M/S PADMAWATI ENTERPRISES, Jaipur V. ITO, Jaipur

ITA 809/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7557 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: S L PODDAR
• Keywords: Bogus purchase

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.809/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: AAGFP 1566 Q M/S. PADMAWATI ENTERPRISES VS. THE ITO C-402, NAGAR RESIDENCY, MALVIYA NAGAR WARD- 6 (1) JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI S.L. PODDAR DEPARTMENT BY : SHRI D.K. MEENA DATE OF HEARING: 11-01-2012 DATE OF PRONOUNCEMENT: 25-01-2012 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-II, JAIPUR DATED 06-09-2011 FOR THE ASSESSMENT YEAR 2007-08. 2.1 THE ONLY GROUND OF APPEAL OF THE ASSESSEE IS TH AT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE TRADING ADDITION OF RS. 8,99,985/- B Y DISALLOWING 25% OUT OF ALLEGED UNVERIFIABLE PURCHASES OF RS. 35,99,940/-. 2.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTICED THAT THE ASSESSEE HAS MADE PURCHASES TO THE EXTENT OF RS. 35,99,940/- FRO M FIVE PARTIES. THE NAMES OF FIVE PARTIES ARE AVAILABLE AT PAGE 2 OF THE ASSESSMENT O RDER. THE AO NOTICED THAT THE PARTIES FROM WHOM ASSESSEE HAS MADE PURCHASES WERE INDULGIN G IN ISSUING BOGUS BILLS AS PER STATEMENT OF SHRI RAVI HALDIYA RECORDED U/S 132(4) OF THE ACT. THE AO HAS ALSO MENTIONED IN HIS ORDER THAT POSTAL AUTHORITIES HAVE ALSO INTIMATED THAT NO PARTY EXIST AT THE 2 ADDRESS. THE AO HAS REFERRED TO THE DECISION OF HON 'BLE APEX COURT IN THE CASE OF KANCHWALA VS. JCIT, 288 ITR 10 AND REJECTED THE BOO KS OF ACCOUNTS. AFTER REJECTING THE BOOKS OF ACCOUNTS, THE AO HAS ADDED 25% OF THE NON- VERIFIABLE PURCHASES AFTER CONSIDERING THE JUDGEMENT OF HON'BLE GUJARAT HIGH C OURT IN THE CASE OF SANJAY OIL CAKE INDUSTRY VS. CIT, 10 DTR 153. 2.3 THE LD. CIT(A) HAS UPHELD THE REJECTION OF BOOK S OF ACCOUNTS. THE LD. CIT(A) HAS REFERRED TO THE ORDER OF THE ITAT JAIPUR BENCH IN T HE CASE OF DEEPAK DALELA VS. ITO , 50 DTR 502. THE LD. CIT(A) HAS ALSO REFERRED TO OTHER ORDERS OF THE JAIPUR TRIBUNAL IN WHICH 25% OF BOGUS PURCHASES WERE NOT UPHELD AS TRADING A DDITION. THE LD. CIT(A) HAS NOTICED THAT GROSS PROFIT RATE SHOWED BY THE ASSESSEE IS ON LY AROUND 1.37% AND THIS IS LOW IN COMPARISON TO OTHER TRADERS. THE LD. CIT(A) HAS REF ERRED TO THE CASES OF M/S. ZEM PLAZA AND M/S. DHADDA EXPORTS IN WHICH THE ASSESSEE HAS S HOWN GROSS PROFIT RATE VARYING FROM 35% TO 43.8%. THEREFORE, THE LD. CIT(A) HAS UPHELD THE ADDITION TO THE EXTENT OF RS. 8,99,985/-. 2.4 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THAT IN CASE THE PURCHASES ARE NOT VERIFIABLE THEN THE BOOKS OF ACCOUNTS ARE TO BE REJ ECTED. WE HAVE ALSO PERUSED THE CONFIRMATION OF ACCOUNTS OF THE PARTY FROM WHOM THE BOGUS PURCHASES WERE MADE. THERE IS NO CLOSING BALANCE AT THE END OF THE FINANCIAL Y EAR. IN THE CASE OF M/S. DEEPAK DALELA (SUPRA), IT WAS NOTICED THAT THERE WERE CLOSING BAL ANCES IN THE CASES OF THE PARTY FROM WHOM BOGUS PURCHASES WERE MADE AND CLOSING BALANCES WERE MORE AS COMPARED TO THE CLOSING BALANCES OF THE PRECEDING YEAR TO THE EXTEN T OF AROUND 25% OF BOGUS PURCHASES. IN THIS CASE, THE PAYMENTS MADE AND THERE IS NO CLOSIN G BALANCE IN THE CASE OF 05 PARTIES. THE AO IN HIS ORDER HAS GIVEN THE GROSS PROFIT RATE DIS CLOSED BY THE ASSESSEE FOR THE 3 ASSESSMENT YEAR UNDER CONSIDERATION AND FOR THE LAS T TWO PRECEDING YEARS. IN THE LAST TWO PRECEDING YEARS, THE GROSS PROFIT RATE WAS 2.09% AN D 1.26% AS COMPARED TO 1.37% IN THE YEAR UNDER REFERENCE. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS NOT DISCLOSED CORRECT GROSS PROFIT RATE ON PURCHASES THAN UNVERIF IABLE PURCHASES. THE ASSESSEE HAS MADE SALES OF AROUND RS. 11.09 CRORES. ONE HAS TO CONSID ER THE PAST HISTORY OF THE CASE FOR CONSIDERING THE TRADING ADDITION. IT IS ALSO TRUE T HAT THE COMMISSION IS TO BE PAID IN RESPECT OF BOGUS BILLS. HENCE, THE TRADING RESULTS CANNOT BE ACCEPTED. HOWEVER, LOOKING TO THE QUANTUM OF THE BOGUS PURCHASES, WE FEEL THAT IT WIL L BE FAIR AND REASONABLE TO RESTRICT THE TRADING ADDITION TO RS. 40,000/-. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25-01 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 25 /01/2012 *MISHRA COPY FORWARDED TO :- 1. M/S. PADMAWATI ENTERPRISES,JAIPUR 2. THE ITO, WARD- 6 (1), JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.809/JP /11) A.R, ITAT, JAIPUR 4