ACIT, Jaipur V. LAL CHAND AGARWAL, Jaipur

ITA 638/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47948 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G G MUNDRA

Judgement Text

1 ITA 638(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 638/JP/2010 ASSTT. YEAR : 2007-08. THE ACIT, CIRCLE-1, VS. SHRI LAL CHAND AGARWAL, JAIPUR. P/O M/S. LAL CHAND & CO., DELHI WALIN KI HAVELI, GOPAL JI KA RASTA, JAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 72/JP/2010 ( ARISING OUT OF ITA NO. 638/JP/2010 ) ASSTT. YEAR : 2007-08. SHRI LAL CHAND AGARWAL, VS. THE ACIT, CIRCLE-1, JAIPUR. JAIPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI SANJAY KUMAR RESPONDENT BY : SHRI G.G. MUNDRA ORDER DATE OF ORDER : 10/06/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AND A CROSS OBJECT ION BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 20 07-08. 2. THE DEPARTMENT IS OBJECTING IN DIRECTING TO APPL Y G.P. ATE OF 10% ON DECLARED SALES OF RS. 1,84,90,138/- AS AGAINST 25% APPLIED BY THE AO ON UNVERIFIABLE PURCHASES OF RS. 33,90,825/-. THE DEPARTMENT IS ALSO OBJECTING IN D ELETING THE ADDITION OF RS. 12,36,000/- 2 BY ACCEPTING FRESH EVIDENCE WITHOUT AFFORDING OPPOR TUNITY TO THE AO IN TERMS OF RULE 46A. 3. THE ASSESSEE IS OBJECTING IN CONFIRMING THE G.P. RATE OF 10% AS AGAINST G.P. RATE OF 8.48% DECLARED BY ASSESSEE AND CONFIRMING THE APPLI CATION OF PROVISIONS OF SECTION 145(3). IN GROUND NO. 2 THE ASSESSEE HAS SUPPORTE D THE ORDER OF LD. CIT (A) WHO DELETED THE ADDITION OF RS. 12,36,000/-. 4. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF AO. 5. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE HAS PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 6. CROSS OBJECTION FILED BY ASSESSEE WAS STATED TO BE TREATED AS WITHDRAWN BY LD. A/R. 7. IN VIEW OF THE ABOVE FACTS, THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 8. THE APPEAL OF THE DEPARTMENT IS DISPOSED OFF IN THE FOLLOWING MANNER. 9. THE ASSESSEE DEALS IN GEMS AND JEWELLERY. THE AS SESSEE DECLARED G.P. RTE OF 8.48% ON THE DECLARED TURNOVER OF RS. 1.84 CRORES OR ODD. THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT PURCHASES OF RS. 33,90,825/- FROM 3 PARTIES REMAINED UNVERIFIABLE. THE ASSESSEE WAS ASKED TO PRODUCE THESE PARTIES BUT NONE WAS PRODUCED. SUMMON ISSUED BY HIM WERE REMAINED UNCOMPLIED WITH. IN VIEW OF T HE INFORMATION RECEIVED FROM BCTT WING AND OTHER INFORMATION COLLECTED IN CASE OF HAL DIA GROUP AND OTHERS, THE AO FOUND THAT THE VARIOUS PARTIES ARE INDULGING IN ISSUING B OGUS BILLS WITHOUT SUPPLYING ANY MATERIAL. THE PARTIES FROM WHOM, THE ASSESSEE SHOW N TO HAVE MADE PURCHASES, WERE ALSO NAMED IN THOSE CASES. THEREFORE, THE AO REJECTED T HE BOOKS OF ACCOUNT BY INVOKING 3 PROVISIONS OF SECTION 145(3) AND MADE AN ADDITION @ 25% OF UNVERIFIABLE PURCHASES. HE PLACED RELIANCE ON THE DECISION IN THE CASE OF M/S. SANJAY OIL CAKE INDUSTRIES, 10 DTR 153 (GUJ.) AND IN THE CASE OF M/S. VIJAY PROTEINS L TD., 58 ITD 428 (ITAT AHMEDABAD). IT WAS CONTENDED BEFORE LD. CIT (A) THAT PURCHASE B ILLS WERE FILED, ALL PARTIES ARE ASSESSED TO TAX UNDER INCOME-TAX AND SALES TAX, PAN NUMBERS WERE FILED, ALL THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE. THEREFORE, ONUS LAY UPON ASSESSEE HAS BEEN DULY DISCHARGED. ACCORDINGLY IT WAS SUBMITTED THAT THER E WAS NO JUSTIFICATION IN REJECTING THE BOOKS OF ACCOUNT AND SUBMITTING THE ADDITION @ 25% OF UNVERIFIABLE PURCHASES. RELIANCE WAS PLACED ON VARIOUS CASE LAWS INCLUDING DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF GOTAN LIME KHANIZ UDYOG, 256 ITR 243. IT W AS FURTHER SUBMITTED THAT DECISION OF HONBLE GUJARAT HIGH COURT WAS FOUND DISTINGUISH ABLE BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF M/S. GEM PARADISE. 10. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT AO WAS NOT JUSTIFIED IN MAKING ADDIT ION @ 25% OF UNVERIFIABLE PURCHASES. HOWEVER, REJECTION OF BOOKS OF ACCOUNT WAS SUSTAINE D AS CERTAIN PURCHASES WERE REMAINED UNVERIFIABLE. THE LD. CIT (A) NOTED THAT G.P. RATE DECLARED BY ASSESSEE IS 8.48% WHICH IS LOWER THAN 9.53% SHOWN IN EARLIER YEAR. TH EREFORE, KEEPING IN MIND THE PAST HISTORY OF THE CASE, THE LD. CIT (A) DIRECTED TO AP PLY A G.P. RATE OF 10% ON DECLARED TURNOVER. 11. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) ON WHICH RELIANCE HAS BEEN PLACED BY THE RESPECTIVE PARTY, WE FIND NO INF IRMITY IN THE FINDING OF LD. CIT (A). THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CON SISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAINED UNVERIFIABLE THE REJECTION OF BO OKS OF ACCOUNT BY INVOKING PROVISIONS 4 OF SECTION 145(3) IS JUSTIFIED. HOWEVER, THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CONSISTENT VIEW ALSO THAT WHERE BOOKS OF ACCOUNT AR E REJECTED ON ACCOUNT OF UNVERIFIABLE PURCHASES, THEN IN THAT CASE THE ADDITION SHOULD BE MADE AFTER TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND ALSO CURRENT EVENT S OF THE CASE. 11.1. IN THE PRESENT CASE THE G.P. RATE DECLARED BY ASSESSEE IS 8.48% WHICH IS MARGINALLY LOWER AS COMPARED TO EARLIER YEAR AT 9.53%. THE LD. CIT (A) HAS DIRECTED TO APPLY 10% OF G.P. THE ACTION OF THE LD. CIT (A), IN OUR CONSIDE RED IS REASONABLE, THEREFORE, WE DECLINE TO INTERFERE WITH THE FINDING OF LD. CIT (A). ACCO RDINGLY ORDER OF LD. CIT (A) IS CONFIRMED. 12. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 13. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 .6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ACIT, CIRCLE-1, JAIPUR. SHRI LAL CHAND AGARWAL, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 638/JP/2010) BY ORDER, AR ITAT JAIPUR. 5