SHRI HARISH GOYAL HUF, Jaipur V. CIT, Jaipur

ITA 648/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87580 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Assessee Lawyers: RAM BABU GUPTA
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 143(3); 131; 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 648/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 HARISH GOYAL HUF, PROP. BADHALIA GEMS & JEWELLERY, 1582, HAVELI NAVRATNA, PARTANIYO KA RASTA, JOHARI BAZAR, JAIPUR. CUKE VS. COMMISSIONER OF INCOME TAX-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AADHH 0566 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 683/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER WARD-1(1), JAIPUR. CUKE VS. M/S HARISH GOYAL HUF, 1582, PARTANIYO KA RASTA, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AADHH 0566 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAM BABU GUPTA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : MRS. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/01/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 27/03/2015 ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 2 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THESE ARE CROSS APPEALS, ONE BY THE ASSESSEE AND AN OTHER BY THE REVENUE ARISE AGAINST THE ORDER DATED 03/05/2012 PA SSED BY THE LEARNED C.I.T.(A)-I, JAIPUR FOR THE A.Y. 2009-10. THE GROUNDS OF ASSESSEES APPEAL AS WELL AS THE REVENUE ARE AS UNDE R:- GROUNDS OF ITA NO. 648/JP/2012 1. THE LEARNED CIT(A) HAVE ACCEPTED THE PLEA OF THE ASSESSEE AND RIGHTLY DELETED THE ADDITIONS MADE BY THE LEARNED A.O. BUT THE LEARNED CIT(A) IS UNJUST AND HAS ERRED IN LAW AND ACTED AGAINST DECIDED JUDGMENTS BY INCREASING THE NET PROFIT WITHOUT ANY BASIS FROM 2.2.% TO 5% IN SPITE OF THE FACT THAT TURNOVER, GROSS PROFIT AND NET PROFIT OF THE FIRM IS BETTER THAN LAST YEAR IN AMOUNT AND IN PERCENTAGE. EVEN THE LEARNED A.O ALSO NOT DISTURBED ANY EXPENSES IN THE PROFIT AND LOSS ACCOUNT AND ACCEPTED ALL EXPENSES AND ALLOWED IN COMPUTING THE INCOME OF THE ASSESSEE. THE NET PROFIT ADDITION MADE BY THE LEARNED CIT(A) DESERVES TO BE DELETED. 2. THE LEARNED CIT(A) IS UNJUST IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT ON THE BASIS THAT FEW PARTIES WERE NOT AVAILABLE OR REFUSED TO ACCEPT THE NOTICE ISSUED BY THE LEARNED A.O. IN SPITE OF THE FACT THAT ALL THE DETAILS REQUIRED BY THE LEARNED A.O. INCLUDING QUANTITATIVE DETAILS OF STOCK. REGISTER WA S FILED AND ACCOUNTS WERE DULY AUDITED AS PER LAW. ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 3 GROUND OF ITA NO. 683/JP/2012 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LEARNED CIT(A) IS ERRED IN : (I) DELETING DISALLOWANCE ON ACCOUNT OF UNVERIFIED PURCHASES OF RS. 11,47,149/-, LABOUR CHARGES AMOUNTING TO RS. 9,11,149/- AND ASSORTING CHARGES AMOUNTING TO RS. 17,43,166/- AND REPLACING THE SAME BY N.P. ADDITION OF RS. 11,78,186/-. 2. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF PRECIOUS/SEMI PRECIOUS S TONES. RETURN DECLARING TOTAL INCOME AT RS. 9,46,200/- WAS FILED E LECTRONICALLY ON 29/09/2009. THIS CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE LEARNED ASSESSI NG OFFICER. LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E IS IN THE SECOND YEAR OF BUSINESS OPERATION AND HAD NOT MAINTAINED D AY TO DAY STOCK REGISTER. THE POSITION OF THE TRADING RESULT OF CURR ENT YEAR, AS COMPARED TO THE TRADING RESULT OF A.Y. 2008-09 IS AS UNDER:- ASSESSMENT YEAR TURNOVER GROSS PROFIT GROSS PROFIT RATIO 2007-08 29062884 1879305 6.47% 2008-09 42380756 3296512 7.78% THE LEARNED ASSESSING OFFICER FOUND THAT THE ASSESSE E HAS DECLARED PURCHASE AT RS. 3,63,35,305/-. THE PURCHASES FROM M/ S SAGAR EXPORTS ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 4 EXCEEDED RS. 10 LACS AND THEREFORE TO VERIFY THE PU RCHASE ON TEST CHECK BASIS. THE ASSESSEE WAS ASKED TO PRODUCE THE SAID PAR TY WITH THEIR STOCK REGISTER, BANK STATEMENT, SALE REGISTER AND L EDGE TO VERIFY THE GENUINENESS OF THE PURCHASES AS CLAIMED. THE SAID PA RTY DID NOT APPEAR BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER INFORMATION AVAILABLE WITH THE DEPARTMEN T TO THE SURVEY CONDUCTED BY THE DIT(INVESTIGATION) WING, THE OTHER AUTHORITIES OF THE DEPARTMENT AND THE SURVEYS/ENQUIRIES CONDUCTED BY T HE SALES TAX DEPARTMENT, REPORTEDLY A LARGE NUMBER OF SO-CALLED SUPPLIERS OF PRECIOUS/SEMI PRECIOUS STONES WERE INDULGING IN ISSU ING MERE BILLS WITHOUT TRANSFER OF THE CORRESPONDING GOODS MENTIONE D IN THE BILLS ISSUED BY THEM. IN THE MEAN WHILE, INFORMATION HAD BEEN RECEIVED THROUGH THE HIGHER AUTHORITIES THAT THE SALES TAX D EPARTMENT HAD ALSO CONDUCTED ENQUIRIES TO ASCERTAIN THE EXISTENCE OF V ARIOUS TRADERS OF GEM STONES. ON THE BASIS OF ENQUIRIES SO CONDUCTED , IT WAS FOUND THAT LARGE NUMBER OF TRADERS ARE EXISTING IN PAPERS ONLY . LIST OF SUCH TRADERS WAS ALSO RECEIVED BY THE ASSESSING OFFICER. THE ASSES SEE HAD CLAIMED PURCHASES FROM THE FOLLOWING PARTIES, WHICH WERE REPO RTEDLY PROVIDING MERE BILLS ONLY WITHOUT TRANSFER OF CORRESPONDING GO ODS MENTIONED IN SUCH BILLS:- ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 5 S. NO. NAME OF THE PARTY ADDRESS OF THE PARTY AND BILL NO. AND DATE OF PURCHASES MADE AMOUNT TOTAL PURCHASES REMARKS FOR NON SERVICE 1 M/S SAGAR EXPORTS 55, KAILASHPURI, NEAR HOTEL JAIPUR DARBAR, AMER ROAD, JAIPUR. BILL NO. 201 DATED 13/05/2008 BILL NO. 202 DATED 18/05/2008 BILL NO. 203 DATED 07/6/2008 BILL NO. 205 DATED 16/06/2008 388800 432000 464640 378000 1663440 ADDRESSEE MOVED 2 M/S PARADISE EXPORTS 37, RAJHANS COLONY,BHRAMPURI, JAIPUR BILL NO. 20 DATED 03/05/2008 BILL NO. 24 DATED 15/05/2008 344250 330750 675000 INSUFFICIENT ADDRESS 3 M/S PRABHAT EXPORTS E - 147, VAISHALI NAGAR, JAIPUR BILL NO. 7 DATED 02/5/2008 BILL NO. 9 DATED 03/5/2008 290000 298500 588500 NO SUCH FIRM EXISTS 4 M/S NEELKANTH ENTERPRISES 1544, CHAURA RASTA, SMS HIGHWAY, JAIPUR BILL NO. 369 DATED 10/05/2008 BILL NO. 370 DATED 13/05/2008 326800 265200 592000 REFUSED TO ACCEPT 5 M/S HARI OM EXPORTS 3738, KGB KA RASTA, JOHRI BAZAR, JAIPUR BILL NO. 419 DATED 08/05/2008 BILL NO. 423 DATED 12/05/2008 283200 284800 568000 HOUSE NO. 3738 REMAINS CLOSED 6 M/S RAJ HANS JEWELLERS 180, VAISHALI NAGAR, JAIPUR (RAJ) BILL NO. 359 DATED 03/4/2008 505000 505000 NO SUCH FIRM EXISTS. TOTAL VALUE OF PURCHASES 4591940 ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 6 THESE PURCHASES WERE 12.63% OF THE TOTAL PURCHASES. THE LEARNED ASSESSING OFFICER ISSUED SUMMONS TO FIND OUT THE GE NUINENESS OF THESE PARTIES AND ALSO TO VERIFY THE GENUINENESS OF THESE TRANSACTIONS BUT THE SUMMONS WERE RETURNED BACK BY THE POSTAL AUTHORITY WI TH THE REMARKS AS MENTIONED IN THE ABOVE CHART. THE ASSESSEE WAS CON FRONTED WITH THESE RESULTS OF INQUIRY AND THE ASSESSEE HUF WAS GI VEN REASONABLE OPPORTUNITY OF BEING HEARD. THE A.R. ALSO PROVIDED A NOTHER OPPORTUNITY TO PRODUCE THESE SUPPLIERS BUT IT FAILED TO COMPLY THE SAME. HOWEVER, IT HAD FILED A REPLY HIGHLIGHTING LEGAL ARGUMENTS FOR NOT DISTURBING THE TRADING RESULT. WITHOUT VERIFICATION OF THE FACTS I NVOLVED, NO LAW OR LEGAL DECISIONS CAN BE APPLIED TO THE FACTS OF THE CASE. THE LEARNED ASSESSING OFFICER REPRODUCED THE ASSESSEES REPLY OF LETTER D ATED 08/12/2012 ON PAGE 3-4 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, THE LEARNED ASSESSING OFFICER CONCLUDED AS U NDER:- I HAVE CONSIDERED THE REPLY FURNISHED BY THE ASSES SEE, BUT I AM UNABLE TO ACCEPT THE SAME, FOR THE FOLLOWING REASONS :- I) IT IS NOT VERIFIABLE AS TO WHETHER THE SUPPLIER HAS BEEN FILING ANY RETURN OF INCOME WITH REGARD TO HIS BUSINESS ACT IVITY AND THE RESULTANT INCOME/LOSS; II) THE BUSINESS DOES NOT EXIST AT THE NOTIFIED ADDRESS. NO NEW ADDRESS HAS BEEN PROVIDED BY THE ASSESSEE FOR FU RTHER VERIFICATION; ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 7 III) AS IS REFLECTED ABOVE SOME OF THE ADDRESSEES HAVE R EFUSED TO ACCEPT THE SUMMONS U/S 131 FROM THE POSTAL AUTHO RITIES. IT IS EVIDENT THAT THEY WERE AWARE OF THE CONTENT OF THE NOTICES AND THE FIRM WANTED TO AVOID ANY SORT OF CRO SS VERIFICATION. IV) THE ASSESSEE HAS NOT MAINTAINED ANY STOCK REGISTER O N DAY TO DAY BASIS SO AS TO VERIFY THE DAY TO DAY MOVEMEN T OF THE STOCK. V) ASSESSEE IS HARPING ON THE FACT THAT WHERE THE G.P. RATE DECLARED IS BETTER THAN THE G.P. RATE OF PAST YEARS , THEN ITS TRADING ACCOUNT IS OUGHT TO BE ACCEPTED, EVEN IF TH ERE ARE INNUMERABLE DEFECTS AND FLAWS IN THE TRADE PRACTICE FOLLOWED. ASSESSEE HAS PREPARD STANDARDIZED AND PRE- DETERMINED DATA WITH REGARD TO ITS TRADING ACCOUNT, WHERE THE PURCHASE ITSELF IS NOT VERIFIABLE. THEN THE AUTH ENTICITY OF ITS OPENING STOCK AND CLOSING STOCK IS ITSELF IS NO T SUBJECT TO VERIFICATION. IN THIS BACKGROUND ASSESSEES ARGUMEN T THAT THE G.P. RATE ALONE SHOULD BE CONSIDERED FOR ACCEPT ING THE CORRECTNESS OF ITS BOOKS OF ACCOUNT HAS NOT LEGAL S ANCTITY. VI) THE ENTIRE EXERCISE MADE IS WITH A VIEW TO VERIFY THE CORRECTNESS OF EACH OF THE ENTRIES MADE IN THE TRAD ING ACCOUNT WHICH CULMINATES IN THE DETERMINATION OF TH E GROSS PROFIT. IF THE CORRECTNESS OF ANY ONE ENTRY OF THE TRADING ACCOUNT IS FOUND TO BE INCORRECT, THEN IT WILL HAVE A BEARING ON THE GROSS PROFIT DECLARED BECAUSE IT IS ARRIVED AT BY ARITHMETICAL CALCULATIONS. ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 8 VII) IT IS TO BE NOTED THAT SUMMONS ISSUED AT THE ADDRES S AVAILABLE ON THE PURCHASE BILLS HAVE BEEN RETURNED BY THE POSTAL AUTHORITIES WITH REMARKS NO SUCH FIRM EXISTS /ADDRESS INCOMPLETE/NOT KNOWN ETC. VIII) CONFIRMATIONS FROM THE PARTIES HAVE ALSO NOT BEEN FURNISHED BY THE ASSESSEE. IX) THE OBSERVATIONS OF FORMALITIES ON PAPER, LIKE TIN, RCST/CST NO./PAN, BANK ACCOUNT ARE PART OF THE MODUS OPERANDI TO RUN THE RACKET OF ISSUING BOGUS BILLS. ALL THE DOCUMENTS BEAR AN ADDRESS, BUT THE SUPPLIER IS NOT FOUND AT THE GIVEN ADDRESS. MOREOVER, PAYMENT BY CHEQUE I S NEITHER SACROSANCT NOR CAN IT MAKE A NON-GENUINE TRANSACTION AS GENUINE FOR WHICH RELIANCE IS PLACED ON THE JUDGMENT OF CIT VS. PRECISION FINANCE(P) LTD (208 ITR 465 (CAL.) X) RELIANCE IS ALSO PLACED ON THE JUDGMENT OF M/S KACH WALA GEMS VS. JCIT (ITD NO. 134, ITAT JAIPUR BENCH (DEC.2003)] WHEREIN IT WAS HELD THAT THE A.O. IS ENTI TLED TO ACT ON MATERIAL WHICH MAY NOT EVEN BE ACCEPTED AS AN EVIDENCE AS THE A.O. IS NOT BOUND BY THE TECHNICAL RULES OF EVIDENCE AND PLEADINGS. THE HONBLE ITAT HAS ALSO HEL D THAT THE DECLARATION OF SALES UNDER SALES TAX ACT AN D NON- PRODUCTION OF BOOKS OF ACCOUNT BY THE SELLER WILL NO T LEAD TO THE CONCLUSION THAT THE SALES ARE GENUINE IN A CASE WHEREIN A.O. COMES TO THE CONCLUSIONS THAT THE RELEVANT PUR CHASES ARE NON-GENUINE IN THE CASE OF THE ASSESSEE. THE HON BLE ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 9 ITAT HAS ALSO HELD THAT THE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE GENUINENE SS OF THE PURCHASER. XI) UNDER SECTION 101, 102 AND 106 OF THE EVIDENCE ACT, ONUS LIES UPON THE ASSESSEE TO PROVE ALL THE EXPENSES IN CLUDING PURCHASES TO THE SATISFACTION OF THE ASSESSING OFFI CER, WHICH WAS NOT DISCHARGED BY THE ASSESSEE AS IT FAILED TO PRODUCE THE SUPPLIERS FROM WHOM PURCHASES HAVE BEEN CLAIMED. THE ONUS LIES UPON THE ASSESSEE TO PROVE TH E GENUINENESS OF THE TRANSACTION WHEN SUCH PURCHASES ARE CLAIMED TO BE GENUINE BY IT. RELIANCE IS PLACED IN THE CASE OF INDIAN WOOLEN CARPET FACTORY VS. ITAT 178 CTR 420 (RAJ.)]. THE ASSESSEE WAS ALSO NOT SUBMITTED EVIDENCE OF ASSOR TING CHARGES AND LABOUR CHARGES FOR RS. 35 LACS. ON THE BASIS OF THE SE DEFECTS, HE APPLIED SECTION 145(3) OF THE ACT AND REJECTED THE BOOK RES ULT. IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD INFL ATED THE COST OF PURCHASE COVERED BY THE BILLS ISSUED BY THE ABOVE P ARTIES. HE ESTIMATED THE NET PROFIT @ 25% ON UNVERIFIABLE/BOGUS PURCHASE S OF RS. 45,91,940/- AT RS. 11,47,985/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD JUSTIFIED THE REJECTION OF BOOK U/S 145 OF THE ACT BY OBSERVING THAT THE ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 10 ASSESSEE WAS NOT ABLE TO PROVE THE GENUINENESS OF TH E PURCHASES FROM SIX PARTIES IN SPITE OF REPEATED OPPORTUNITIES GIV EN TO THE ASSESSEE BY THE ASSESSING OFFICER. THE DEPARTMENT HAD GATHERED T HE EVIDENCES AGAINST THESE PARTIES AND FOUND THAT THESE TRANSACT IONS WERE NOT FOUND GENUINE BUT WERE MERELY ENTRY PROVIDERS. THE LEARNED ASSESSING OFFICER MADE EFFORTS TO VERIFY THE PARTIES BY ISSUING NOTIC E U/S 131 OF THE ACT BUT THEY COULD NOT BE SERVED BECAUSE THESE PARTIES WERE NOT FOUND TO EXIST. REGARDING ESTIMATION OF INCOME ON UNVERIFIAB LE/BOGUS PURCHASES, THE LEARNED CIT(A) HELD THAT THE LEARNED ASSESSING OFFICER MADE AN AD HOC DISALLOWANCE ON LABOUR CHARGES CLAIMED AND ENTIR E ASSORTING CHARGES HAVE BEEN DISALLOWED. ON THE OTHER HAND, THE APPELLANT HAD PRODUCED LEDGER ACCOUNT OF LABOUR CHARGES AND ASSOR TING CHARGES PAID. THE DEPARTMENT CANNOT VENTURE UPON GIVING DIRECTIONS TO THE ASSESSEE ON HOW TO CONDUCT BUSINESS AND THE LABOUR CHARGES AN D ASSORTING CHARGES WERE BUSINESS RELATED EXPENSES AS PER THE AP PELLANT. THE ONLY POINT OF DISPUTE SEEMS TO BE THE AMOUNT OF DISALLOWA NCE TO BE MADE IN ABSENCE OF PROPER RECORDS AS REQUIRED FOR VERIFICAT ION BY THE A.O. IT IS ALSO A FACT THAT THE TURNOVER, G.P. RATE AND N.P. R ATE OF THE APPELLANT HAVE IMPROVED. SECONDLY, SEVERAL JUDICIAL PRONOUNCE MENTS HAVE HELD THAT ONCE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED A ND THE INCOME IS ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 11 ESTIMATED THAN SEPARATE ADDITION CANNOT BE MADE. ON THE OTHER HAND, THE NON MAINTENANCE OF PROPER BOOKS OF ACCOUNT WHICH PREVENTED THE VERIFICATION OF THE PAYMENT FOR LABOUR AND ASSORTME NT AND THE FACTS THAT 12.63% OF THE TOTAL PURCHASES WERE MADE FROM UNREGIS TERED DEALERS AND NOT MAINTAINING QUALITATIVE DETAILS OF STOCK IN SPITE OF HUGE PAYMENT FOR ASSORTING OF STOCK, INDICATES THAT THE APPELLAN T MAY NOT BE REFLECTING ITS CORRECT INCOME. THEREFORE, THE N.P. RATE IS EST IMATED AT 5% ON TOTAL TURNOVER. THE SEPARATE DISALLOWANCES MADE FROM LABOUR CHARGES AND ASSORTING CHARGES ARE NOT BEING UPHELD. SINCE THE A PPELLANT HIMSELF HAS SHOWN A NET PROFIT OF RS. 9,40,852/- AT THE RATE OF 2.22% A SET OFF THE AMOUNT IS GIVEN AND A TOTAL N.P. ADDITION OF RS. 11 ,78,187/- IS CONFIRMED AT THE RATE OF 5%. RESULTING IN A TOTAL N .P. ADDITION OF RS. 11,78,186/-. 4. NOW BOTH I.E. ASSESSEE AS WELL AS THE REVENUE ARE IN APPEALS BEFORE US. THE LEARNED A.R. FOR THE ASSESSEE REITER ATED THE ARGUMENTS MADE BEFORE THE LEARNED CIT(A) AND FURTHER ARGUED T HAT THE RELEVANT DETAILS LIKE PURCHASE BILLS, COPY OF ACCOUNT, SALES TAX NUMBER, PAN OF THESE PARTIES WERE SUBMITTED. THE LEARNED ASSESSING O FFICER INSISTED ON PERSONAL PRESENCE OF THESE PERSONS AND AS AN INDIVI DUAL HE COULD NOT HAVE BEEN FORCED TO PRODUCE THESE PEOPLES. NONE SER VICE OF SUMMONS ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 12 DID NOT MEAN THAT THE BUSINESS DID NOT EXIST OR THE BUSINESS HAD NEVER EXISTED. THE STOCK SUMMARY/INVENTORY REGISTER OF GOO D WAS FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE TURNOVER AS WELL AS G.P. HAD INCREASED SUBSTANTIALLY INCLUDING THE N.P. RATE. HE ALSO RELIED UPON THE VARIOUS CASE LAWS GIVEN BELOW: (I) KANSARA BEARING PVT. LTD. VS. CIT 270 ITR 235 (R AJ.). (II) ADDL.CIT VS. LAKHANI SHOES LTD. 34 TW 32 (JP.) AND J.C. SHARMA VS. ITO 33 TW 80 (JP.) (III) CIT VS. GOTAN LIME KHANIJ UDHYOG 256 ITR 243. 5. AT THE OUTSET, THE LEARNED D.R. SUPPORTED THE OR DER OF THE ASSESSING OFFICER AND ARGUED THAT NO EVIDENCE REGAR DING LABOUR CHARGES AND ASSORTING CHARGES WERE FURNISHED BEFORE THE ASSE SSING OFFICER. HOWEVER, THE LEARNED CIT(A) ALLOWED THE BENEFIT OF EXP ENSES CLAIMED AND NO SEPARATE ADDITION ON ACCOUNT OF LABOUR CHARG ES AND ASSORTING CHARGES HAD BEEN CONFIRMED. THESE DISALLOWANCES ARE S PECIFIC, THEREFORE, SEPARATE ADDITION SHOULD HAVE CONFIRMED BY THE LEARNED CIT(A). SHE PRAYED TO CONFIRM THE ORDER OF THE LEARN ED ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UND ISPUTED FACT THAT THE ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 13 ASSESSEES PURCHASES WERE FOUND UNVERIFIABLE/BOGUS. THE LEARNED ASSESSING OFFICER GOT INFORMATION FROM THE VARIOUS AUTHORITIES OF THE DEPARTMENT AND FROM INSPECTION OF THE ADDRESS AND I T WAS FOUND THAT THESE PURCHASES WERE UNVERIFIABLE/BOGUS. HE ISSUED S UMMONS TO THEM BUT WHICH WAS RETURNED BACK UNSERVED. THE LEARNED ASS ESSING OFFICER ALSO ASKED TO PRODUCE THESE PARTIES FOR VERIFICATIO N, WHICH WERE NOT PRODUCED BY THE APPELLANT DURING THE ASSESSMENT PRO CEEDINGS. SIMILAR LINE OF CASES, THIS BENCH HAS DECIDED IN THE CASE O F SHRI ANUJ KUMAR VARSHNEY VS. I.T.O. AND OTHER GEMS AND JEWELLERY CASE S IN ITA NO. 187/JP/2012 ORDER DATED 22/10/2014 WHERE ON UNVERIFI ABLE/BOGUS PURCHASES 15% DISALLOWANCES HAS BEEN DECIDED. BEING THIS ISSUE IDENTICAL, WE ALSO APPLY 15% DISALLOWANCES ON UNVERIF IABLE PURCHASES IN THIS CASE ALSO. 6.1 THE OTHER ADDITIONS MADE BY THE ASSESSING OFFICE R, WHICH WERE DELETED BY THE LEARNED CIT(A) ON THE GROUND THAT S EVERAL JUDICIAL PRONOUNCEMENTS HAVE HELD THAT ONCE THE BOOKS OF ACC OUNT HAVE BEEN REJECTED AND THE INCOME IS ESTIMATED, THEN SEPARATE ADDITION CANNOT BE MADE. THIS BENCH ALSO CONFIRMED THIS FINDING AS HELD BY THE VARIOUS COURTS THAT AFTER ESTIMATING THE INCOME, NO SEPARAT E ADDITION CAN BE MADE ON ACCOUNT OF VARIOUS EXPENSES DEBITED IN THE P&L ACCOUNT. ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 14 THEREFORE, WE CONFIRMED THE ADDITION OF RS. 6,88,791/ - AS 15%. THE LEARNED CIT(A) HAS INCREASED THE N.P. ON TOTAL SALE AND AFTER GIVING THE EFFECT OF N.P. DISCLOSED AT RS. 9,40,852/- @ 2.22% I S SET OFF THE AMOUNT WAS GIVEN. HOWEVER, SHE ESTIMATED THE INCOME ON THE B ASIS OF 5% ON TOTAL TURNOVER BUT SHE HAD NOT GIVEN ANY FINDING ON THE BASIS OF COMPARABLE CASE AND HAD NOT CONSIDERED THE PAST HIS TORY OF THE ASSESSEES CASE. IT IS A FACT THAT THE ASSESSEES S ALE, G.P. AND N.P. RATE HAS INCREASED BUT IT IS ALSO FACT THAT THE ASSESSEE HAD NOT ABLE TO VERIFY THE PARTLY LABOUR CHARGES AND ASSORTING CHARGES. THE LEARNED ASSESSING OFFICER ALSO MADE THESE ADDITIONS IN ABSENCE OF ANY EVIDENCE SUBMITTED BY THE ASSESSEE, WHICH HAS BEEN EXPLAINED BEFORE THE LEARNED CIT(A). HOWEVER, THE ASSESSEES REPLY NOT SUPPORTED WITH THE EVIDENCES, HE SIMPLY EXPLAINED THE REASONS BUT IT IS ALSO A FACT THAT THE ASSESSEE HAS TO INCUR EXPENSES ON LABOUR CHARGES AND ASSORTING O F GEMS. THUS, WE UPHELD THE N.P. RATE @ 3% INSTEAD OF 5% CONFIRMED BY THE LEARNED CIT(A) ON TOTAL SALE. NET ADDITION OF RS. 3,25,222/- IS CONFIRMED. THE ADDITION CONFIRMED BY THIS BENCH ON UNVERIFIABLE/BO GUS PURCHASES IS SEPARATE. THEREFORE, THE ASSESSING OFFICER IS DIRECT ED TO CALCULATE THE INCOME AS PER ABOVE DIRECTION. ACCORDINGLY, ASSESSE ES APPEAL IS PARTLY ALLOWED. ITA 648 & 683/JP/2012_ HARISH GOYAL VS. CIT-1 15 7. IN THE RESULT, THE ASSESSEES APPEAL AS WELL AS A PPEAL OF THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/03/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 27 TH MARCH, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- HARISH GOYAL HUF, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- COMMISSIONER OF INCOME TAX-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 648 & 683/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR