ITO, Jaipur V. M/S LAKHI GEMS, Jaipur

ITA 893/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62024 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Bogus purchase
• Section: 145

Judgement Text

1 ITA 893-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : A JAIPUR. BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ITA NO. 893/JP/2011 ASSTT. YEAR : 2008-09. THE INCOME-TAX OFFICER, VS. M/S. LAKHI GEMS, WARD 2(1), 395, II FLOOR, HANUMAN JI KA RASTA, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI P.C. PARWAL DATE OF HEARING : 10.05.2012. DATE OF PRONOUNCEMENT : 25.5.2012. ORDER DATE OF ORDER : 25/05/2012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2008-09. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ENTI RE ADDITION OF RS. 24,50,679/- MADE BY ASSESSING OFFICER @ 25% OF UNVERIFIABLE PUR CHASES. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADI NG AND EXPORT OF PRECIOUS AND SEMI PRECIOUS STONES AND JEWELLERY. AGAINST THE INCOME DECLARED OF RS. 5,51,650/-, THE ASSESSMENT WAS COMPLETED ON A FIGURE OF RS. 30,02,3 30/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSES SEE HAS SHOWN PURCHASES OF RS. 98,02,717/- FROM 11 PARTIES. THESE PURCHASES REMAI NED UNVERIFIABLE. THEREFORE, 2 ASSESSING OFFICER INVOKED PROVISIONS OF SECTION 145 (3) BY PLACING RELIANCE ON THE DECISION OF SANJAY OIL CAKE INDUSTRIES, 10 DTR 153 (GUJ.) AND MADE AN ADDITION OF RS. 24,50,679/- @ 25% OF TOTAL UNVERIFIABLE PURCHASES. 3.1. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT THERE IS NO ADVERSE MATERIAL FOUND AGAINST ASSESSEE. ENTIRE SALES SHOWN BY ASSESSEE WH ICH ARE EXPORT SALES HAVE BEEN ACCEPTED BY THE DEPARTMENT. THE PROVISIONS OF SECT ION 145(3) ARE INVOKED ONLY FOR THE REASON THAT CERTAIN PURCHASES REMAINED UNVERIFIABLE . IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS FILED COMPLETE DETAILS IN RESPECT OF P URCHASES. THE PAYMENTS HAVE BEEN MADE THROUGH PROPER CHANNEL. THE DECISION OF HON'BLE GUJ ARAT HIGH COURT IN CASE OF SANJAY OIL CAKE INDUSTRIES (SUPRA) WAS FOUND DISTINGUISHAB LE IN CASE OF GEMS PARADISE IN ITA NO. 700/JP/2009 DATED 18.12.2009. THE RESULTS DECL ARED BY ASSESSEE ARE BETTER COMPARED TO EARLIER YEAR. IT WAS FURTHER EXPLAINED THAT IN EARLIER YEARS ALSO SIMILAR ADDITIONS WERE MADE AND THEY HAVE BEEN DELETED. HOWEVER, CERTAIN P ERCENTAGE HAS BEEN APPLIED BY THE TRIBUNAL WHILE DELETING THE ADDITION. IT WAS EXPLAI NED THAT FOR ASSESSMENT YEAR 2007-08, THE TRIBUNAL HAS DIRECTED TO APPLY GP RATE OF 13% A GAINST 12.42% SHOWN BY ASSESSEE. IN THE PRESENT YEAR THE ASSESSEE ITSELF HAS SHOWN GP R ATE OF 13.29%. THEREFORE, NO ADDITION IS WARRANTED. THE LD. CIT (A) WAS SATISFIED WITH T HE CONTENTION OF THE ASSESSEE. ACCORDINGLY, HE DELETED THE ENTIRE ADDITION BY MAKI NG FOLLOWING OBSERVATIONS IN PARAS 4.5 AND 4.6 OF HIS ORDER :- 4.5. I HAVE CAREFULLY PERUSED THE ORDER OF THE AS SESSING OFFICER AND THE SUBMISSIONS OF THE AR. THE HON'BLE ITAT JAIPUR BENC H HAS CONSISTENTLY HELD IN CASES OF BOGUS PURCHASES THAT THE BOOKS OF ACCOUNTS ARE TO BE TREATED AS UNRELIABLE UNDER THE PROVISIONS OF S. 14 5(3). ON SAME FACTS IN THE CASE OF THE ASSESSEE IN A.Y. 2005-06 THE HON'BL E ITAT JAIPUR BENCH HAS UPHELD THE DECISION OF THE ASSESSING OFFICER RE GARDING REJECTION OF THE BOOKS OF ACCOUNTS AND HAS HELD THE APPLICATION OF T HE GP RATE OF 16.16% ON SALES OF RS. 2,55,00,660/- AS JUST. CONSIDERING THAT THE ASSESSEE WAS NOT 3 ABLE TO BRING ANY EVIDENCE ON RECORD TO REBUT THE E VIDENCE BROUGHT ON RECORD BY THE DEPARTMENT REGARDING THE UNVERIFIABLE PURCHASES OR ANY NEW EVIDENCE/EXPLANATIONS ALREADY ADJUDICATED UPON BY T HE HON'BLE ITAT BENCH JAIPUR THE REJECTION OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) IS UPHELD. 4.6. REGARDING ESTIMATION OF INCOME IT HAS ALSO BEE N CONSISTENT VIEW OF THE HON'BLE ITAT JAIPUR BENCH THAT PAST HISTORY IS THE BEST GUIDE FOR ESTIMATING THE INCOME OF THE ASSESSEE. THE HON'BLE ITAT JAIPUR BENCH HAS UPHELD APPLICATION OF GP AT THE RATE OF 13% ON TOTAL TURNOVER OF RS. 4,00,94,293/- IN THE IMMEDIATE PRECEDING A.Y. 2007- 08 IN ITS ORDER ITA NO. 1072/JP/2010 DATED 10.06.2011 IN ASSESSEES CAS E. SINCE THE ASSESSEE HAS DECLARED A BETTER GP RATE OF 13.29% ON AN INCRE ASED TURNOVER OF RS. 4,82,42,346/- THE GP ADDITION IS NOT SUSTAINED AND THE DISALLOWANCE OF 25% OF TOTAL UNVERIFIED PURCHASES IS NOT UPHELD AND THE IMPUGNED ADDITION OF RS. 24,50,679/- IS DIRECTED TO BE DELETED. 4. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5. THE LD. D/R PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). FURTHER, COPY OF ORDER IN CASE OF ASSE SSEE ITSELF WAS ALSO FILED. 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN PART. WE NOTE D THAT IN IMMEDIATELY PRECEDING YEAR ALSO AN ADDITION OF RS. 35,95,743/- WAS MADE @ 25% OF UNVERIFIABLE PURCHASES AFTER REJECTING THE BOOKS OF ACCOUNT BY PLACING RELIANCE ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF SANJAY OIL CAKE INDUSTRIES (S UPRA). THE LD. CIT (A) DIRECTED THE ASSESSING OFFICER TO APPLY 13% GP RATE INSTEAD OF 2 5% ADDITION ON UNVERIFIABLE PURCHASES. THEREAFTER, ON APPEAL BY DEPARTMENT, TH E TRIBUNAL BY TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE, CONFIRM ED THE ORDER OF LD. CIT (A) 7.1. FACTS OF THE PRESENT YEAR ARE ALSO SIMILAR. T HE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHAS ES REMAINED UNVERIFIABLE THEN THE 4 REJECTION OF BOOKS OF ACCOUNT IS JUSTIFIED. THE TRI BUNAL IS ALSO TAKING A CONSISTENT VIEW THAT WHERE BOOKS OF ACCOUNT ARE REJECTED ON ACCOUNT OF UNVERIFIABLE PURCHASES THEN ADDITION SHOULD BE MADE ON THE BASIS OF PAST HISTOR Y AND TAKING INTO CONSIDERATION THE CURRENT EVENTS OF THE CASE INSTEAD OF MAKING ANY AD DITION @ 25% OF UNVERIFIABLE PURCHASES. THE GP RATE SHOWN BY ASSESSEE IS 13.29% WHICH IS BETTER AS COMPARED TO RATES ADOPTED BY TRIBUNAL AT 13% AGAINST 12.42% SHOWN BY ASSESSEE IN IMMEDIATELY PRECEDING YEAR. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMS TANCES AND TAKING INTO CONSIDERATION THAT CERTAIN PURCHASES REMAINED UNVERIFIABLE, WE AR E OF THE VIEW THAT IF AN ADDITION OF RS. 2,00,000/- IS SUSTAINED ON ACCOUNT OF UNVERIFIABLE PURCHASES WHICH WILL TAKE CARE OF LEAKAGE OF REVENUE, IF ANY, WILL MEET THE ENDS OF J USTICE. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLOW ED IN PART. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25. 5.2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO WARD 1(1), JAIPUR. M/S. LAKHI GEMS, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 893/JP/2011) BY ORDER, AR ITAT JAIPUR. 5