ACIT, Jaipur V. M/S ALLIED GEMS CORPORATION, Jaipur

ITA 794/JPR/2011

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1826 (ITAT-JAIPUR)
• Duration Of Justice: 6 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Keywords: Bogus purchase; Rejection of books of accounts; Accommodation entries; Onus to prove
• Section: 69C; 143(3)

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. 794/JP/2011 ASSESSMENT YEAR : 2005-06 ACIT, CIRCLE-1, JAIPUR. CUKE VS. M/S ALLIED GEMS CORPORATION, BHANDIA BHAWAN, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACFA2928D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT CO NO. 76/JP/2011 (ARSING FROM ITA NO. 794/JP/2011) ASSESSMENT YEAR : 2005-06 M/S ALLIED GEMS CORPORATION, BHANDIA BHAWAN, JOHARI BAZAR, JAIPUR. CUKE VS. ACIT, CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACFA2928D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 795/JP/2011 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-1, JAIPUR. CUKE VS. M/S ALLIED GEMS CORPORATION, BHANDIA BHAWAN, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACFA2928D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT CO NO. 77/JP/2011 (ARSING FROM ITA NO. 795/JP/2011) ASSESSMENT YEAR : 2007-08 ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 2 M/S ALLIED GEMS CORPORATION, BHANDIA BHAWAN, JOHARI BAZAR, JAIPUR. CUKE VS. ACIT, CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACFA2928D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 716/JP/2012 ASSESSMENT YEAR : 2008-09 ACIT, CIRCLE-1, JAIPUR. CUKE VS. M/S ALLIED GEMS CORPORATION, BHANDIA BHAWAN, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACFA2928D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT CO NO. 60/JP/2012 (ARSING FROM ITA NO. 716/JP/2012) ASSESSMENT YEAR : 2008-09 M/S ALLIED GEMS CORPORATION, BHANDIA BHAWAN, JOHARI BAZAR, JAIPUR. CUKE VS. ACIT, CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACFA2928D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ASSESSEE BY : SHRI RAJEEV SOGANI (CA) REVENUE BY : SHRI P.P. MEENA (JCIT) DATE OF HEARING : 08/11/2017 DATE OF PRONOUNCEMENT: 15/12/2017 ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 3 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M.: THESE ARE THREE APPEALS BY THE REVENUE AND CROSS O BJECTIONS OF THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A), JAIPUR FOR THE A.Y. 2005-06, 2007-08- & 2008-09 RESPECTIVELY. THE REVEN UE HAS RAISED THE COMMON GROUNDS IN THESE APPEALS. THE GROUNDS RAISED FOR THE ASSESSMENT YEARS 2005-06 ARE AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN:- I) RESTRICTING THE TRADING ADDITION TO THE EXTENT O F RS. 11.54 LACS AS AGAINST ADDITION OF RS. 96,69,746/- MADE BY THE AO ON ACCOUNT OF UNVERIFIABLE PURCHASES, KEEPING IN VIEW THE DECISION OF THE LD. CIT(A)-1, JAIPUR, IN THE CASE OF M/S NAND K ISHORE MEGHRAJ IN ITA NO. 583/08-09 DATED 09.03.2009 AND CONFIRMED BY THE HONBLE ITAT, JAIPUR BENCH, JAIPUR. II) RELYING ON PAST HISTORY OF THE CASE IN SPITE OF THE FACT THAT DURING THE YEAR UNDER CONSIDERATION MOST OF THE PUR CHASES OF THE ASSESSEE WERE FROM PERSONS/ CONCERNS ISSUING BILLS WITHOUT DELIVERY OF GOODS. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED I N THE BUSINESS PRECIOUS AND SEMI PREVIOUS STONES AND SILVER AND GO LD JEWELLERY. WHILE COMPLETING THE ASSESSMENT FOR THE A.YS. IN QUESTION THE AO FOUND THAT THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER AND AS PER THE AUDIT REPORT THE INVENTORY OF CLOSING STOCK HAS BEEN VALU ED ON ESTIMATE BASIS. ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 4 THE AO FURTHER NOTED THAT THE ASSESSEE MADE PURCHAS ES FROM 45 PARTIES WHICH ARE FOUND TO BE ENTRY PROVIDERS FOR T HE PURPOSE OF ISSUING BILLS WITHOUT ACTUAL SALES. THE AO HAS MADE REFEREN CE TO THE FACTS FOUND DURING THE SEARCH AND SURVEY CONDUCTED BY THE DEPAR TMENT ON THOSE ENTRYS PROVIDER PARTIES. THE AO ISSUED SUMMONS TO T HESE PARTIES BUT RETURNED UN-SERVED AND UN-COMPLIED WITH. ACCORDINGL Y THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSES SEE BY INVOKING THE PROVISIONS OF SECTION 143(3) ON THE GROUND THAT TH E ASSESSEE HAS FAILED TO PRODUCE THE SUPPLIERS IN PERSON FOR EXAMINATION AND CONSEQUENTLY FAILED TO DISCHARGE THE ONUS TO PROVE THE CLAIM OF PURCHASES. THUS, THE AO HELD THAT THE PURCHASES IN QUESTION REMAINED UNV ERIFIABLE AND THEREFORE, THE AO NOT SATISFIED WITH THE CORRECTNES S AND COMPLETENESS OF ACCOUNTS OF THE ASSESSEE. THE AO THEN PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF THE PROFIT @ 25% ON UNVERIFIABLE PURCHASES. THE AO COMPUTED THE PROFIT @ 25% ON THE PURCHASE OF RS. 3,86,78,985/- FOR THE ASSESSMENT YEAR 2005-06 AMOUN TING TO RS. 96,69,746/-. THE SAID AMOUNT WAS ADDED TO THE INCOM E OF THE ASSESSEE. SIMILAR ADDITIONS WERE MADE FOR THE OTHER ASSESSMENT YEARS. THE LD. CIT(A) THOUGH UPHELD THE REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE HOWEVER, THE LD. CIT(A) RESTRICTED THE ADD ITION WHILE ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 5 CONSIDERING THE AVERAGE GP RATE OF THE PAST ASSESSM ENT YEARS @ 13.60% APPLIED ON TOTAL SALE OF RS. 560.16 LACS AND CONSEQUENTLY THE ADDITION WAS CONFIRMED TO THE EXTENT OF RS. 11.54 L ACS AS AGAINST RS. 96,69,746/- FOR A.Y. 2005-06. A SIMILAR FINDING HA S BEEN GIVEN FOR THE OTHER ASSESSMENT YEARS THOUGH THE G.P. RATE ESTIMAT ED VARIES AS PER THE AVERAGE OF THE PAST G.P. RATE. AGGRIEVED BY THE IMPUGNED ORDERS OF THE LD. CIT(A) THE REVENUE AS WELL AS ASSESSEE FILE D THESE APPEALS AND CROSS OBJECTION RESPECTIVELY. 3 THE LD. DR HAS SUBMITTED THAT THE AO REJECTED THE BOOKS OF ACCOUNT ON THE GROUND THAT THE MAJORITY OF THE PURC HASES OF THE ASSESSEE WERE FOUND TO BE UNVERIFIABLE AND FURTHER THE PARTIES FROM WHOM THE ASSESSEE CLAIM THE PURCHASES WERE PROVIDIN G ACCOMMODATION ENTRIES. IN ALL THE CASES AS POINTED OUT BY THE AO THE PURCHASES COULD NOT BE VERIFIED DUE TO NON PRODUCTION OF NECESSARY DETAILS AND PARTIES BEFORE THE AO. THEREFORE, THE AO WAS JUSTIFIED IN M AKING THE ADDITION U/S 69C @ 25% OF BOGUS PURCHASES BY FOLLOWING DECIS IONS OF HONBLE GUJARAT HIGH IN CASE OF VIJAY PROTEINS LTD. VS. DCI T 58 TAXMANN.COM 44 ( GUJ). THE LD. DR HAS ALSO RELIED UPON THE DECISIO N OF HONBLE GUJARAT HIGH COURT IN CASE OF SANJAY OIL CAKES INDUSTRIES V S. CIT 316 ITR 274 AND SUBMITTED THAT THE HONBLE HIGH COURT UPHELD TH E DISALLOWANCE OF ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 6 BOGUS PURCHASES. HE HAS CONTENDED THAT THE LD. CIT (A) IS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO THE GP RATE ADDI TION WHEN THERE ARE HONBLE HIGH COURT DECISION CONFIRMING THE DISALLOW ANCE 25% OF BOGUS PURCHASES. THE LD. DR HAS ALSO REFERRED TO THE DECI SION OF HONBLE GUJARAT HIGH COURT IN CASE OF N.K. INDUSTRIES VS. DCIT 72 TAMANN.COM 289/ 142 DTR 962 AND THE HONBLE SUPREME COURT HAS DISMISSED THE SLP FILED AGAINST THE DECISION OF THE HONBLE GUJAR AT HIGH COURT, THEREFORE, THE SAME HAS ATTAINED THE FINALITY. 4. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HA S SUBMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDER DAT ED 10.06.2001 IN ITA NO. 603 OF 2010 WHEREIN THOUGH THE TRIBUNAL HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) HOWEVER, THE GP RATE ADDITION MADE BY THE LD. CIT(A) WAS ALSO UPHELD BY THE TRIBU NAL. THE LD. AR HAS FURTHER CONTENDED THAT THE HONBLE JURISDICTION HIG H COURT IN CASE OF CIT VS. AMRAPALI JEWELLS (P) LTD. 65 DTR 196 HAS UPHEL D THE ORDER OF THIS TRIBUNAL WHEREBY THE GP RATE ADDITION MADE BY THE T AXING AUTHORITIES WAS DELETED. HE HAS ALSO RELIED UPON THE DECISION DATED 15.03.2012 OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN CASE OF M/S SWARNGANGA JEWELLERS VS. ACIT ITA NO. 833/JP/2011. ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 7 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3). THE I SSUE OF REJECTION OF BOOKS OF ACCOUNTS IS INVOLVED IN THE CROSS OBJECTIO N FILED BY THE ASSESSEE, THEREFORE, WE 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 I NCOME OF THE ASSESSEE ON THE BASIS OF BEST JUDGMENT AND GP RATE IS CONSI DERED AS PROPER AND REASONABLE BASIS AND GUIDANCE FOR THE BEST JUDGMENT . ONCE, THE BOOKS RESULT ARE REJECTED THE ASSESSING OFFICER CANNOT PR OCEED TO MAKE AN ADDITION TO THE INCOME OFFERED BY THE ASSESSEE AS P ER BOOKS RESULT. HOWEVER, THE AO IN THE CASE OF THE ASSESSEE INSTEAD OF APPLYING THE GP RATE MADE ON ADDITION@ 25% OF THE PURCHASES TO THE BOOK RESULTS. THIS ACT OF THE ASSESSING OFFICER ITSELF CONTRADICTS THE DECISION OF REJECTING THE BOOKS OF ACCOUNTS AND BOOKS RESULT. THE TRIBUNA L IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 HAS CONSIDERED THIS ISSUE AND UPHELD THE ORDER OF THE LD. CIT(A) IN PARA 2.20 AND 2.30 AS 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 ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 8 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 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 ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 9 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 THEJFORM 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 CORRECT AMO UNT 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 FACTS THAT T HE ASSESSEE INFLATED THE PURCHASES UPTO 25% AND THEREFORE, IT WAS NOT A CASE OF NON VERIFICATION OF THE PURCHASE AND REJECTION OF BOOK S OF ACCOUNTS BUT THE FACT WAS 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 UPHELD BY THE HONBLE HIGH COURT. ON THE CONTRARY I N THE CASE OF THE ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 10 ASSESSEE THE AO NOT GIVEN ANY FINDING OF INFLATED P URCHASES BY THE ASSESSEE BUT DOUBTED THE VERY TRANSACTION OF PURCHA SES DUE TO NON PRODUCTION OF THESE PARTIES BEFORE THE AO. THE AO H AS NOT GIVEN THE FINDING THAT THE PRICES OF THE GOODS WAS INFLATED B Y THE ASSESSEE BUT THE AO DOUBTED THE GENUINENESS OF THE PURCHASES ON THE GROUND THAT THE SUPPLIERS WERE FOUND TO BE ACCOMMODATION ENTRIES PR OVIDERS. WHEN THE AO REJECTED THE BOOK RESULTS U/S 145(3) OF THE ACT, THEN THE AO AFTER REJECTION OF THE BOOKS OF ACCOUNT CAN PROCEED TO MA KE THE ASSESSMENT ON THE BASIS OF BEST JUDGMENT INSTEAD OF RESORTING MAKE THE ADDITION TO THE BOOK RESULTS. ACCORDINGLY, IN THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION OF THIS TRIBUNAL IN ASS ESSEES 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 ADDITION TO THE AVERA GE GP RATE BASED ON THE PAST HISTORY. HENCE, THE GROUNDS RAISED IN THE REVENUE APPEALS ARE REJECTED BEING WITHOUT ANY SUBSTANCE OR MERITS. 6. IN THE CROSS OBJECTION OF THE ASSESSEE HAS RAISE D THE COMMON GROUNDS IS AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO IN CONFIRMING THE TRADING ADDITION OF RS. 11.54 OUT OF THE TOTAL ADDITION OF RS. 96,69,746/- MADE BY THE LD. AO. THE ACTION OF THE ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 11 LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND A GAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE REJECTION OF BOOKS AND DELETING THE TRADING ADDITION OF RS. 1 1.54/-. 