DCIT, Jaipur V. M/S GEMS PARADISE, Jaipur

ITA 747/JPR/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5457 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Keywords: Bogus purchase; Rejection of books of accounts; Additional evidence; Accommodation entries
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR BEFORE: SHRI VIJAY PAL RAO, JM & DR. ARJUN LAL SAI NI, AM ITA NO. 747/JP/2012 ASSESSMENT YEAR : 2009-10 DCIT, CIRCLE-2, JAIPUR. VS. M/S GEMS PARADIES, GULAB NIWAS, M.I. ROAD, JAIPUR. PAN/GIR NO.: AA CFG68 30 A APPELLANT RESPONDENT CO NO. 65/JP/2012 (ARISING FROM ITA NO. 747/JP/2012) ASSESSMENT YEAR : 2009-10 M/S GEMS PARADIES, GULAB NIWAS, M.I. ROAD, JAIPUR. VS. DCIT, CIRCLE-2, JAIPUR. PAN/GIR NO.: AACFG6830A APPELLANT RESPONDENT ASSESSEE BY : SHRI P.C.PARWAL (CA) REVENUE BY : SHRI P.P. MEENA (JCIT) DATE OF HEARING : 06/11/2017 DATE OF PRONOUNCEMENT : 26/12/2017 ORDER PER: VIJAY PAL RAO, J.M.: THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 24.07.2012 OF LD. CIT(A) FOR THE ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 2 ASSESSMENT YEARS 2009-10. THIS MATTER WAS EARLIER D ECIDED BY THIS TRIBUNAL VIDE ORDER DATED 17.02.2016 HOWEVER, SUBSE QUENTLY THE SAME WAS RECALLED VIDE ORDER DATED 11.01.2017 IN M.A. NO . 175/JP/2016. THEREFORE, IT WAS PLACED BEFORE US FOR AFRESH HEARI NG AND DISPOSAL. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN ALLOWING RELIEF OUT OF THE TRADING ADDITION MADE BY THE AO BY DISALLOWING 25% OF TOTAL BOGUS PURCHASES OF RS. 1,01,00,729/- IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF M/S SANJA Y OILCAKE INDUSTRIES VS. CIT. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO OUT OF SALES COMMISSION PAID (III)WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF FOREIGN TRAVELING EXPENSES OF RS. 1,00,000/- MAD E BY THE AO. (VI) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS ON CREDIT CARD COMMISSION. 2. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO NOTED THAT THE PURCHASES OF THE ASSESSEE INCLUDES THE PURCHASE OF RS. 1,01,00,729/- MADE FROM FOUR PARTIES WHICH ARE PROV IDING ACCOMMODATION. THE AO ISSUED NOTICE U/S 131 TO THEM BUT NO RESPONSE/ INFORMATION WAS RECEIVED FROM THESE PARTI ES DESPITES THE ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 3 SUMMONS WERE DULY SERVED. THE AO FURTHER OBSERVED T HAT THESE FOUR PARTIES WERE FOUND TO BE ENGAGED IN PROVIDING ACCOM MODATION ENTRIES AND BOGUS BILLS DURING THE COURSE OF SEARCH AND SEI ZURE OPERATIONS IN VARIOUS CASES. THEREFORE, THE AO INVOKED THE PROVIS IONS OF SECTION 145(3) OF THE INCOME TAX ACT AND REJECTED THE BOOKS RESULT OF THE ASSESSEE ON THE GROUND THAT THE PURCHASES FROM THES E FOUR PARTIES WERE NOT VERIFIABLE. THE AO THEN DISALLOWED 25% OF THE U NVERIFIABLE PURCHASES AMOUNT BY FOLLOWING THE DECISION OF HONB LE GUJARAT HIGH COURT IN CASE OF SANJAY OIL CAKES INDUSTRIES VS. CI T 316 ITR 274. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) WHO HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. HOWEVER, THE CIT(A) RESTRICTING THE TRADING ADDITI ON MADE BY THE AO BY APPLYING GP RATE OF 25.50% ON TOTAL TURNOVER. SINCE , THE ASSESSEE DECLARED G.P. RATE OF 25%, THEREFORE, THE ADDITION TO THE EXTENT OF RS. 6,63,915/- WAS SUSTAINED BY THE LD. CIT(A) ON THIS ACCOUNT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) BOTH REVENUE AS WELL AS ASSESSEE FILED THEIR RESPECTIVE APPEAL AND CROSS OBJECTION. 3. BEFORE US, THE LD. DR HAS SUBMITTED THAT WHEN TH E AO HAS ISSUED THE SUMMONS U/S 131 AND THESE SUPPLIES HAVE NOT FIL ED ANY REPLY TO THE SUMMONS ISSUED BY THE AO THEN, PURCHASES MADE FROM THESE TAINTED ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 4 PARTIES ARE FOUND TO BE UNVERIFIABLE AND THEREFORE, BY FOLLOWING DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF SANJAY OIL CAKES INDUSTRIES VS. CIT 316 ITR 274 THE AO WAS JUSTIFIED IN REJECTING T HE BOOKS OF ACCOUNT AND MAKING THE TRADING ADDITION TO THE EXTENT OF 25 % OF BOGUS PURCHASES. HE HAS RELIED UPON THE ORDER OF THE ASSE SSING OFFICER. 4. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE H AS SUBMITTED THAT WHEN THE ASSESSEE IS MAINTAINING THE BOOKS OF ACCOU NTS AS WELL AS STOCK REGISTER THEN THE REJECTION OF BOOKS OF ACCOUNTS IS NOT JUSTIFIED AND FURTHER WHEN THE ASSESSEE HAS DECLARED GP RATE OF 2 5% THEN, FURTHER ADDITION SUSTAINED BY THE LD. CIT(A) BY APPLYING TH E GP RATE OF 25.50% IS NOT JUSTIFIED. THUS HE HAS SUBMITTED THAT THE AD DITION SUSTAINED BY THE LD. CIT(A) SHOULD BE DELETED. HE HAS FURTHER SU BMITTED THAT WHEN THE ASSESSING OFFICER HAS NOT DISPUTED THE SALE THE N EVEN IF THE SUPPLIES HAVE NOT RESPONDED TO THE SUMMONS ISSUED BY THE AO, THE SAME CANNOT BE A GROUND FOR REJECTION OF BOOKS OF ACCOUN TS AND MAKING THE ADDITION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER BY THE LD. CIT(A) WHEREBY THE ADDITION MADE BY THE AO EQUIVALENT TO 25% OF THE UNVERIFIABLE PURCHASE WAS RESTRICTED BY APPL YING THE GP ADDITION ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 5 @ 25.50%. WE ARE OF THE CONSIDERED VIEW THAT ONCE T HE BOOKS OF ACCOUNT ARE REJECTED BY THE AO THEN, THE ONLY COURS E OF ACTION LEFT WITH THE AO IS TO ASSESS THE INCOME OF THE ASSESSEE ON T HE BASIS OF ESTIMATE AND BEST JUDGMENT. THE ASSESSING OFFICER AFTER REJE CTION OF BOOKS OF ACCOUNT HAS FURTHER MADE ADDITION OF 25% OF TAINTED SALES TO THE BOOKS RESULT WHICH IS NOT PERMISSIBLE WHEN THE AO RESORTE D INVOKE THE PROVISIONS OF SECTION 145(3) OF THE ACT. THUS, THIS ACTION OF THE AO IS CONTRARY TO THE DECISION OF REJECTING THE BOOKS OF ACCOUNTS. ACCORDINGLY, WE DO CONCUR WITH THE VIEW OF THE LD. CIT(A) IN APP LYING THE GP RATE FOR ASSESSMENT OF THE INCOME OF THE ASSESSEE AFTER THE REJECTION OF BOOKS OF ACCOUNT. THIS TRIBUNAL COMPRISING THE SAME COMBI NATION IN CASE OF CIT VS. ALLIED GEMS CORPORATION IN ITA NO. 794/JP/2 011 VIDE ORDER DATED 15.12.2017 CONSIDERING THEN AN IDENTICAL ISSU E HAS HELD IN PARA 5 AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECT ION 145(3). THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS IS INVO LVED IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THEREFORE, W E DEAL WITH THIS ISSUE WHILE DECIDING THE CROSS OBJECTION. ONCE, THE BOOKS OF ACCOUNTS ARE REJECTED BY THE AO THE ONLY COURSE OF ACTION LEFT TO THE AO IS TO ASSESS THE INCOME OF THE ASSESSEE ON T HE BASIS OF BEST JUDGMENT AND GP RATE IS CONSIDERED AS PROPER AND REASONABLE BASIS AND GUIDANCE FOR THE BEST JUDGMENT . ONCE, THE ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 6 BOOKS RESULT ARE REJECTED THE ASSESSING OFFICER CAN NOT PROCEED TO MAKE AN ADDITION TO THE INCOME OFFERED BY THE ASSES SEE AS PER BOOKS RESULT. HOWEVER, THE AO IN THE CASE OF THE AS SESSEE INSTEAD OF APPLYING THE GP RATE MADE ON ADDITION@ 25% OF TH E PURCHASES TO THE BOOK RESULTS. THIS ACT OF THE ASSESSING OFFI CER ITSELF CONTRADICTS THE DECISION OF REJECTING THE BOOKS OF ACCOUNTS AND BOOKS RESULT. THE TRIBUNAL IN ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2006-07 HAS CONSIDERED THIS ISSUE A ND UPHELD THE ORDER OF THE LD. CIT(A) IN PARA 2.20 AND 2.30 A S UNDER:- 2.20 HENCE, THERE ARE CERTAIN CONCERNS FOR WHICH R EVENUE GOT EVIDENCE IN THE FORM OF STATEMENT RECORDED IN RESPE CT OF SUCH PARTIES, OPENING BALANCE IS RS. 37,06,175/- WHILE T HE CLOSING BALANCE IS RS. 42,81,496/-. IT MEANS THAT THERE IS AN ACCRETION OF AMOUNT OF RS. 5.75/- LACS. IT MEANS THAT TO THIS EX TENT, ACCRETION IN PURCHASE IS WITHOUT SUPPORTING THE CORRECT BILLS . OF COURSE, TOTAL OPENTING BALANCE OF ALL PARTIES IS RS. 1,15,43,782/ - AND THE CLOSING BALANCE IS RS. 1,33,36,193/-. HOWEVER, LOOK ING TO THE ACCRETION IN THE CLOSING BALANCE OF THE CONCERNS FO R WHICH REVENUE HAS MATERIAL, THE ADDITION CONFIRMED BY THE LD. CIT(A) IS REASONABLE. 2.30 THE HONBLE P & H HIGH COURT IN THE CASE OF UP LAKESH METAL INDUSTRIAL V CIT 177 TAXMAN 298 HELD THAT ISSUE DEC IDED BY THIS IS IN THE REALM OF APPRECIATION EVIDENCE. THE FIND OF TRIBUNAL AS MENTIONED IN THIS JUDGMENT IS AS UNDER:- ' HOWEVER, IN OUR OPINION THE OBSERVATION OF THE ASSE SSING OFFICER THAT THE ASSESSEE WAS PRIMA FACIE REQUIRED TO PROVE THE GENUINENESS OF THE TRANSACTION AND IDENTITY OF THE CREDITORS IS NOT MISPLACED BECAUSE THERE IS NO DISTINCTION LAID BETW EEN THE TRADE CREDITOR AND THE NON-TRADE CREDITOR AND WE ARE FURT HER OF THE OPINION THAT IN CASE THE ASSESSEE CLAIMS LIABILITY OF PAYMENT TO THE TRADE CREDITORS SHOWN IN THE BALANCE-SHEET, THE ASSESSEE IS DEFINITELY REQUIRED TO PRIMA FACIE PROVE THE IDENTI TY OF THE TRADE ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 7 CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSAC TION. IN THIS CASE, ADMITTEDLY THE ASSESSEE HAS NEITHER BEEN ABLE TO DISCLOSE THE COMPLETE ADDRESSES OF THE TRADE CREDITORS NOR I S ABLE TO GIVE THE COMPLETE ADDRESSES OF THE CONSIGNORS NOR THE NA ME HAS BEEN MENTIONED ON THE CHALLAN FORMS, SO THE VERIFICATION OF THE SAME BY THE ASSESSING OFFICER BECAME TOTALLY IMPRACTICAB LE ON ACCOUNT OF LACK OF THIS COMPLETE INFORMATION SUPPLIED BY TH E ASSESSEE. IT MEANS THAT THE ASSESSEE FAILED IN ESTABLISHING THE GENUINENESS OF THE SO CALLED TRADE CREDITORS APPEARING IN ITS BOOK S OF ACCOUNT. WE ARE FURTHER OF THE OPINION THAT SINCE IN THE INS TANT CASE OF THE ASSESSEE, THE POINT UNDER CONSIDERATION BEFORE US I S REGARDING THE GENUINENESS OF THE LIABILITY AMOUNTING TO RS. 1,75, 26,586 SHOWN BY THE ASSESSEE IN ITS BALANCE-SHEET AS TRADE CREDI TORS, SO IT WAS NOT RELEVANT FOR US TO CONSIDER AS TO WHETHER THE P URCHASES MADE BY THE ASSESSEE WERE GENUINE OR NOT OR TO WHETHER T HE ASSESSEE HAS INFLATED THOSE PURCHASES OR NOT. IT IS ALSO NOT MATERIAL TO CONSIDER WHETHER THE GRS FROM SALE-TAX DEPARTMENT W ERE VERIFIED OR NOT, SO, THE CIT(A) ON CONSIDERING THESE POINTS WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION WITHOUT DISCUSSING AS TO WHETHER THE LIABILITY OF TRADE CREDITORS SHOWN B Y THE ASSESSEE IN THE ABSENCE OF FURNISHING COMPLETE ADDRESSES OF TRADE CREDITORS/CONSIGNORS AND THE PAYMENT VOUCHERS WAS G ENUINE OR NOT.' WHILE EVALUATING THE MATERIAL COLLECTED BY THE REVE NUE ON THE TOUCH STONE ON HUMAN PROBABILITY AND CONSIDERING TH E ACCRETION IN THE CLOSING BALANCE IN RESPECT OF PARTIES FOR WH ICH REVENUE HAS MATERIAL IN THE FORM OF STATEMENT. WE FELL THAT THE LD. CIT(A) WAS REASONABLE IN CONFIRMING THE ADDITION OF RS. 5.00 L ACS. HENCE BOTH THE GROUNDS OF ASSESSEE AS WELL AS REVENUE ARE DISM ISSED. WE FURTHER NOTED THAT WHEN THE CORRESPONDING SALE I S NOT IN DISPUTE THEN THE QUESTION IS ONLY REGARDING THE COR RECT AMOUNT OF PURCHASES AND VERIFICATION OF THE SAME. THE LD. DR HAS RELIED UPON THE VARIOUS DECISIONS OF HONBLE GUJARAT HIGH COURT HOWEVER, WE FIND THAT IN ALL THOSE DECISIONS THERE WAS A FINDING OF ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 8 FACTS THAT THE ASSESSEE INFLATED THE PURCHASES UPTO 25% AND THEREFORE, IT WAS NOT A CASE OF NON VERIFICATION OF THE PURCHASE AND REJECTION OF BOOKS OF ACCOUNTS BUT THE FACT WA S ESTABLISHED IN THE INVESTIGATION THAT THE ASSESSEE INFLATED THE PURCHASE PRICE AND ACCORDINGLY THE ADDITION OF 25% BEING INFLATED PURCHASES WAS MADE AND UPHELD BY THE TRIBUNAL WHICH WAS AGAIN UPH ELD BY THE HONBLE HIGH COURT. ON THE CONTRARY IN THE CASE OF THE ASSESSEE THE AO NOT GIVEN ANY FINDING OF INFLATED PURCHASES BY THE ASSESSEE BUT DOUBTED THE VERY TRANSACTION OF PURCHA SES DUE TO NON PRODUCTION OF THESE PARTIES BEFORE THE AO. THE AO HAS NOT GIVEN THE FINDING THAT THE PRICES OF THE GOODS WAS INFLATED BY THE ASSESSEE BUT THE AO DOUBTED THE GENUINENESS OF THE PURCHASES ON THE GROUND THAT THE SUPPLIERS WERE FOUND TO BE ACCOMMODATION ENTRIES PROVIDERS. WHEN THE AO REJECT ED THE BOOK RESULTS U/S 145(3) OF THE ACT, THEN THE AO AFTER RE JECTION OF THE BOOKS OF ACCOUNT CAN PROCEED TO MAKE THE ASSESSMENT ON THE BASIS OF BEST JUDGMENT INSTEAD OF RESORTING MAKE TH E ADDITION TO THE BOOK RESULTS. ACCORDINGLY, IN THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION OF THIS TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE LD. CIT(A) IN RESTRICTING THE ADD ITION TO THE AVERAGE GP RATE BASED ON THE PAST HISTORY. HENCE, T HE GROUNDS RAISED IN THE REVENUE APPEALS ARE REJECTED BEING WI THOUT ANY SUBSTANCE OR MERITS. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE AND THE DECISION OF THIS TRIBUNAL IN CASE OF ACIT V S. M/S ALLIED GEMS CORPORATION (SUPRA) THE GROUNDS RAISED BY THE REVEN UE IN THIS APPEAL ARE WITHOUT ANY SUBSTANCE OR MERITS. 6. GROUND NO. (II) TO (IV) OF THE REVENUES APPEAL WERE DECIDED BY THE TRIBUNAL VIDE ORDER DATED 17.02.2016, HOWEVER T HIS ORDER WAS ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 9 RECALLED ON THE M.A. FILED BY THE REVENUE ONLY ON T HE LIMITED POINT OF SETTING ASIDE THE ISSUE OF ESTIMATION OF INCOME TO THE AO SUBJECT TO THE OUTCOME OF THE ORDER OF THE HONBLE HIGH COURT IN C ASE OF ANUJ VARSHNEY VS. ITO. THUS THE FINDINGS OF THE TRIBUNA L GIVEN IN VIDE ORDER DATED 17.02.2016 ON THIS ISSUE ARE NOT EFFECTED BY RECALLING ORDER. THE FINDS IN PARAS 3 TO 5.1 ARE AS UNDER:- 3 . REGARDING GROUND NO. 2 OF THE REVENUE AND CROSS OBJ ECTION NO.2 OF THE ASSESSEE, THE BRIEF FACTS OF THE CASE ARE TH AT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED CERTAIN S ALES COMMISSION PAYMENT. IN ORDER TO VERIFY THE GENUINE NESS OF COMMISSION EXPENSES, THE AO ISSUED SUMMON U/S 131 TO 21 PARTIES TO WHOM SALES COMMISSION OF RS. 36,66,562/ - WAS PAID. OUT OF 21 PARTIES, 17 PARTIES RESPONDED BUT 4 PARTI ES MADE NO COMPLIANCE. THEREAFTER, THE AO COMPLETED THE ASSES SMENT BY MAKING DISALLOWANCE OF RS. 10,99,968/-, BEING 30% O F COMMISSION OF RS. 36,66,562/- PAID TO ALL THE 21 PARTIES. THE LD. CIT(A) OBSERVED THAT ASSESSEES CASE IS COV ERED BY THE FINDINGS OF HONBLE ITAT, JAIPUR BENCH IN ITS OWN C ASE FOR A.Y. 2006- 07 AND 2008-09 WHERE THE ITAT RESTRICTED THE DISALL OWANCE TO 20% OF COMMISSION PAID TO ONLY THOSE PARTIES WHO DID NO T RESPOND TO THE SUMMON. SHE, THEREFORE, RESTRICTED THE DISALLOW ANCE TO RS. 1,44,276/-, BEING 20% OF COMMISSION OF RS.7,21,380 /- PAID TO 4 PARTIES WHO MADE NO COMPLIANCE. 3.1 DURING THE COURSE OF HEARING, THE LD AR SUBMITT ED THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF COMMISSI ON PAYMENT. THE VOUCHER CONTAINS THE NAME AND ADDRESS OF THE PA RTY TO WHOM COMMISSION WAS PAID ALONGWITH THE SFT NO. WITH REFE RENCE TO ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 10 WHICH SUCH PAYMENT IS MADE. TAX HAS BEEN DEDUCTED AT SOURCE. PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE. THE LOWER AUTHORITIES HAVE NOT DISPUTED THE FACT OF COMMISSIO N PAYMENT IN THIS LINE OF BUSINESS. THEY HAVE NOT POINTED OUT A NY SPECIFIC PAYMENT OF COMMISSION WHICH IS NOT GENUINE. THERE IS NO REQUIREMENT OF THE LAW THAT THERE SHOULD BE WRITTEN AGREEMENT FOR PAYMENT OF COMMISSION. IN CASE OF COMMISSION PAYMEN T, BRINGING THE CUSTOMER TO THE SHOW ROOM IS THE RENDERING OF T HE SERVICES BY THE AGENT FOR WHICH HE IS PAID THE COMMISSION. THE EXPENSE ARE THUS WHOLLY AND NECESSARILY FOR THE PURPOSE OF THE BUSINESS. NO PART OF SUCH COMMISSION PAYMENT THEREFORE CAN BE DI SALLOWED. THE 21 PARTIES TO WHOM SUMMON WERE ISSUED, THE TAX HAS BEEN DEDUCTED AT SOURCE ON COMMISSION PAYMENT. THE SUMM ARIZED POSITION OF OUTCOME OF THE ISSUE OF NOTICE U/S 131 IS AS UNDER: OUT OF 21 PARTIES, 17 PARTIES (TOTAL COMMISSION PAY MENT TO THEM RS. 29,45,182/-) COMPLIED WITH THE SUMMONS AND FILE D THE REPLY DIRECTLY TO THE AO WHEREIN THEY HAVE ACCEPTED THE F ACT OF RECEIPT OF COMMISSION. THESE 17 PARTIES HAVE ALSO FILED THEIR INCOME TAX R ETURNS WHEREIN THE COMMISSION INCOME IS DECLARED. IN 11 CASES, CO MMISSION INCOME DECLARED IN THE RETURN IS MATCHING WITH COMM ISSION PAID BY THE ASSESSEE. IN 6 CASES, COMMISSION INCOME DECLAR ED IN THEIR RETURN IS LESS THAN THE COMMISSION PAID WHICH IS FO R THE REASON THAT THESE PERSONS MAY HAVE CLAIMED CERTAIN EXPENSES AGA INST THE COMMISSION RECEIPTS. IN RESPECT OF 4 PARTIES WHO DID NOT COMPLY WITH THE SUMMON, THE AO DID NOT TOOK ANY ACTION AGAINST THEM EVEN WHEN S UMMONS WERE SERVED ON THEM. OUT OF THESE 4 PERSONS, SHRI SUDHIR JAIN TO WHOM COMMISSION OF RS.1,24,1790/- IS PAID HAS COMPL IED WITH THE SUMMON U/S 131 BY FILING LETTER DATED 13.12.2011 BU T IT WAS NOT CONSIDERED BY THE AO. THE AO HAS ALSO NOT GIVEN AN Y OPPORTUNITY ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 11 TO THE ASSESSEE TO ADDUCE THE EVIDENCE IN RESPECT O F THESE 4 PERSONS. THE ASSESSES HAS NOW OBTAINED COPY OF ITR RETURN, BALANCE SHEET, P&L A/C & CONFIRMATION FROM THESE FO UR PARTIES AND VIDE LETTER DATED 17.04.2013 HAS REQUESTED THE HON BLE BENCH TO ADMIT THE SAME AS ADDITIONAL EVIDENCE UNDER RULE 29 OF ITAT RULES FOR IMPARTING SUBSTANTIAL JUSTICE. CONSIDERING TH E EVIDENCE PRODUCE, NO DISALLOWANCE OF COMMISSION PAID TO THES E 4 PARTIES IS JUSTIFIED. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. IN RESPECT OF 17 PARTIES WHO HAVE COMPLIED WITH THE SUMMONS, TAX HAS BEEN DEDUCTED AT SOURCE AND TH EY HAVE ALSO REPORTED THE COMMISSION RECEIPTS IN THEIR RETURN OF INCOME, WE DONOT SEE A RATIONALE BASIS WHICH PROMPTED THE AO TO DISA LLOW THE COMMISSION PAYMENT. MORE SO, WHERE THE MATTER IS C OVERED IN FAVOUR OF THE ASSESSEE BY EARLIER ORDERS OF THE COORDINATE BENCH WHICH HAS BEEN REFERRED TO BY THE LD CIT(A). WE ACCORDINGLY UPHELD THE DELETION OF ADDITIONS OF COMMISSION PAYMENTS TO THESE 17 PAR TIES. IN RESPECT OF OTHER 4 PARTIES, IT IS NOTED THAT SHR I SUDHIR JAIN HAS ALREADY COMPLIED WITH THE SUMMONS AND FURTHER ASSES SEE HAS FILED ADDITIONAL EVIDENCE BEFORE THE BENCH. THE ADDITION AL EVIDENCE IS ACCEPTED AND THE MATTER IS SET-ASIDE TO THE FILE OF THE AO IN RESPECT OF THESE 4 PARTIES TO EXAMINE THE SAME AFRESH CONSIDER ING THE ADDITIONAL EVIDENCE AFTER GIVING PROPER OPPORTUNITY TO THE ASS ESSEE. 4. REGARDING GROUND NO. 3 OF THE REVENUE, THE BRIEF FACTS ARE THAT DURING THE YEAR, ASSESSEE CLAIMED TRAVELLING EXPENS ES OF RS. 21,95,887/- INCLUDING FOREIGN TRAVELLING . THE AO OBSERVED THAT EXPENSES RELATED TO FAMILY MEMBERS WERE CLAIMED AND THE VOUCHERS SUPPORTING THE EXPENDITURE SUCH AS HOTEL STAY ETC. SUBSEQUENT TO PURCHASE OF FOREIGN CURRENCY WERE NOT AVAILABLE. AC CORDINGLY, HE HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO GIVE SATISFA CTORY EXPLANATION ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 12 RELATED TO GUIDE AND CHILDREN, THE EXPENDITURE IS N OT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASS ESSEE AND MADE A DISALLOWANCE OF RS. 1,00,000/-. THE LD CIT(A) DELETED THE DISALLOWANCE OF RS. 1 LAC BY HOLDING THAT SIMILAR DISALLOWANCE OF RS. 1 LAC MADE BY THE AO IN PREVIOUS A.Y 2008- 09 WAS DELETED BY CIT(A) AND SINCE THE AO HAS NOT BROUGHT ON RECORD ANY NEW ARGUMENTS OR EVIDENCE TO CONTROVERT THE FIN DINGS OF CIT(A) ON SAME FACTS, THE MATTER IS COVERED AND DISALLOWANCE OF RS 1 LACS WAS DELETED. 4.1 THE LD AR SUBMITTED BEFORE THE BENCH THAT THE E NTIRE TRAVELLING EXPENSE HAS BEEN INCURRED FOR THE PURPOSE OF THE BU SINESS. OUT OF TOTAL EXPENDITURE OF RS. 21,95,887/- FOREIGN TRAVEL LING EXPENSES ARE OF RS. 17,78,080/-UNDERTAKEN BY PARTNERS AND EMPLOYEES FOR THE PURPOSE OF THE BUSINESS. OUT OF THE TOTAL FOREIGN TRAVELLI NG EXPENSE, EXPENSES AMOUNTING TO RS.13,41,519/- WAS INCURRED ON TRIP UN DERTAKEN TO USA TO PARTICIPATE IN LAS VEGA JEWELLERY SHOW CUM EXHI BITION. MR. VIKAS KAUL ACCOMPANIED IN THIS TRIP. HE IS A TOURIST GUID E AND HAVING VISA OF USA. THEREFORE, HE WAS TAKEN TO LAS VEGAS JEWELLER Y SHOW TO ASSIST THE ASSESSEE IN THE JEWELLERY SHOW CUM EXHIBITION H ELD THERE THUS THE EXPENDITURE INCURRED ON THE GUIDE IS FOR THE PURPOS E OF THE BUSINESS. SO FAR AS VISIT OF NEETA DADDA IS CONCERNED, SHE IS PARTNER IN THE FIRM AND LOOKING AFTER THE BUSINESS. THERE IS NO EXPEND ITURE OF OTHER FAMILY MEMBERS. 4.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL ON RECORD. THE ASSESSEE HAS PROVIDED THE NECESSARY EX PLANATION IN RESPECT OF TRAVEL OF TOURIST GUIDE VIKAS KAUL AND N EETA DADDA WHO IS A PARTNER IN THE FIRM. FURTHER, IT IS NOTED THAT ON SIMILAR FACTS, THE DISALLOWANCE WAS DELETED BY LD CIT(A) FOR AY 2008-0 9 AGAINST WHICH THE DEPARTMENT HAS NOT FILED ANY APPEAL. KEEPING I N MIND THE NATURE OF THE BUSINESS OF THE ASSESSEE AND THE EXPLANATION PROVIDED BY THE ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 13 ASSESSEE, WE SEE NOT REASON TO INTERFERE WITH THE O RDER OF LD CIT(A) WHO HAS DELETED THE DISALLOWANCE OF RS 1 LACS TOWAR DS FOREIGN TRAVEL EXPENSES. 5. REGARDING GROUND NO 4 OF THE REVENUE, THE AO HAS MADE THE DISALLOWANCE ON PAYMENT TO BOB AND ICICI AMOUNTING TO RS. 7,26,312/- BY APPLYING THE PROVISIONS OF SECTION 40 (A)(IA) SINCE THE ASSESSEE HAS NOT DEDUCTED THE TDS U/S 194H. THE L D. CIT(A) DELETED THE DISALLOWANCE BY RELYING ON HONBLE ITAT ORDER D ATED 02.02.2012 IN ITA NO. 746/JP/2011 IN ASSESSEES OWN CASE FOR A.Y 2008-09. 5.1 RESPECTFULLY FOLLOWING THE DECISION OF COORDIN ATE BENCH IN ITA NO. 746/JP/2011 IN ASSESSEES OWN CASE FOR A.Y. 2008-09 , WE HEREBY DELETE THE DISALLOWANCE OF RS 726312 UNDER SECTION 40A(IA) IN THE HANDS OF THE ASSESSEE. NEITHER THE DEPARTMENT NOR THE ASSESSEE HAS POINTED OUT ANY MISTAKE OR INFIRMITY IN THE SAID FINDING OF THIS TRIBUNAL A CCORDINGLY, THE SAME FINDING VIDE ORDER DATED 17.02.2016 STANDS REVIVED. 7. IN THE CROSS OBJECTION OF THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS AS UNDER:- (I) THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW3 I N CONFIRMING THE TRADING ADDITION TO THE EXTENT OF RS.6,63,915/- BY APPLYING THE G.P.RATE OF 25.5% AS AGAINST THE G.P. RATE OF 25.06 % DECLARED BY THE ASSESSEE. (II) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE OF RS. 1,44,276/- OUT OF THE COMMISSIO N PAID TO THE FOUR PARTIES/AGENTS @ 20% OF THE TOTAL COMMISSION O F RS. 7,21,380/- PAID TO THEM. ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 14 8. AS REGARDS GROUND NO. (I) WE HAVE HEARD LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED BY THE AO U/ S 145(3) WHICH WAS UPHELD BY THE LD. CIT(A), THEREFORE, AFTER THE REJE CTION OF BOOKS OF ACCOUNTS ONLY COURSE OF ACTION WAS TO ESTIMATE THE INCOME OF THE ASSESSEE BY APPLYING THE GP RATE. THE LD. CIT(A) FO LLOWED THE DECISION OF THIS TRIBUNAL IN APPLYING THE GP RATE OF 25.50%. ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE. 8. GROUND NO. (II) OF THE CO HAS BEEN DECIDED BY TH IS TRIBUNAL VIDE ORDER DATED 17.02.2016 AS REPRODUCED ABOVE. ACCORDI NGLY, THE ADDITION SUSTAINED BY THE LD. CIT(A) IN RESPECT OF THE COMMI SSION PAID TO 4 PARTIES IS RESTORED TO THE RECORD OF THE AO FOR EXA MINATION AFTER CONSIDERATION THE ADDITIONAL EVIDENCE AS WELL AS GI VING AN OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED AND CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/12/2017. ITA NO.747/JP/2012 CO. NO. 65/JP/2012 DCIT VS. M/S GEM PARADISE 15 SD/- SD/- (DR. ARJUN LAL SAINI) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED:- 26/12/2017. * SANTOSH. COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- DCIT, CIRCLE-2, JAIPUR. 2. THE RESPONDENT- M/S GEMS PARADIES, GULAB NIWAS, M.I . ROAD, JAIPUR. 3. CIT 4. CIT(A) 5. DR, ITAT, JAIPUR. 6. GUARD FILE {ITA NO. 747/JP/12 CO NO. 65/JP/12} BY ORDER, ASST. REGISTRAR