ADITYA GEMS, Jaipur V. ACIT, Jaipur

ITA 786/JPR/2013

• Counselvise Citation: 78623114 RSA 2013
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S L PODDAR
• Keywords: Gross profit estimation; Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 786/JP/2013 (A.Y. 2006-07) M/S. ADITYA GEMS, VS. ACIT, CIRCLE-5, K-10, FATEH TIBA, JAIPUR. MOTI DOONGARI ROAD, JAIPUR. PAN NO. AAFFA 3120 J (APPELLANT) (RESPONDENT) ITA NO. 788/JP/2013 (A.Y. 2006-07) M/S. PANSARI GEMS INTERNATIONAL, VS. ACIT, CIRCLE -6, 13, PRATAP COLONY, TONK ROAD, JAIPUR. JAIPUR. PAN NO. AAGFP 1543 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. PODDAR DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 28/01/2014. DATE OF PRONOUNCEMENT : 30/01/2014. 2 O R D E R PER N.K.SAINI, A.M THESE TWO APPEALS BY THE ASSESSEES ARE DIRECTED AG AINST THE SEPARATE ORDERS OF THE LD. CIT(A)-II, JAIPUR, DATED 09/10/2013 IN THE CASE OF M/S. ADITYA GEMS, JAIPUR AND DATED 01/1 0/2013 IN THE CASE OF M/S. PANSARI GEMS INTERNATIONAL, JAIPUR. S INCE THE ISSUE INVOLVED IN BOTH THESE APPEALS IS SIMILAR HAVING ID ENTICAL FACTS AND THE APPEALS WERE HEARD TOGETHER, SO, THESE ARE BEIN G DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 FIRST WE WILL DEAL WITH APPEAL IN I.T.A.NO. 786/JP /2013. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS A S UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF RS. 7,94,710/- IMPOSED BY THE LEARNED ASSESSING OFF ICER WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSE E HAD SHOWN LOW GP RATE OF 8.05% AS COMPARED TO 5.53% IN THE IM MEDIATELY PRECEDING YEAR AND NO JUSTIFIABLE REASON FOR LOW GP RATE WAS PUT- FORTH BY THE ASSESSEE. THE AO, ON EXAMINATION OF B OOKS OF ACCOUNTS, NOTICED THAT THE ASSESSEE MADE PURCHASES FROM 15 CONCERNS. HE ASKED THE ASSESSEE TO PRODUCE THOSE P ARTIES FOR VERIFICATION OF THE PURCHASES. AS THE ASSESSEE COU LD NOT PRODUCE 3 SUCH PARTIES, AO REJECTED THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT 1961 ( HEREINAFTER REFERRED TO AS ACT, IN SHORT) AND APPLIED GP RATE OF 15% WHICH RESULTED INTO TRADING ADDITION OF RS. 82,50,288/-. THE ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT(A), WHO REDUCED THE ADDITION AND SUSTAINED ADDITION OF RS. 8,29,998/- WHICH WAS ALSO CONFIRMED BY THE ITAT. THE SAID ADDITION WAS CONSIDERED BY T HE AO AS CONCEALED INCOME WITHIN THE MEANING OF SECTION 271( 1)(C) OF THE ACT AND A PENALTY OF RS. 2,81,366/- WAS LEVIED. THE SAID PENALTY WAS CONFIRMED BY THE LD. CIT(A) FOR THE REASON THAT THE ADDITION SUSTAINED WAS CONFORMED BY THE ITAT. NOW THE ASSES SEE IS IN APPEAL. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS ONLY ON ESTIMATE BASIS, THEREFORE, IT CANNOT BE SAID THAT T HE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCE ALED THE INCOME TO ATTRACT THE PROVISIONS OF SECTION 271(1)( C) OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1) CIT VS. HARYANA WAREHOUSING CORPORATION (2009) 3 14 ITR 215 (P & H) 2) CIT VS. SANGUR VANASPATI MILLS LTD. (2008) 303 I TR 53 (P & H) 4 3) CIT VS. JAGABANDHU PRASANNA KUMAR RUPLAL SEN POD DAR (1982) 133 ITR 156 (CAL.) 5. IN HIS RIVAL SUBMISSIONS, LD. D.R. SUPPORTED THE I MPUGNED ORDER PASSED BY THE LD. CIT(A) AND FURTHER SUBMITTE D THAT THE PURCHASES MADE BY THE ASSESSEE WERE NOT SUBJECT TO VERIFICATION. THEREFORE, THE BOOKS OF ACCOUNTS WERE REJECTED AND THE INCOME WAS WORKED OUT BY APPLYING THE GP RATE OF 15% AFTER CONSIDERING THE PAST HISTORY OF THE ASSESSEE. HE FURTHER OBSER VED THAT THE ASSESSEE NOT ONLY CONCEALED THE INCOME, BUT ALSO FU RNISHED INACCURATE PARTICULARS OF INCOME, THEREFORE, THE PE NALTY UNDER SECTION 271(1)(C) OF THE ACT WAS RIGHTLY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A). 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE I NCOME OF THE ASSESSEE AFTER REJECTING THE BOOKS OF ACCOUNTS UNDE R SECTION 145(3) OF THE ACT WAS DETERMINED BY THE AO ON ESTIM ATE BASIS BY APPLYING THE GP RATE OF 15% INSTEAD OF DECLARED GP RATE OF 8.5%. LD. CIT(A) ALTHOUGH REDUCED THE ADDITION, BUT SUSTA INED ADDITION WAS ALSO ON ESTIMATE BASIS. IN THE PRESENT CASE, T HE AO LEVIED THE 5 PENALTY UNDER SECTION 271(1)(C) OF THE ACT CONSIDER ING THE INCOME ON ESTIMATE BASIS AS THE CONCEALED INCOME OF THE AS SESSEE. 7 . ON A SIMILAR ISSUE, THE HONBLE PUNJAB AND HARYAN A HIGH COURT IN THE CASE OF CIT VS. SANGRUR VANASPATI MILLS LTD. [2008] 303 ITR 53 HELD AS UNDER:- IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1) OF THE INCOME TAX ACT, 1961, IT IS NECESSARY THAT THERE MU ST BE CONCEALMENT BY THE ASSESSEE OF THE PARTICULARS OF H IS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INC OME. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED O N ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. WHE N THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE A ND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN THE PENALTY IS NOT LEVIABLE. IN THE PRESENT CASE ALSO, THE INCOME OF THE ASSESSE E WAS ASSESSED ON ESTIMATE BASIS AND THE ADDITIONS WERE M ADE THEREIN BUT WITHOUT BRINGING ON RECORD ANY CONCRETE EVIDENC E OF CONCEALMENT, THEREFORE, THE PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT WAS NOT LEVIABLE. 8. IN THAT VIEW OF THE MATTER, WE DELETE THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT AND SUSTA INED BY THE LD. CIT(A). 6 9. IN I.T.A.NO. 788/JP/2013, THE FACTS ARE SIMILAR. T HE ONLY DIFFERENCE IS THAT THE PENALTY LEVIED BY THE AO VID E ORDER DATED 29/03/2011 AND SUSTAINED BY THE LD. CIT(A) WAS OF R S. 7,94,710/- AND THE GP DECLARED BY THE ASSESSEE WAS AT 15.79% W HICH WAS ENHANCED BY THE AO TO 19.43% RESULTING IN ADDITION OF RS. 43,93,191/-. THE SAID ADDITION WAS RESTRICTED BY T HE LD. CIT(A) TO RS. 22,75,393/- AND THE ITAT CONFIRMED THE ADDITION SUSTAINED BY THE LD. CIT(A). HOWEVER, THE ADDITION MADE AND SUS TAINED WAS ON ESTIMATE BASIS, THEREFORE, THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE OF M/S. ADITYA GEMS(SUPRA) . WE HAVE ALREADY ADJUDICATED IN THE FORMER PART OF THIS ORDE R, THEREFORE, OUR FINDINGS GIVEN IN RESPECT OF THE SAID CASE SHAL L APPLY MUTATIS MUTANDIS FOR THE CASE OF M/S. PANSARI GEMS INTERNATIONAL, J AIPUR IN I.T.A.NO. 788/JP/2013 FOR THE A.Y. 2006-07. 10 . IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 30 TH JANUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JANUARY, 2014. VR/- 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R BY ORDER ASSISTANT REGISTRAR, ITAT, JAIPUR.