ACIT, Jaipur V. SUBHASH SHAH, Jaipur

ITA 978/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47930 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK
• Assessee Lawyers: VIVEK CHATTAR
• Keywords: Business income; Depreciation

Judgement Text

1 ITA 978-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 978/JP/2010 ASSTT. YEAR : 2007-08. THE ACIT, CIRCLE-1, VS. SHRI SUBHASH SHAH, JAIPUR. PROP. M/S. SHAH GEMS, 1309, GOPAL JI KA RASTA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.R. PAREEK RESPONDENT BY : SHRI VIVEK CHATTAR ORDER DATE OF ORDER : 24/06/2011. 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. 2. GROUND NOS. 1 & 2 RELATE TO RESTRICTING THE G.P. RATE TO 20% ON DECLARED TURNOVER AGAINST RATE OF 25% APPLIED BY AO ON UNVERIFIABLE P URCHASES OF RS. 57,02,206/-. 3. THE ASSESSEE DEALS IN GEMS STONES. ASSESSEE DEC LARED G.P. RATE AT 19.30% ON TOTAL SALES OF RS. 1.11 CRORES OR ODD. IN THE IMMEDIATEL Y PRECEDING YEAR ON SALE OF RS. 1.29 CRORES G.P. RATE WAS SHOWN AT 20.52%. DURING THE AS SESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE HAS MADE PURCHASES OF RS. 57, 02,206/- FROM 8 PARTIES WHICH WERE CONSIDERED AS UNVERIFIABLE AS THESE PARTIES WERE NO T FOUND AT THE ADDRESS GIVEN. THEREFORE, AO HELD THAT THE PURCHASES ARE NOT GENUI NE. ACCORDINGLY PROVISIONS OF 2 SECTION 145(3) ATTRACTED. RELIANCE WAS PLACED ON VA RIOUS CASE LAWS. THEREAFTER THE AO MADE ADDITION OF RS. 14,25,552/- @ 25% OF UNVERIFIA BLE PURCHASES PLACING RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF M/S. SANJAY OIL CAKE INDUSTRIES, 10 DTR 153 (GUJ.) AND M/S. VIJAY PROTEI NS LTD., 58 ITD 428 (ITAT AHMEDABAD). IT WAS SUBMITTED THAT M/S. R.R. EXPORT S IS A REGULAR ASSESSEE AND SUMMON WAS SERVED AND CONFIRMATION WAS FILED ALONG WITH CO PIES OF IMPORT BILLS THOUGH HE DID NOT ATTEND BEFORE THE AO. SIMILAR WAS THE CASE OF M/S. AUSHI JEWELS, M/S. RAJAST EXPORTS. NO NOTICE WAS SERVED ON M/S. MOHIT EXPOTS. THE PROP RIETOR OF M/S. ANU EXPORTS EXPIRED AND, THEREFORE, COULD NOT BE PRODUCED FOR VERIFICAT ION. M/S. STAR GEMS AND M/S. MEENU GEMS APPEARED BEFORE THE AO AND PRODUCED BOOKS OF A CCOUNT. SIMPLY NON MAINTENANCE OF STOCK REGISTER BY THEM DOES NOT PROVE THAT THE A SSESSEE WAS LIABLE FOR REJECTION OF ITS BOOKS OF ACCOUNT. THE GOODS WERE EXPORTED OUT OF CO UNTRY AND SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. ALL THE PARTIES ARE GENUINE AND THEY HAVE FILED THEIR CONFIRMATION ALONG WITH COPIES OF RETURNS AND OTHER INVOICES. TH E PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. RELIANCE WAS PLACED ON VARIO US CASE LAWS. 4. AFTER CONSIDERING THE SUBMISSIONS AND RELEVANT D OCUMENTS, THE LD. CIT (A) FOUND THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION @ 25% OF THE UNVERIFIABLE PURCHASES. MOST OF THE PARTIES WERE PRODUCED AND FOUND GENUINE . THEREFORE, AOS CONTENTION THAT ALL THE PARTIES ARE BOGUS WAS FOUND INCORRECT. THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF M/S. SANJAY OIL CAKE INDUSTRIES (SUPRA) HAS BEEN FOUND DISTINGUISHABLE BY THE JAIPUR BENCH OF THE TRIBUNAL IN CASE OF M/S. GEM PA RADISE. KEEPING IN VIEW ALL THESE FACTS IN MIND, THE LD. CIT (A) FOUND THAT G.P. RATE DECLARED BY ASSESSEE IS MARGINALLY 3 DECLINED AND, THEREFORE, THE AO WAS DIRECTED TO APP LY G.P. RATE OF 20% AGAINST G.P. RATE OF 19.30% SHOWN BY ASSESSEE. 5. THE LD. D/R PLACED RELIANCE ON THE ORDER OF THE AO. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 7. AFTER CONSIDERING THE SUBMISSIONS, WE FIND NO IN FIRMITY IN THE FINDING OF LD. CIT (A) WHO HAS ASCERTAINED THE FACTUAL ASPECTS OF THE CASE. THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A CONSISTENT VIEW IN VARIOUS CA SES THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIABLE THEN REJECTION OF BOOKS OF ACCO UNT ARE CORRECT. THE JAIPUR BENCHES OF THE TRIBUNAL ARE ALSO TAKING A CONSISTENT VIEW THAT NO ADDITION CAN BE MADE @ 25% OF THE UNVERIFIABLE PURCHASES. HOWEVER, THE ADDITION CAN B E MADE ON THE BASIS OF PAST HISTORY AND TAKING INTO CONSIDERATION THE CURRENT EVENTS OF THE CASE. THE LD. CIT (A) HAS ALREADY ENHANCED THE G.P. RATE CONSIDERING THE PAST HISTORY OF THE CASE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) . ACCORDINGLY WE CONFIRM THE FINDING OF LD. CIT (A). 8. NEXT ISSUE IS AGAINST DELETING THE DISALLOWANCE OF DEPRECIATION OF RS. 99,561/- DISALLOWED BY THE AO UNDER SECTION 38(2) OF THE ACT . 9. THE AO DISALLOWED VARIOUS EXPENSES ALONG WITH DE PRECIATION @ 20%. THE LD. CIT (A) DELETED THE DISALLOWANCES MADE BY AO ON ACC OUNT OF VARIOUS EXPENSES BY OBSERVING THAT ASSESSEE HIMSELF HAS ADMITTED PERSON AL USE OF FACILITIES AND HAD ADDED BACK 10% OF THE SAME WHILE FILING THE RETURN OF INC OME. HOWEVER, LD. CIT (A) DELETED THE DISALLOWANCE ON ACCOUNT OF DEPRECIATION ON CAR BY O BSERVING THAT THE DEPRECIATION CLAIMED AS PER STATUTORY PROVISIONS, THEREFORE, CAN NOT BE ADDED. 4 10. AFTER CONSIDERING RIVAL SUBMISSIONS, WE FIND TH AT THE DEPARTMENT DESERVES TO SUCCEED IN THIS GROUND IN PART. DISALLOWANCE ON AC COUNT OF PETROL ETC. WAS ADDED BY THE ASSESSEE HIMSELF TO THE INCOME @ 10% WHILE COMPUTIN G THE TAXABLE INCOME. HOWEVER, NO ADDITION WAS MADE ON ACCOUNT OF DEPRECIATION ON CAR . SINCE ASSESSEE HIMSELF ADMITTED PERSONAL USE OF CAR, THEREFORE, ON DEPRECIATION ALS O 10% SHOULD HAVE BEEN ADDED TO THE INCOME BY THE ASSESSEE. TOTAL CLAIM OF DEPRECIATIO N WAS OF RS. 4,97,808/-. THEREFORE, WE RESTRICT THE DISALLOWANCE TO RS. 49,780/- AGAINST T HE DISALLOWANCE OF RS. 99,561/- MADE BY THE AO. THE ORDER OF LD. CIT (A) TO THIS EXTENT IS MODIFIED. 11. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLO WED IN PART. 13. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 .6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ACIT, CIRCLE-1, JAIPUR. SHRI SUBHASH SHAH, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 978/JP/2010) BY ORDER, AR ITAT JAIPUR.