2. THE ASSESSEE CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF T HE GROUNDS ON OR BEFORE THE HEARING. 7. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION TO THE EXTENT OF GP RATE. 8. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSES SEE FAILED TO SUBSTANTIATE THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNTS AND TO THAT EXTENT THE PURCHASES WERE NOT VERIFIABLE. THE ASSESSING OFFICER HAS ALSO POINTED THAT THE INVENTORY OF CLOSING STOCK HA S BEEN VALUED ON ESTIMATED BASIS AS POINTED OUT AND SPECIFICALLY MEN TIONED IN THE AUDIT REPORT AND THEREFORE, THE ASSESSEE WAS NOT MAINTAIN ING THE STOCK REGISTER SHOWING THE QUANTITY AND QUALITATIVE DETAI LS INCLUDING THE PURITY OF THE PREVIOUS MATTERS. THEREFORE, THE VALUATION O F THE CLOSING STOCK WAS ALSO FOUND TO BE ESTIMATED AND NOT THE ACTUAL A ND CORRECT VALUE. THE AO ISSUED SUMMONS TO THE PARTIES FROM WHOM THE ASSESSEE MADE THE PURCHASES HOWEVER, THERE WAS NO RESPONSE AND NO COMPLIANCE OF THE NOTICE ISSUED BY THE AO TO THESE PARTIES. THUS, THE ASSESSING OFFICER HAS RIGHTLY POINTED OUT THAT THE SALE TO THE EXTENT OF MORE THAN 60% OF ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 12 THE ASSESSEE WAS NOT VERIFIABLE. THEREFORE, IN THES E FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE SALES OF THE ASS ESSEE TO THE EXTENT OF MORE THAN 60% IS NOT VERIFIABLE DUE TO THE FAILU RE OF THE ASSESSEE TO PRODUCE THE RELEVANT EVIDENCE AND THE SUPPLIER THEN THE BOOK RESULTS OF THE ASSESSEE WOULD NOT REFLECTED TRUE PICTURE AND C ONSEQUENTLY IT WAS A SUFFICIENT AND PROPER GROUND FOR REJECTION OF BOOKS OF ACCOUNTS BY THE AO. THE LD. CIT(A) HAS DEALT WITH THIS ISSUE IN PAR A 4.3 AS UNDER- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO A ND THE EXTENSIVE SUBMISSIONS OF THE AR. THE MOST PERTINENT POINT IN THE CASE OF THE ASSESSEE IS THAT THE HONBLE ITAT, JAIP UR BENCH HAS ALREADY ADJUDICATED IN IDENTICAL FACTS IN THE CASE OF THE ASSESSEE FOR A.Y. 2006-07 VIDE ITS ORDER ITA NO. 603/JP/2010 DATED 10.06.2011. SIMILAR DISALLOWANCES WERE MADE BY THE AO UNDER SIMILAR FACTS AND CIRCUMSTANCES AS ARE INVOLVED IN THE APPELLANTS PRESENT APPEAL FOR A.Y. 2005-06. ON PERUSAL OF THE SAME I FIND THAT THE HONBLE ITAT JAIPUR IN THE APPELLANTS CAS E FOR A.Y. 2006- 07 BASED ON A DETAILED DISCUSSION FROM PAGES 2 TO 9 HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING THE P ROVISIONS OF S. 145(3) IN THE CASE OF THE ASSESSEE DUE TO UNVERIFIA BLE PURCHASES. THEREFORE, AS THE FACTS AND CIRCUMSTANCES ARE THE S AME IN THIS YEAR I UPHOLD THE DECISION OF THE AO TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ESTIMATE HIS INCOME. THUS, THE LD. CIT(A) HAS DECIDED THIS ISSUE BY FOLL OWING DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07. HENCE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN TH E ORDERS OF THE LD. CIT(A) QUA THIS ISSUE. ITA NO.794& 795/JP/11, 716/JP/12 CO 76& 77/JP/11, 6 0/JP/12 ACIT VS. M/S ALLIED GEMS CORPORATION 13 IN THE RESULT THE APPEALS OF THE REVENUE AND CO OF THE ASSESSEE FOR ALL THREE ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/12/2017. SD/- SD/- (DR. ARJUN LAL SAINI) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15/12/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-1, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S ALLIED GEMS CORPORATION, BHANDI A BHAWAN, JOHARI BAZAR, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 794 &795/JP/2011, 716/JP/12 CO NO. 76&77/JP/11 CO 60/JP/12} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR