THE TUNE OF RS. 60,30,610/- AS BOGUS PURCHASE BILLS. IT IS DEAR THA T THE INCOME FOR A. Y. 2008- 09 HAS BEEN UNDER ASSESSED TO THE EXTENT OF RS. 15, 07,653/- BEING 25% OF UNVERIFIABLE PURCHASES OF RS. 60,30,6101 AS PER THE DECISION PRONOUNCED BY THE APEX COURT IN SPECIAL LEAVE TO APPEAL (C) NO. 8 956/2015 DECIDED ON 6.4.2015 VIJAY PROTEINS LTD. VS. CIT. THIS ERRONEOU S ASSESSMENT HAS IN TURN RESULTED IN LOSS OF REVENUE. HOWEVER AN OPPORTUNITY TO THE ASSESSEE TO STATE ITS CASE IS TO BE ALLOWED IN THE INTEREST OF NATURA L JUSTICE. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. IN THE CONTEXT OF ORIGINAL AS SESSMENT PROCEEDINGS, WE HAVE ALREADY HELD IN ITA NO. 415/JP/2013 DATED 2 9.08.2018 THAT IN CASE OF UNVERIFIABLE PURCHASES, ONCE BOOKS OF ACCOU NTS ARE REJECTED, ONLY COURSE OF ACTION AVAILABLE TO THE AO IS TO ASS ESS THE INCOME OF THE ASSESSEE ON ESTIMATION BASIS AND AVERAGE GP DECLARE D BY THE ASSESSEE WHICH HAS ATTAINED FINALITY SHALL BE PROPER BASIS F OR ESTIMATION OF INCOME AND OUR RELEVANT FINDINGS ARE AS UNDER: 3. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/ R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. IN THE ASSESSMENT PROCEEDINGS, THE AO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE UNDE R SECTION 145(3) OF THE IT ACT AND THEREAFTER ESTIMATED THE INCOME OF T HE ASSESSEE BY APPLYING 25% OF THE PURCHASES WHICH WAS CONSIDERED AS UNVERIFIABLE. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ADDITION M ADE BY THE AO. IN THE PROCEEDINGS BEFORE US, THE ONLY ISSUE IS REGARD ING ESTIMATION OF INCOME OF THE ASSESSEE AFTER REJECTION OF BOOKS OF ACCOUNTS. THEREFORE, ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 10 ONCE THE AO REJECTED THE BOOKS OF ACCOUNTS UNDER SE CTION 145(3) OF THE ACT AND THE SAID DECISION OF THE AO HAS NOW ATTAINE D THE FINALITY, THEN THE CONSEQUENTIAL ACTION OF THE AO WOULD BE ESTIMAT ION OF INCOME IN TERMS OF SECTION 144 OF THE ACT. THE AO HAS MADE T HE ADDITION @ 25% OF THE PURCHASES INSTEAD OF ESTIMATING THE INCOME B Y APPLYING SOME REASONABLE AND PROPER BASIS OF GP RATE. ONCE THE B OOKS OF ACCOUNTS ARE REJECTED BY THE AO, THE ONLY COURSE OF ACTION L EFT TO THE AO IS TO ASSESS THE INCOME OF THE ASSESSEE ON ESTIMATION BAS IS AND ON BEST JUDGMENT. THE GP RATE IS CONSIDERED AS A PROPER AN D REASONABLE BASIS AND A GUIDANCE FOR THE BEST JUDGMENT OF ESTIMATION OF INCOME. IT IS SETTLED POSITION OF LAW AS HELD BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INANI MARBLES PVT. LTD., 316 IT R 125 (RAJ.) AS WELL AS IN THE CASE OF KANSARA BEARINGS PVT. LTD. VS. AC IT, 270 ITR 235 (RAJ.) THAT THE GP RATE DECLARED AND ACCEPTED IN TH E EARLIER YEARS CAN BE A REASONABLE AND PROPER BASIS FOR ESTIMATION OF INC OME OF THE ASSESSEE. ACCORDINGLY, THE AVERAGE GP DECLARED BY THE ASSESSE E WHICH HAS ATTAINED THE FINALITY SHALL BE THE PROPER AND REASO NABLE BASIS FOR ESTIMATION OF INCOME OF THE ASSESSEE. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THIS ISSUE OF ESTIMATION OF INCOME OF THE ASSESSEE TO THE RECORD OF THE AO FOR DECIDING AFRESH BY APPLYING THE AVERAGE GP OF PAST YEARS WHICH HAS ATT AINED THE FINALITY. GROUND NOS. 2 & 3 ARE SET ASIDE TO THE RECORD OF TH E AO. 13. EVEN THE REASSESSMENT PROCEEDINGS AND THE IMPUN GED REVISION PROCEEDINGS U/S 263 HAVE BEEN INITIATED IN CONTEXT OF UNVERIFIABLE PURCHASES, THE ONLY COURSE AVAILABLE WITH THE AO IS TO ASSESS THE INCOME ON ESTIMATE BASIS AS WE HAVE ALREADY HELD IN CONTEXT OF ORIGINAL ITA NO. 598 /JP/2018 SHRI HABIB KHAN VS. PR.CIT 11 ASSESSMENT PROCEEDINGS. IN LIGHT OF SAME, THE PRES ENT REVISION PROCEEDINGS U/S 263 HAVE BECOME INFRUCTIOUS AND ARE SET-ASIDE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/12/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/12/2018. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HABIB KHAN, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- PR.CIT, JAIPUR-1,JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 598/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR