ACIT, Jaipur V. M/S J.K. JEWELERS, INTERNATIONAL, Jaipur

ITA 880/JPR/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91856 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR
• Keywords: Bogus purchase; Rejection of books of accounts; Accommodation entries; Reassessment proceedings
• Section: 69C; 143(3); 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 880/JP/2011 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 THE ACIT, CIRCLE-7, JAIPUR. CUKE VS. M/S J.K. JEWELERS, INTERNATIONAL A-36, GOVINDI TAKHTESHALHI ROAD JAWAHAR LAL NEHRI MARG, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAEFJ 9839 Q VIHYKFKHZ@ AP PELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 908/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 M/S J.K. JEWELERS, INTERNATIONAL A-36, GOVINDI TAKHTESHALHI ROAD JAWAHAR LAL NEHRI MARG, JAIPUR. CUKE VS. THE DCIT, CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAEFJ 9839 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. PODDAR (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI NEENA JEPH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/02/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 28/03/2018 VKNS'K@ ORDER ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 2 PER: VIJAY PAL RAO, J.M. THESE ARE TWO APPEALS ONE OF THE REVENUE IS DIRECTE D AGAINST THE ORDER DATED 01.07.2011 OF LD. CIT(A), JAIPUR ARISI NG FROM ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT AND ANOTHER BY T HE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.09.2016 OF CIT (A), JAIPUR ARISING FROM REASSESSMENT ORDER PASSED U/S 147 R.W.S. 143(3 ) OF THE ACT FOR THE ASSESSMENT YEAR 2008-09. 2. THE ORIGINAL ASSESSMENT ORDER WAS COMPLETED BY T HE AO U/S 143(3) OF THE ACT ON 16.12.2010 WHEREBY THE AO MADE AN ADDITION OF RS. 1,19,58,445/- ON ACCOUNT OF PURCHASES MADE BY T HE ASSESSEE FROM 12 PARTIES TREATING THE SAME AS NOT GENUINE. ON APP EAL, THE LD. CIT(A) DELETED THE ADDITION/DISALLOWANCE MADE BY THE AO EX CEPT AN ADDITION OF RS. 3,00,000/- ON THIS ACCOUNT. THUS, THE REVENUE H AS FILED THE PRESENT APPEAL. IN THE MEANTIME THE ASSESSING OFFICER REOPE NED THE ASSESSMENT BY ISSUING A NOTICE U/S 148 ON 30.03.201 5 WHEREBY PROPOSED TO ASSESS A FURTHER INCOME OF RS. 1,33,94, 163/- ON ACCOUNT OF PURCHASES MADE BY THE ASSESSEE FROM ADI IMPEX. THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS REJECTED THE BOOKS OF ACCOUNT U/S 145(3) AND MADE AN ADDITION BY ESTIMATING THE PROFI T OF THE ASSESSEE AT ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 3 25% THE PURCHASES OF RS. 2,45,02,247/-. ON APPEAL A GAINST THE REASSESSMENT ORDER/ADDITION THE LD. CIT(A) RESTRICT ED THE ADDITION TO 15% OF SUCH PURCHASE AS AGAINST 25% MADE BY THE AO. THUS, THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER AND FIL ED THE PRESENT APPEAL. 3. GROUNDS RAISED BY THE REVENUE AS WELL AS ASSESSE E IN THESE APPEALS ARE AS UNDER:- REVENUES GROUND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN (I) THE CIT(A) HAS ERRED IN LAW AND ON FACTS AND IN PERVERSITY, RESTRICTED THE ADDITION OF RS. 1,19,58,445/- MADE O N ACCOUNT OF PURCHASES FROM 12 DIFFERENT PARTIES, NONE OF WHICH WAS PRODUCED FOR EXAMINATION/VERIFICATION BEFORE THE A.O. DESPIT E REPEATED REQUESTS. (II) THE CIT(A) HAS ERRED IN LAW AND ON FACTS AND I N PERVERSITY, HELD THAT THE GENUINENESS OF STATED PURCHASES HAD B EEN ESTABLISHED AND THAT THE RESTRICTION OF THE DISALLO WANCE TO RS. 3 LACS WOULD SUFFICE EVEN WHEN GENUINENESS OF THE PU RCHASES WAS NOT ESTABLISHED. (III) THE CIT(A) HAS ERRED IN LAW AND ON FACTS AND PERVERSELY, HELD THAT THE ACCEPTANCE OF THE SALES BY THE AO, JUSTIFI ED THE PURCHASES, EVEN WHILE IGNORING THE POSSIBILITY OF I NFLATED PURCHASES ASSESSEES GROUND ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 4 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 148/143 (3) OF THE INCOME TAX ACT, 1961 AND CONFIRMED THE LEARNED CIT( A) IS VOID AB-INITIO DESERVES TO BE QUASHED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED CONFIRMING THE RE-OPENING OF ASSES SMENT U/S 148 AS VALID ON THE BASIS OF ISSUE OF ALLEGED UNVER IFIABLE PURCHASES WHICH HAS ALREADY BEEN CONSIDERED AND ADD ITION HAS BEEN MADE IN THE ORDER PASSED U/S 143(3) OF THE INC OME TAX ACT, 1961. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED SUSTAINING THE ADDITION OF RS. 36, 75,337/- OUT OF 15% OF TOTAL ALLEGED BOGUS PURCHASES OF RS. 2,45,02 ,247/- WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE. 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING. 4. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR A ND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE REVENUE IS AGG RIEVED BY THE ORDER OF THE LD. CIT(A) IN THE FIRST ROUND OF ASSESSMENT WHEREBY THE ASSESSEE IS AGGRIEVED THE ORDER OF THE LD. CIT(A) IN THE REO PENING OF THE ASSESSMENT. THE ASSESSEE FIRM IS DERIVING INCOME FR OM EXPORT OF PRECIOUS AND SEMI PRECIOUS STONES INCLUDING EXPORT OF GOLD AND SILVER JEWELLERY. IN THE ORIGINAL ASSESSMENT PASSED U/S 14 3(3) THE AO DOUBTED THE PURCHASES MADE FROM 12 PARTIES AND WHEN THE ASS ESSEE COULD NOT PRODUCE THE SUPPLIERS FOR EXAMINATION, THE AO TREAT ED THE PURCHASES TO THE EXTENT OF RS. 1,33,94,163/- AS NOT GENUINE AND DISALLOWANCE THE ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 5 SAME. ON APPEAL, THE LD. CIT(A) AFTER CONSIDERING T HE RELEVANT FACTS AS WELL AS EVIDENCES PRODUCED BY THE ASSESSEE BEFORE T HE AO IN SUPPORT OF THE PURCHASES MADE FROM THESE 12 PARTIES HAS ADJUDI CATED THE ISSUES IN PARA 2.3 AS UNDER:- 2.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE ISSUE UNDER CONSIDERATION, OBSERVATIONS OF THE AO AND ALSO THE SUBMISSIONS MADE BY LD. AR IN THIS REGARD. BEFORE G OING INTO THE MERITS OF THE RIVAL STANDS, THE PRIMARY CLAIM O F THE APPEAL THAT THE PRESENT ISSUE HAS ALREADY BEEN DEALT AND D ECIDED BY THE HON'BLE ITAT, JAIPUR BENCH, IN THEIR FAVOUR, IN THE PAST, WAS EXAMINED. ON PERUSAL OF THE RELEVANT ORDERS OF A.Y. 2006-07 & 2007-08, IT IS TRANSPIRED THAT THE HON'BL E ITAT HAS DELETED THE ADDITION MADE BY THE AO OF ENTIRE OR PA RT OF SUCH PURCHASES, MADE ALMOST FROM SAME SUPPLIERS, WHICH A RE INVOLVED IN CURRENT YEAR. WHILE GIVING THE RELIEF T O THE APPELLANT, THE HON'BLE BENCH HAS HELD THAT ONCE THE -SALES ARE ACCEPTED THEN THE ADDITION CANNOT BE MADE WHILE TERMING THE CORRESPONDING PURCHASES AS BOGUS IN NAT URE. UNDER SUCH CIRCUMSTANCES, THE HON'BLE BENCH HAS LAI D DOWN THE PRINCIPLE THAT ANY ADDITION CAN BE MADE, ONLY O N THE BASIS OF THE ADEQUACY OF THE TRADING RESULTS SHOWN OF CUR RENT YEAR VIZ. SHOWN IN THE PAST PERIOD. WHILE DISPOSING THE APPEAL FOR A.Y. 2006-07, THE HON'BLE ITAT DELETED THE ADDITION OF ENTIRE PURCHASES MADE U/S 69C OF THE ACT AND RESTRICTED TH E SAME, UP TO THE GAP OF THE HIGHER GP RATIO SHOWN IN THE P AST THEN SHOWN IS THE RELEVANT YEAR. SIMILARLY WHILE DECIDIN G THE APPEAL OF A.Y. 2007-08, THE HON'BLE BENCH HAS DELET ED THE ADDITION MADE OF 25% OF SUCH PURCHASES. SIMILARLY I N VIEW OF THE FACT THAT THE GP IN THE RELEVANT YEAR WAS OFFER ED AT HIGHER SIDE THEN THE PREVIOUS YEAR, THE HON'BLE ITAT MADE ADHOC ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 6 ADDITION OF RS. 1,00,000/- TO COVER-UP THE DISCREPA NCIES FOUND I.R.O. RELEVANT PURCHASES. WITH THE ABOVE BACKGROUND, IT THE FACTS AND CIRCUMS TANCE OF THE CURRENT YEAR ARE MATCH WITH THE A.Y. 2006-07 & 2007-08, THEY WOULD BE FOUND IDENTICAL IN ALL MANNERS. SO MU CH, SO THAT MOST OF THE SUPPLIERS OF GOODS ARE COMMON IN B OTH THE ASSESSMENT YEARS AND ALSO THAT THE GP THE CURRENT Y EAR IS BETTER THEN THE LAST YEAR. ACCORDINGLY, WHILE RESPE CTFULLY FOLLOWING THE GUIDELINES AND VERDICT OF THE HON'BLE TRIBUNAL, IT IS HELD THAT THE AO WAS NOT REASONABLE AND JUSTIFIE D, WHILE DISALLOWING THE ENTIRE PURCHASES OF THE APPELLANT, WHICH WERE INDISPUTABILITY UTILIZED FOR MAKING EXPORT SALES OF THE RELEVANT PERIOD. ACCORDINGLY THE ADDITION OF RS. 1,19,58,445 /- IS FOUND UNTENABLE ON THE FACTS AND MERITS ALSO AND THUS FOU ND DISSERVES TO BE DELETED. SIMILARLY IN VIEW OF THE F ACT THAT THE GP RATE OF THE CURRENT YEAR (I.E.18.55%) IS BETTER THEN THE PREVIOUS YEAR (17.36%), THEREFORE, WHILE FOLLOWING THE FOOT PRINTS OF THE DECISION OF THE HONBLE ITAT BENCH, I N THE APPELLANT CASE FOR A.Y. 2007-08 AND ALSO THE FACT O F THE INCREASED TURNOVER OF THE CURRENT YEAR, AN ADHOC AC TION OF RS. 3,00,000/- IS SUSTAINED TO TAKE CARE OF ALL THE INC REMENTING ASPECTS, RELATED TO THE ISSUE UNDER CONSIDERATION, IF ANY CONSEQUENTLY, THIS GROUND OF APPEAL IS PARTLY UPHEL D. THUS, IT IS CLEAR THAT THE LD. CIT(A) WHILE DELETIN G THE ADDITION MADE BY THE AO HAS FOLLOWED THE DECISION OF THIS TRIBUNAL I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08. IT IS ALSO NOT DIS PUTED THAT THE ASSESSEE IS AN EXPORTER OF PRECIOUS AND SEMI PRECIO US STONES AS WELL JEWELLERY THEREFORE, WHEN THE EXPORT OF GOODS IS NO T IN DISPUTE THEN THE ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 7 PURCHASES OF THE CORRESPONDING QUANTITY CANNOT BE D OUBTED EXCEPT THE COST OF PURCHASE WHICH MIGHT HAVE BEEN INFLATED BY THE ASSESSEE. HOWEVER, IT IS NOT THE CASE OF THE A.O. THAT THE AS SESSEE HAS INFLATED THE PURCHASES IN COMPARISON TO THE PREVAILING MARKE T PRICE OF THE GOODS. THEREFORE, WHEN THE GP RATE OF THE CURRENT Y EAR DECLARED BY THE ASSESSEE AT 18.55% IS BETTER THAN THE EARLIER ASSES SMENT YEAR AT 17.36% WHICH HAS BEEN ACCEPTED AS FINALLY DECIDED B Y THIS TRIBUNAL IN DELETING THE ADDITION MADE BY THE AO THEN NO ADDITI ON IS CALLED FOR ON THIS ACCOUNT. HENCE, AS FAR AS THE REVENUES APPEAL IS CONCERNED IN THE ABSENCE OF ANY CONTRARY MATERIAL OR FACT WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A). 5. AS REGARDS THE APPEAL OF THE ASSESSEE SINCE, THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDING HAS REJECTED THE BOO KS OF ACCOUNT U/S 145(3) OF THE ACT THEREFORE, ONLY COURSE OF ACTION LEFT WITH THE AO IS TO ESTIMATE THE INCOME OF THE ASSESSEE ARE SOME REASON ABLE AND PROPER BASIS. THE ASSESSING OFFICER INSTEAD OF APPLYING GP RATE AS DECLARED BY THE ASSESSEE IN THE PAST AS A PROPER BENCH MARK FOR ESTIMATION OF THE INCOME, HAS MADE A DISALLOWANCE OF 25% OF THE PURCH ASES MADE FROM CERTAIN PARTIES. THE LD. CIT(A) THOUGH RESTRICTED T HE DISALLOWANCE TO 15% OF SUCH PURCHASES HOWEVER, ONCE THE BOOKS OF AC COUNT ARE ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 8 REJECTED U/S 145(3) OF THE ACT THE AO OUGHT TO HAVE ESTIMATED THE INCOME BY APPLYING PROPER AND REASONABLE GP RATE. T HE PAST HISTORY OF GP RATE DECLARED BY THE ASSESSEE IS A PROPER GUIDE FOR ESTIMATION OF INCOME. WE FURTHER NOTE THAT IT IS SETTLED PROPOSIT ION THAT THE REJECTION OF BOOKS OF ACCOUNTS WOULD NOT IPSO FACTO LEAD TO A DDITION IF THE, GP DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION IS IN THE LINE WITH THE PAST HISTORY OF THE ASSESSEE OR MORE THAN THE GP DECLARED IN THE EARLIER YEARS. THUS, THE REJECTION OF BOOKS OF ACCOUNTS NEED NOT NECESSARILY RESULT IN AN ADDITION TO THE INCOME OF THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT V S. CLARITY GOLD (P) LTD. VIDE ITS DECISION DATED 19.09.2017 IN D.B. ITA NO. 125/2014 TO 128/2014 HAS HELD THAT AVERAGE GP OF 12% WHICH IS I N LINE WITH THE GP SHOWN BY THE IDENTICAL INDUSTRIES SHALL BE APPLIED IN THE CASE OF THE ASSESSEE. WE FURTHER NOTE THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF DCIT VS. M/S GEMS PARADIES IN ITA NO. 747/J P/2012 AND CO NO. 65/JP/2012 VIDE ORDER DATED 26.12.2017 HAS CONS IDERED AN IDENTICAL ISSUE IN PARA 5 AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE REVENUE IS AGGRIEV ED BY THE IMPUGNED ORDER BY THE LD. CIT(A) WHEREBY THE ADDITI ON MADE BY THE AO EQUIVALENT TO 25% OF THE UNVERIFIABLE PURCH ASE WAS RESTRICTED BY APPLYING THE GP ADDITION @ 25.50%. WE ARE OF THE ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 9 CONSIDERED VIEW THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED BY THE AO THEN, THE ONLY COURSE OF ACTION LEFT WITH TH E AO IS TO ASSESS THE INCOME OF THE ASSESSEE ON THE BASIS OF E STIMATE AND BEST JUDGMENT. THE ASSESSING OFFICER AFTER REJECTIO N OF BOOKS OF ACCOUNT HAS FURTHER MADE ADDITION OF 25% OF TAINTED SALES TO THE BOOKS RESULT WHICH IS NOT PERMISSIBLE WHEN THE AO R ESORTED INVOKE THE PROVISIONS OF SECTION 145(3) OF THE ACT. THUS, THIS ACTION OF THE AO IS CONTRARY TO THE DECISION OF REJ ECTING THE BOOKS OF ACCOUNTS. ACCORDINGLY, WE DO CONCUR WITH THE VIE W OF THE LD. CIT(A) IN APPLYING THE GP RATE FOR ASSESSMENT OF TH E INCOME OF THE ASSESSEE AFTER THE REJECTION OF BOOKS OF ACCOUN T. THIS TRIBUNAL COMPRISING THE SAME COMBINATION IN CASE OF CIT VS. ALLIED GEMS CORPORATION IN ITA NO. 794/JP/2011 VIDE ORDER DATE D 15.12.2017 CONSIDERING THEN AN IDENTICAL ISSUE HAS HELD IN PAR A 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 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 ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 10 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 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 ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 11 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 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 ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 12 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 A CIT VS. M/S ALLIED GEMS CORPORATION (SUPRA) THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE WITHOUT ANY SUBSTANCE OR MERITS. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND DELETE THE ADDITION CONFIRMED BY THE LD. CIT(A) WHEN THE GP DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS MORE T HAN THE GP FOR THE EARLIER ASSESSMENT WHICH WAS ACCEPTED BY THIS TRIBU NAL. THOUGH THE ASSESSEE HAS RAISED OTHER GROUNDS REGARDING THE VAL IDITY OF REOPENING HOWEVER, ONCE THE APPEAL OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE ON THE MERITS AND THE ADDITION IS DELETED THEN, THE LEGAL ISSUE RAISED BY THE ASSESSEE BECOMES ACADEMIC IN NATURE A ND ACCORDINGLY WE DO NOT PROPOSE TO GO INTO THE SAME. ITA NO. 880/JP/2011 & 908/JP/2016 ACIT V M/S J.K. JEWELERS, INTERNATIONAL 13 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/03/2018 SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/03/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT/DCIT, CIRCLE-7, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S J.K. JEWELERS, INTERNATIONAL, J AIPUR. 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. 880/JP/2011 & 908/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR