ITO, Jaipur V. ABHISHEK JAIN, Jaipur

ITA 973/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54120 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 27-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA

Judgement Text

1 ITA 973-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 973/JP/2010 ASSTT. YEAR : 2007-08. THE INCOME-TAX OFFICER, VS. SHRI ABHISHEK JAIN, WARD 1(3), P/O M/S. FRIENDSHIP GEMCO, JAIPUR. MUNSHI MAHAL, RAMGANJ BAZAR, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI MAHENDRA GARGIEY A DATE OF HEARING : 09.08.2011. DATE OF PRONOUNCEMENT : 19.8.2011. ORDER DATED : 19/08/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2007-08. THE DEPARTMENT IS OBJECTING IN DIRECTING TO APPLY GROSS PROFIT RATE AT 10.42% AS AGAINST 25% APPLIED BY THE AO ON UNVERIFIABLE PURCH ASES OF RS. 42,28,594/-. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD MADE CERTAIN PURCHASES FROM VARIOUS PARTIES WHICH REMAIN ED UNVERIFIED. THE AO NOTICED THAT THESE CONCERNS WERE HELD AS BOGUS CONCERN ISSUING O NLY ACCOMMODATION BILLS AND NOT DOING ANY PURCHASE OR SALE, BY THE BCTT WING OF THE DEPARTMENT. THOUGH PAN NUMBER AND ST NUMBERS ALONG WITH PURCHASE BILLS AND CONFIR MATIONS WERE ALSO FILED, HOWEVER, 2 SINCE NO PARTIES COULD BE PRODUCED, THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNT PLACING RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES, 10 DTR 153 (GUJ.) AND BY APPLYING 25% OF UNVERIFIABLE PURCHASES MADE AN ADDITION OF RS. 10,57,145/-. IT WAS CONTENDED B EFORE LD. CIT (A) THAT GROSS PROFIT RATE DECLARED BY ASSESSEE IS 9.26% AS AGAINST 28.59% IN THE IMMEDIATELY PRECEDING YEAR. IT WAS FURTHER SUBMITTED THAT ASSESSEES TURNOVER HAS BEEN INCREASED TO RS. 1.03 CRORES AS AGAINST RS. 34.38 LACS IN THE EARLIER YEAR. THE AS SESSEE HAS MAINTAINED ALL THE BOOKS OF ACCOUNTS WHICH WERE PRODUCED FOR EXAMINATION. THE SUPPLIERS IDENTIFICATION HAVE BEEN PROVED FROM THE PAN AND ST NUMBER. COPIES OF PURCHA SE BILLS WERE PROVIDED WITH CONFIRMATIONS. THEREFORE, THE ONUS LAY UPON ASSESSE E HAS BEEN DISCHARGED. RELIANCE WAS PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH CO URT IN CASE OF GOTAN LIME KHANIZ UDYOG, 256 ITR 243 (RAJ.). IT WAS ALSO SUBMITTED T HAT PRECEDING YEARS RESULT CANNOT BE APPLIED IN THE YEAR UNDER CONSIDERATION AS IN ASSES SMENT YEAR 2006-07 NO FRESH PURCHASES WERE MADE AND SALES WERE MADE OUT OF OPENING STOCK ONLY. THE TURNOVER SHARPLY DROPPED TO RS. 34 LACS ONLY FROM OVER RS. 1 CRORES IN THE A SSESSMENT YEAR 2006-07. IT WAS FURTHER SUBMITTED THAT BEFORE ASSESSMENT YEAR 2006-07, THE GROSS PROFIT RATE SHOWN BY ASSESSEE WAS 6.69% TO 10.42%. REGARDING THE DECISION OF HON BLE GUJARAT HIGH COURT IT WAS SUBMITTED THAT THIS HAS ALREADY BEEN CONSIDERED BY JAIPUR BENCH OF THE TRIBUNAL IN CASE OF GEM PARADISE WHERE IT WAS FOUND DISTINGUISHABLE. AF TER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) FOUND THAT ADDITION MADE BY AO ON ACCOU NT OF UNVERIFIABLE PURCHASES @ 25% OF UNVERIFIABLE PURCHASES IS NOT JUSTIFIED. THE LD . CIT (A) NOTED THAT IF ANY ADDITION CAN BE MADE THAT CAN BE MADE TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE AND TAKING INTO CONSIDERATION THE PAST HISTORY OF THE CASE. T HE LD. CIT (A) NOTED THAT THERE WAS NO PURCHASE IN IMMEDIATELY PRECEDING YEAR AS SALES WER E EFFECTED ONLY ON ACCOUNT OF 3 OPENING STOCK. THERE WERE NO EXPENSES AND, THEREFO RE, GROSS PROFIT RATE WAS HIGHER. THE LD. CIT (A) FURTHER NOTED THAT IN EARLIER THREE YEA RS WHEN TURNOVER WAS MORE THAN RS. 1 CRORE, GROSS PROFIT RATE VARIES FROM 6.69% TO 10.42 %. THEREFORE, THE LD. CIT (A) WAS OF THE VIEW THAT IF GROSS PROFIT RATE OF 10.42% IS APP LIED AGAINST 6.69% THAT WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND NO UNREASONBLENESS IN THE FINDING OF LD. CIT (A). THE JAIPUR BENCHES ARE TAKING A CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIAB LE THEN THE REJECTION OF BOOKS OF ACCOUNT ARE JUSTIFIED. HOWEVER, THE JAIPUR BENCHES ARE ALSO TAKING A VIEW THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIABLE, THE PROFIT S HOULD BE DEDUCED TAKING INTO CONSIDERATION THE PAST HISTORY AND CURRENT EVENTS O F THE CASE. THE LD. CIT (A) HAS TAKEN INTO CONSIDERATION THE PAST HISTORY OF LAST FOUR YE ARS AND FOUND THAT THE COMPARABLE RESULT WAS FOR IMMEDIATELY THREE YEARS BEFORE THE ASSESSME NT YEAR 2006-07 AS DURING THE ASSESSMENT YEAR 2006-07 NO PURCHASES WERE MADE AND ONLY OPENING STOCK WAS SOLD WHICH GAVE A HIGHER GROSS PROFIT RATE. THE LD. CIT (A) HAS APPLIED GROSS PROFIT RATE OF 10.42% AS AGAINST 9.62% DECLARED BY ASSESSEE WHICH, IN OUR VIEW WILL TAKE CARE OF LEAKAGE, IF ANY, ON ACCOUNT OF UNVERIFIABLE PURCHAS ES. ACCORDINGLY, WE CONFIRM THE ORDER OF LD. CIT (A). IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISS ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19.8. 2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, 4 D/ COPY FORWARDED TO :- THE ITO WARD 1(3), JAIPUR. SHRI ABHISHEK JAIN, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 973/JP/2010) BY ORDER, AR ITAT JAIPUR.