SHRI ALOK HALDIA, Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, Jaipur

ITA 925/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8715 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Assessee Lawyers: M L BORAD
• Keywords: Bogus purchase
• Section: 271(1)(c); 143(3); 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 925/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2007-08 SHRI ALOK HALDIA, PROPRIETOR M/S RATNA KIRTI, 150 HALDIA HOUSE, 3 RD FLOOR, JOHARI BAZAR, JAIPUR-302003. CUKE VS. A.C.I.T., CIRCLE-1, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AAEPH 1017 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI M.L. BORAD (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/01/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/04/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-I, JAIPUR DATED 27/06/2018 FOR THE A.Y. 2007-08 IN THE MATTER OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: 1. THAT THE LD. CIT(A) ERRED IN SUSTAINING PENALTY OF RS. 6,18,121/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE I.T. ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 6,18,121/- U/S 271(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCES OF THE CASE. ITA 925/JP/2018_ ALOK HALDIA VS ACIT 2 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR SUBSTITUTE ONE OR MORE GROUNDS OF APPEAL AS AND WHEN NEEDED. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND AS UNDER: IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. HAS ERRED IN IMPOSING PENALTY U/S 271(1)(C) WITHOUT SPECIFICALLY POINTING OUT IN THE SHOW CAUSE NOTICE, WHETHER PENALTY WAS PROPOSED ON CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND EXPORT OF PRECIOUS AND SEMI PRECIOUS STONES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESSING OFFICER MADE ADDITION BY ESTIMATING 25% OF THE ALLEGED BOGUS PURCHASES. THE LD. CIT(A) HAS REDUCED THE ESTIMATED ADDITION TO THE EXTENT OF 15% OF THE BOGUS PURCHASES. HOWEVER, THE A.O. ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT WITH REGARD TO THE ALLEGED ADDITION, UPHELD BY THE LD. CIT(A). 3. AT THE OUTSET, THE LD. AR OF THE ASSESSEE PLACED ON RECORD THE ORDER OF THE COORDINATE BENCH IN THE CASE OF SHRI ASHOK KUMAR GUPTA VS ITO IN ITA NO. 95/JP/2017 ORDER DATED 30/05/2018, WHEREIN THE PENALTY IMPOSED FOR THE SIMILAR ESTIMATED ADDITION WAS DELETED BY THE TRIBUNAL BY OBSERVING THAT THE A.O. HAS ESTIMATED THE PROFIT BY REJECTING THE BOOKS OF ACCOUNT. ITA 925/JP/2018_ ALOK HALDIA VS ACIT 3 4. ON THE OTHER HAND, THE LD DR HAS CONTENDED THAT THE QUANTUM ADDITION TO THE EXTENT OF 15% ON BOGUS PURCHASES HAS BEEN CONFIRMED BY THE TRIBUNAL, THEREFORE, PENALTY RELATING TO 15% OF THE ADDITION SHOULD BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD. AR AND LD. DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD, WE FOUND THAT IN THE COURSE OF QUANTUM PROCEEDINGS, THE A.O. HAS ESTIMATED EXTRA INCOME OF 25% OF THE ALLEGED BOGUS PURCHASES. THE LD. CIT(A) HAS ESTIMATED 15% OF THE PROFIT ON SUCH PURCHASES, ACCORDINGLY GIVEN PARTIAL RELIEF. IN QUANTUM APPEAL, THE TRIBUNAL HAVE CONFIRMED THE ORDER OF THE LD. CIT(A) UPHOLDING THE ADDITION @ 15%. THE A.O. HAS ALSO IMPOSED PENALTY U/S 271(1)(C) OF THE ACT WITH REGARD TO ESTIMATED QUANTUM ADDITION UPHELD BY THE LD. CIT(A). THE ASSESSEE IS IN FURTHER APPEAL BEFORE US WITH REGARD TO PENALTY SO IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT. HOWEVER, THE QUANTUM AND PENALTY PROCEEDINGS ARE SEPARATE AND IF IN THE PENALTY PROCEEDINGS, IT IS FOUND THAT THE ASSESSEE HAS FURNISHED ALL THE EVIDENCES TO SUBSTANTIATE ITS CLAIM OF NOT FURNISHING INACCURATE PARTICULARS, NO PENALTY IS TO BE IMPOSED EVEN ITA 925/JP/2018_ ALOK HALDIA VS ACIT 4 IF THE ADDITION IS BEING CONFIRMED. IN THE INSTANT CASE, THE ASSESSEE IS CARRYING ON BUSINESS AT JAIPUR AS EXPORTER AND TRADER OF PRECIOUS AND SEMI PRECIOUS GEMS AND STONES FROM LAST MANY YEARS. THE ENTIRE SALES OF RS. 4,11,22,504/- ARE EXPORT SALES AND ALL REALIZATIONS OF SALE PROCEEDS ARE IN THE FORM OF FOREIGN CURRENCY THROUGH PROPER BANKING CHANNELS. FOR THE PURPOSES OF EXPORTS, THE ASSESSEE PURCHASES GOODS FROM VARIOUS DEALERS INCLUDING ABOVE NAMED JPK TRADING (I) PVT. LTD AND THE SAME WERE EXPORTED OUTSIDE INDIA. IN THE COURSE OF THIS REGULAR BUSINESS ACTIVITY THE ASSESSEE INTER ALIA PURCHASED GOODS, NAMELY PRECIOUS AND SEMI PRECIOUS GEMS AND STONES FROM ABOVE NAMED COMPANY JPK TRADING (I) PVT. LTD. AND TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM ABOVE NAMED PARTY THE ASSESSEE FURNISHED COPY OF PURCHASES INVOICES, COPY OF BANK STATEMENTS COPY OF EXPORT INVOICES, AIRWAYS BILLS, BANK ADVICE IN RELATION TO REALIZATION OF SALE PROCEEDS IN FOREIGN EXCHANGE, CONFIRMATION OF SUPPLIER, TIN OF SUPPLIER WHICH IS ISSUED TO A DEALER DOING BUSINESS OF PURCHASE/SALE ISSUED BY THE GOVT. OF RAJASTHAN. IT IS CLEAR FROM THE DOCUMENTS SO FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAS SUBMITTED ALL THE DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE PURCHASES SO MADE, UNDER THESE FACTS AND CIRCUMSTANCES, MERELY MAKING OF ESTIMATED ADDITION OF 15% WILL NOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. ITA 925/JP/2018_ ALOK HALDIA VS ACIT 5 6. THE ITAT, JAIPUR BENCH IN THE CASE OF DEEPAK DALELA VS. ITO IN ITA NO. 1027/JP/2013 DATED 22/12/2016 HAS HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE COORDINATE BENCH IN THE IDENTICAL CASE I.E. IN THE CASE OF ITO VS. M/S BHANSALI TRADING CORPORATION, HAS HELD AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ADDITION MADE BY THE A.O. WAS SPECIFIC ON ACCOUNT OF UNVERIFIABLE PURCHASES ON WHICH G.P. @ 25% WAS APPLIED AND ADDED IN THE INCOME. HOWEVER, THE SAME WAS REDUCED BY THE LD CIT(A) AND APPLIED DIFFERENT G.P. RATE. HOWEVER, THE ADDITIONS WERE SPECIFIC. THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THESE PARTIES FOR VERIFICATION AND ALSO SUMMONS WERE RETURNED BACK TO THE OFFICER UNSERVED. THIS BENCH RECENTLY DECIDED THIS ISSUE IN DETAIL IN THE CASE OF SHRI ANUJ KUMAR VARSHNEY VS. I.T.O. AND OTHER CASES IN ITA NO. 187/JP/2012 ORDER DATED 22/10/2014 AND GAVE DETAIL FINDINGS ON UNVERIFIABLE PURCHASES IN NUMBER OF CASES. THE DEPARTMENT HAS BEEN ABLE TO PROVE THAT IN GEMS AND JEWELLERY BUSINESS, SOME OF THE PARTIES WERE GIVING ACCOMMODATION ENTRY AND SOME OF THEM ACCEPTING THE ACCOMMODATION BILL TO REDUCE THE PROFIT. THE PARTIES NAMES FIGURED IN THIS CASE ALSO WERE SIMILAR TO THOSE CASES, THEREFORE, WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS ITA NO.95/JP/2017 SHRI ASHOSK KUMAR GUPTA VS ITO, WARD- 4(2), JAIPUR 7 SPECIFIC AND ASSESSEE HAD CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. FURTHER THE ASSESSEES EXPLANATION IS NOT BONAFIDE. THE CASE LAWS REFERRED BY THE ASSESSEE ARE NOT SQUARELY APPLICABLE. IN THIS CASE, THE ADDITION WAS SPECIFIC WITH REFERENCE TO UNVERIFIABLE PURCHASES. THEREFORE, WE REVERSE THE ORDER OF THE LD CIT(A). LD. AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF SHIV LAL TAK VS CIT (SUPRA) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IN MAKING COMPUTATION OF TOTAL INCOME WHERE THE INCOME RETURNED HAS BEEN REJECTED BY REJECTING THE TRADING RESULTS, FINDING SOME DISCREPANCY IN THE BOOKS OF ACCOUNT AND SUBSTITUTING THE SAME BY AN ESTIMATED FIGURE, IN THE STRICT SENSE, CAN NEITHER BE SAID TO BE ADDITION OF ANY AMOUNT IN THE ITA 925/JP/2018_ ALOK HALDIA VS ACIT 6 RETURNED INCOME NOR DISALLOWANCE OF ANY AMOUNT AS DEDUCTIONS CLAIMED. THE WORD AMOUNT OF WHICH ADDITIONS MADE OR DEDUCTIONS DISALLOWED ALSO DENOTES REFERENCE TO SPECIFIC ITEM OF AMOUNT ADDED OR DISALLOWED AS DEDUCTION IN CONTRAST TO SUBSTITUTION OF ALTOGETHER A NEW ESTIMATED SUM IN PLACE OF THE INCOME RETURNED. IT IS A CASE NEITHER OF ADDITION OR DISALLOWANCE BUT A CASE OF SUBSTITUTION. IN VIEW THEREOF, THE HON'BLE HIGH COURT HAS UPHELD THE DECISION OF THE TRIBUNAL FOR DELETING THE PENALTY. IN THE LIGHT OF THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY AS IN THE PRESENT CASE ALSO THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT BY REJECTING THE BOOKS OF ACCOUNT. ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). 7. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH APRIL, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH APRIL, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI ALOK HALDIA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT ITA 925/JP/2018_ ALOK HALDIA VS ACIT 7 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 925/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR