M/S SWARNGANGA JEWELLERS, Jaipur V. ACIT, Jaipur

ITA 833/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59555 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 27-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: S L PODDAR
• Keywords: Bogus purchase

Judgement Text

1 ITA 833-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ITA NO. 833/JP/2011 ASSTT. YEAR : 2007-08. M/S. SWARNGANGA JEWELLERS, VS. THE ACIT, CIRCLE-5 , A-129, JANTA COLONY, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L.PODDAR RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 12.03.2012. DATE OF PRONOUNCEMENT : 15.03.2012. ORDER DATE OF ORDER : 15/03/2012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 20077-08. 2. THE ASSESSEE IS OBJECTING IN CONFIRMING TRADING ADDITION OF RS. 17,74,349/- MADE AND CONFIRMED BY LOWER AUTHORITIES BY DISALLOWING 2 5% ON ACCOUNT OF UNVERIFIABLE PURCHASES OF RS. 70,97,395/-. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT ASSESSEE HAD MADE PURCHASES OF RS. 70.97 LACS OR ODD FROM 6 PARTIES W HICH REMAINED UNVERIFIABLE, THOUGH COMPLETE NAME AND ADDRESS OF THESE PARTIES WERE FUR NISHED ALONG WITH THEIR CONFIRMATIONS AND COPIES OF PURCHASE VOUCHERS. THE PARTIES HAD S ALES TAX REGISTRATION NUMBER AND 2 PAN. COPIES OF RELEVANT BANK ACCOUNTS WERE ALSO FIL ED. HOWEVER, THE AO WAS NOT SATISFIED, THEREFORE, HE REJECTED THE CONTENTION OF THE ASSESSEE BY FURTHER OBSERVING THAT ASSESSEE INVOLVED IN RECEIVING BOGUS PURCHASE BILLS . THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT BY PLACING RELIANCE ON THE DECISION OF TRIB UNAL IN CASE OF VIJAY PROTEINS, 58 ITD 428 AND IN CASE OF SANJAY OIL CAKE INDUSTRIES, 10 DTR 153 (GUJ.). THEREAFTER HE MADE AN ADDITION @ 25% OF UNVERIFIABLE PURCHASES. THE LD . CIT (A) HAS CONFIRMED THE ACTION OF THE AO. 4. NOW ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUN AL. 5. AFTER CONSIDERING THE WRITTEN SUBMISSIONS AND AR GUMENTS OF LD. D/R, WHO PLACED RELIANCE ON THE ORDERS OF THE AO AND LD. CIT (A), W E FIND THAT ASSESSEE DESERVES TO SUCCEED IN ITS APPEAL IN PART. THE JAIPUR BENCHES OF THE TRIBUNAL IS TAKING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIAB LE THEN THE REJECTION OF BOOKS OF ACCOUNT IS JUSTIFIED. THEREFORE, WE HOLD THAT REJE CTION OF BOOKS OF ACCOUNT IS JUSTIFIED. 5.1. HOWEVER, THE JAIPUR BENCHES ARE ALSO TAKING A CONSISTENT VIEW THAT WHERE ADDITION IS MADE ON THE BASIS OF UNVERIFIABLE PURCHASES IS N OT JUSTIFIED AS THE ADDITION CAN BE MADE TAKING INTO CONSIDERATION THE PAST HISTORY OF THE C ASE AND CURRENT EVENTS OF THE CASE AS HELD BY HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. INANI MARBLES PVT. LTD., 316 ITR 125 (RAJ.) AND IN CASE OF GOTAN LIME, 256 ITR 243. IN RECENT JUDGMENT IN CASE OF AMRAPALI JEWELS PVT. LTD., 65 DTR 196 (RAJ.), THE HONBLE RA JASTHAN HIGH COURT HAS ALSO UPHELD THE VIEW THAT IN CASE OF UNVERIFIABLE PURCHASES ONL Y SECTION 145(3) CAN BE INVOKED BUT NO ADDITION CAN BE MADE ON THE BASIS OF UNVERIFIABLE P URCHASES AS THE ADDITION CAN BE MADE AFTER TAKING INTO CONSIDERATION THE PAST HISTORY AN D CURRENT EVENTS OF THE CASE. IT IS FURTHER SEEN THAT IN IMMEDIATELY PRECEDING YEAR I.E. 2006-0 7 AGAINST DISCLOSED GP RATE OF 24.78% 3 THE AO APPLIED GP RATE OF 26.23%. THE ADDITION MAD E BY AO WAS DELETED BY LD. CIT (A) AND THE TRIBUNAL HAS CONFIRMED THE ORDER OF LD. CIT (A) VIDE ITS ORDER IN ITA NO. 457/JP/2009 DATED 30.09.2009. THE TRIBUNAL HAS HELD THAT GP RATE DECLARED BY ASSESSEE IS QUITE REASONABLE. IN THE YEAR UNDER CONSIDERATION, THE GP RATE HAS GONE VERY HIGH I.E. 35.36% AGAINST 24.78%, THEREFORE, NO ADDITION CAN B E MADE ON THE BASIS OF PAST HISTORY. HOWEVER, THE FACT REMAINS THAT CERTAIN PURCHASES RE MAINED UNVERIFIABLE, THEREFORE, WE ARE OF THE VIEW THAT IF AN ADDITION OF RS. 1 LAC IS SUS TAINED WHICH WILL TAKE CARE OF LEAKAGE OF REVENUE, IF ANY, THAT WILL MEET THE ENDS OF JUSTICE . WE ORDER ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15. 3.2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- M/S. SWARNGANGA JEWELLERS, JAIPUR. THE ACIT, CIRCLE-5, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 833/JP/2011) BY ORDER, AR ITAT JAIPUR.