ACIT, Jaipur V. MEHARCHAND JAIN & SONS, Jaipur

ITA 981/JPR/2010

• Counselvise Citation: 98123114 RSA 2010
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Assessee Lawyers: SANDEEP BHARGAVA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.981 & 984/ JP/2010 ASSESSMENT YEAR 2007-08 & 2006-07 PAN: AACFM 4926 B THE ACIT VS. M/S. MEHARCHAND JAIN & SONS CIRCLE- 1 22, RAMGANJ BAZAR JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI K.C. MEENA ASSESSEE BY : SHRI SANDEEP BHARGAVA ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED APPEALS AGAINST TWO DIFFEREN T ORDERS OF THE LD. CIT(A)-1, JAIPUR DATED 10-05-2010 FOR THE ASSESSME NT YEARS 2007-08 AND 2006-07.. 2.0 THE GROUNDS OF APPEAL RAISED FOR BOTH THE APPEA LS ARE THE SAME EXCEPT THE QUANTUM OF RELIEF ALLOWED BY THE LD. CIT(A). 2.1 THE ASSESSEE DEALS IN GOLD AND SILVER JEWELLERY AND PRECIOUS AND SEMI PRECIOUS STONE. FOR ASSESSMENT YEAR 2006-07 THE ASS ESSEE HAS MADE PURCHASES FROM 07 PARTIES WHICH HAVE BEEN NOTICED B Y THE DEPARTMENT OF ISSUING BOGUS BILLS. THE AO ACCORDINGLY REQUIRED TH E ASSESSEE TO PRODUCE THE PARTIES AND TO GET THE PURCHASES VERIFIED. BEFORE T HE AO, THE ASSESSEE 2 SUBMITTED THAT PARTIES FROM WHOM THE PURCHASES HAVE BEEN MADE ARE HAVING PAN AND ARE ALSO HAVING SALES TAX REGISTRATION NO. . THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THE AO AFTER CONSIDERING THE ORDERS OF THE JAIPUR TRIBUNAL HELD THAT THE BOOKS O F ACCOUNT ARE TO BE REJECTED. FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS CIT 10 DTR 153, TH E AO MADE THE TRADING ADDITION WHICH REPRESENTED 25% OF UNVERIFIABLE PURC HASES. 2.2 THE LD. CIT(A) NOTICED THAT THE G.P.RATE IN THE TRADE OF PRECIOUS JEWELLERY DURING THE YEAR IS 14.61% AS AGAINST 14.9 8% OF THE IMMEDIATELY PRECEDING YEAR. THE LD. CIT(A) UPHELD THE REJECTION OF BOOKS OF ACCOUNT. CONSIDERING THE DECLINE IN G.P.RATE AND NOTICING TH E UNVERIFIABLE PURCHASES, THE LD. CIT(A) UPHELD THE TRADING ADDITION OF RS. 5 0,000/- AS AGAINST RS.7,51,144/- MADE BY THE AO. 2.3 WE HAVE HEARD BOTH THE PARTIES. ON ACCOUNT OF U NVERIFIABLE PURCHASES, THE BOOKS OF ACCOUNT ARE TO BE REJECTED. SUCH CONSI STENT FINDING IS BEING GIVEN BY THE TRIBUNAL IN NUMBER OF CASES. AFTER REJ ECTION OF BOOKS OF ACCOUNT AND CONSIDERING THE QUANTUM OF UNVERIFIABLE PURCHASES, WE FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE TRADI NG ADDITION OF RS. 50,000/- 3.1. IN THE ASSESSMENT YEAR 2007-08, THE UNVERIFIAB LE PURCHASES ARE TO THE EXTENT OF RS. 8,15,983/-. THE G.P.RATE DISCLOSED DU RING THE YEAR IS ONLY 3 10.09% AS AGAINST OVERALL G.P.RATE OF 18.79% IN THE IMMEDIATELY PRECEDING YEAR. THE AO APPLIED THE G.P.RATE OF 11% AND MADE T HE TRADING ADDITION OF RS. 9,31,662/-. 3.2 THE LD. CIT(A) NOTICED THAT THE EXPORT DURING T HE YEAR IN RESPECT OF PRECIOUS AND SEMI PRECIOUS STONE IS ONLY 2.34%. IN THE IMMEDIATELY PRECEDING YEAR, THE TURNOVER OF PRECIOUS STONES WAS AROUND 4%. BEFORE THE LD. CIT(A), AN EXPLANATION WAS GIVEN IN RESPECT OF FALL IN G.P.RATE. ACCORDING TO THE ASSESSEE,, THERE WERE STEEP UPWARD FLUCTUATIONS IN THE MARKET PRICES OF THE GOLD JEWELLERY THROUGHOUT THE ASSESSMENT YEAR UNDER CONSIDERATION. THE PRICES OF SILVER AROSE FROM RS. 10,675/- PER KG TO RS. 17,405/- PER KG . SIMILARLY THE PRICES OF GOLD AROS E BY 37%. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSE SSEE RESTRICTED THE TRADING ADDITION TO RS. 50,000/-. 3.3 WE HAVE HEARD BOTH THE PARTIES. IN CASE THE ASS ESSEE HAS BEEN ABLE TO EXPLAIN THE REASONS FOR FALL IN G.P.RATE THEN THE G .P.RATE AS DISCLOSED BY THE ASSESSEE IS TO BE ACCEPTED. HOWEVER, IN THE INSTANT CASE, THERE HAS BEEN UNVERIFIABLE PURCHASES. THE ASSESSEE HAS PARTIALLY BEEN ABLE TO GIVE THE EXPLANATION FOR FALL IN G.P.RATE WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN REDUCING THE TRADING ADDITION TO RS. 5 0,000/-. 4 4. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED.. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22-07 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 22/07/2011 *MISHRA COPY FORWARDED TO :- 1. THE ACIT, CIRCLE- 1,JAIPUR 2. M/S. MEHARCHAND JAIN & SONS, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.981/JP /10) A.R, ITAT, JAIPUR 5 6