DCIT, Jaipur V. EURO JEWELS, Jaipur

ITA 65/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48015 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Assessee Lawyers: JK RANKA
• Keywords: Bogus purchase

Judgement Text

1 ITA 65(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 65/JP/2011 ASSTT. YEAR : 2006-07. THE DCIT, CIRCLE-2, VS. M/S. EURO JEWELS, JAIPUR. 2238, HALDIYON KA RASTA, JOHARI BAZAR, JAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 42/JP/2011 ( ARISING OUT OF ITA NO. 65/JP/2011 ) ASSTT. YEAR : 2006-07. M/S. EURO JEWELS, VS. THE DCIT, CIRCLE-2, JAIPUR. JAIPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI JK RANKA & SHRI SIDDARTH RANKA ORDER DATE OF ORDER : 28/07/2011. PER BENCH : THIS IS AN APPEAL BY DEPARTMENT AGAINST DELETING T HE TRADING ADDITION OF RS. 7,15,924/-. CROSS OBJECTION OF THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE TRIBUNAL. 2. ON ACCOUNT OF UNVERIFIABLE PURCHASES THE ADDITIO N WAS MADE BY THE AO @ 25% OF UNVERIFIABLE PURCHASES. HOWEVER, ENTIRE ADDITION WA S DELETED BY LD. CIT (A) BY FINDING OUT THAT GP RATE DECLARED IS MUCH BETTER AS COMPARE D TO EARLIER YEAR. THEREFORE, HE DELETED THE ENTIRE ADDITION. 2 3. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF AO. CERTAIN FURTHER ARGUMENTS WERE ADVANCED BY LD. D/R. 4. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE P LACED RELIANCE ON THE ORDER OF LD. CIT (A). 5. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) AND SUBMISSIONS OF LD. LD. D/R THAT ASSESSEE COULD NOT PROVE THAT THE PURCHASE S MADE ARE GENUINE. THE ASSESSEE ALSO FAILED TO SUBSTANTIATE BY FILING ANY SUPPORTING EVI DENCE THAT THE PURCHASES MADE ARE GENUINE. ONLY ENTRIES OF BOGUS PURCHASES HAVE BEEN MADE IN THE BOOKS OF ACCOUNT AND ASSESSEE CAN EASILY MANEUVER ITS GROSS PROFIT BY SH OWING BOGUS PURCHASES. THEREFORE, THE AO WAS CORRECT IN APPLYING 25% OF UNVERIFIABLE PURC HASES. RELIANCE WAS ALSO PLACED IN CASE OF M/S. KANCHWALA GEMS, 288 ITR 10 (SC), 55 TT J 261, 260 ITR 658 AND 17 ITR 355 (ORISSA). 5.1. AFTER CONSIDERING ALL THESE SUBMISSIONS, WE NO TED THAT THE CASE ON WHICH RELIANCE HAS BEEN PLACED ARE NOT DIRECTLY IN FAVOUR OF THE D EPARTMENT. FOR EXAMPLE, THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S. KANCHWALA GEMS (SUPRA) HAS HELD THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIABLE THEN REJECTIO N OF BOOKS OF ACCOUNT IS JUSTIFIED. TO THIS EXTENT THIS RATIO IS APPLICABLE. HOWEVER, THE DISALLOWANCE OF PURCHASES @ 25% ON ACCOUNT OF UNVERIFIABLE PURCHASES, NO FINDING HAS B EEN GIVEN BY HONBLE SUPREME COURT THAT 25% DISALLOWANCE IS CORRECT. ON THE CONTRARY, THE JAIPUR BENCHES ARE TAKING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAI N UNVERIFIED THOUGH THE INVOCATION OF PROVISIONS OF SECTION 145(3) IS CORRECT BUT NO ADDI TION CAN BE MADE @ 25% OF UNVERIFIABLE PURCHASES AS THE ADDITIONS CAN BE MADE TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND CURRENT EVENTS OF THE CASE. THE LD. CIT (A) HAS TAKEN INTO 3 CONSIDERATION THE PAST HISTORY OF THE CASE AND FOUN D THAT RESULT SHOWN BY ASSESSEE ARE BETTER AS COMPARED TO EARLIER YEAR. THEREFORE, HE HAS DELETED THE ENTIRE ADDITION. HOWEVER, AS CERTAIN PURCHASES REMAINED UNVERIFIABL E, THEREFORE, WE ARE OF THE VIEW THAT TO COVER UP THE LEAKAGE OF REVENUE, IF ANY, IF AN A DDITION OF RS. 50,000/- IS SUSTAINED ON ACCOUNT OF UNVERIFIABLE PURCHASES, IT WILL MEET THE ENDS OF JUSTICE AS THIS VIEW PRESENT BENCHES ARE TAKING CONSISTENTLY. ACCORDINGLY WE SU STAIN AN ADDITION OF RS. 50,000/- AGAINST ENTIRE DELETION MADE BY LD. CIT (A). 6. CROSS OBJECTION FILED BY ASSESSEE WAS IN SUPPORT OF THE ORDER OF LD. CIT (A). WE HAVE ALREADY DISPOSED OFF THE GROUND OF THE DEPARTM ENT TAKING INTO CONSIDERATION THE ORDERS OF THE AO AND LD. CIT (A) AND, THEREFORE, CR OSS OBJECTION DOES NOT REQUIRE ANY SEPARATE ADJUDICATION UPON. SINCE WE HAVE DISPOSED OFF THE APPEAL OF THE DEPARTMENT ON MERIT, THEREFORE, ALTERNATE CONTENTION OF THE ASSES SEE IS NOT CONSIDERED AT THIS POINT OF TIME. 7. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLOW ED IN PART AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 8. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28. 7.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE DCIT, CIRCLE-2, JAIPUR. M/S. EURO JEWELS, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 65(2)/JP/2011) BY ORDER, AR ITAT JAIPUR. 4