ACIT, Jaipur V. M/S SILVEX & CO. (INDIA) LTD., Jaipur

ITA 981/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62020 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-04-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Keywords: Bogus purchase
• Section: 69

Judgement Text

ITA 981-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : B JAIPUR BEFORE SHRI R.K.GUPTA AND SHRI SANJAY ARORA ITA NO.981/JP/2011 ASSTT. YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF VS. M/S.SILVEX & CO .(INDIA) LTD. INCOME TAX, CIRCLE-7, JAIPUR. SITAPURA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI MANISH AGARWAL DATE OF HEARING : 24.04.2012 DATE OF PRONOUNCEMENT : 16.05.2012. ORDER DATE OF ORDER : 16/05/2012. PER R.K.GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD.CIT(A) RELATING TO ASSESSMENT YEAR2008-09. 2. THE DEPARTMENT IS OBJECTING RESTRICTING THE ADDI TION OF RS.19,24,294/- TO RS. 2 LAC MADE BY A.O. ON ACCOUNT OF UNVERIFIABLE PURCHASES. 3. DURING THE AMOUNT PROCEEDING NOTED THAT THE ASSE SSEE HAS SHOWN G.P. RATE 9.7% ON TOTAL SALE OF RS.32.50 CRORE WHICH IS SLIGHTLY L OWER FROM THE PRECEEDING YEAR. THE A.O. NOTED THAT AS PER INFORMATION RECEIVED BCTT WING CE RTAIN PARTIES INVOLVED IN ISSUES BOGUS BILLS WITHOUT SUPPLY OF ANY MATERIAL. THESE P ARTIES HAS ADMITTED DURING THE COURSE OF SURVEY, THEY CHARGE COMMISSION @ 0.20% TO 0.25% FOR THE QUANTUM FOR ISSUING BILLS. THE A.O. NOTED THAT ASSESSEE HAD MADE PURCHASES FOR RS.19,24,294/- FROM FOUR PARTIES - 2 - AND THESE PURCHASES REMAIN UNVERIFIABLE AS THESE PA RTIES COULD NOT BE PRODUCED THOUGH ASSESSEE HAS FILED COPIES OF PURCHASE BILLS. RST/CS T OF THE SUPPLIERS, PAN OF THE SUPPLIER, PROOF OF PAYMENT MADE AGAINST PURCHASES T HROUGH ACCOUNT PAYEE CHEQUE DULY DEBITED AND CREDITED THE BANK ACCOUNT OF SUPPLIERS AND CONFIRMATION OF THE SUPPLIER ALSO FILED. THESE PURCHASE WERE OF 0.69% OF TOTAL PURCHA SE. DETAILED REPLY WAS ALSO FILED BEFORE A.O., HOWEVER A.O. WAS NOT SATISFIED AND TRE ATED THE ENTIRE PURCHASES AS BOGUS AND TREATED THE SAME AS INCOME OF THE ASSESSEE. DET AILED SUBMISSION WERE FILED BEFORE CIT(A) AND IT WAS SUBMITTED THAT ASSESSEE HAD FILED ALL REQUIRE DETAILS BEFORE A.O. IT WAS FURTHER SUBMITTED THAT G.P. RATE IS MARGINALLY DECL INED I.E. FROM 10.12% TO 9.87%. 4. IT WAS EXPLAINED THAT REASON FOR DECLINE THAT RA TE OF FOREIGN CURRENCY WAS REDUCED DURING THE YEAR CONSDIERATION. 5. IT WAS ALSO SUBMITTED THAT THE TURNOVER OF THE A SSESSEE HAS BEEN INCREASED FROM 26.56 CRORE OR ODD TO 32.50 CRORE OR ODD. HOWEVER N ET PROFIT OF THE ASSESSEE HAS BEEN INCREASED, FURTHER RELIANCE WAS PLACED ON VARIOUS C ASE LAWS. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD HELD THAT ADDITION MADE BY A.O. U/S 69 ARE NOT JUST IFIED. DETAILED REASONING HAS BEEN GIVEN BY LD.CIT(A).FINDING OF CIT(A) HAVE BEEN RECO RDED IN PARA 2.3 AT PAGE NO.8 TO 10 ARE AS UNDER :- 2.3. I HAVE CAREFULLY EXAMINED THE FINDINGS OF THE AO, VIZ., THE ISSUE UNDER CONSIDERATION AND ALSO THAT COUNTER ARGUMENTS MADE BY THE LD.AR IN THIS REGARDS. FROM THE RECORDS, IT IS EVIDENT TH AT THE GP IN THE CURRENT YEAR (I.E. 9.87%) WAS LOWER THAN THE PREVIOUS YEAR (I.E. 10.12%) AND THE AO HAS MADE AN ADDITION OF RS.1924294/- TOWARDS THE UNVERIFIABLE/BOGUS PURCHASES, AS FOUND DURING THE ASSESSMENT PROCEEDIN G. ON THE CONTRARY, THROUGH THE WRITTEN SUBMISSION, THE LD.AR CLAIMED T HAT PROPER BOOKS AND RECORDS AND STOCK REGISTER ARE MAINTAINED AND ALL T HE RELEVANT DETAILS AND - 3 - DOCUMENTS RELATED TO SUCH PURCHASES HAVE BEEN SUBMI TTED BEFORE THE AO TO ESTABLISH THE GENUINENESS THEREOF. REGARDING THE FALL IN GP BY 0.25%, IN THE CURRENT YEAR, IT WAS STATED THAT THE SAME IS RE SULT OF THE FALL IN EXCHANGE RATE OF DOLLAR IN THE RELEVANT PERIOD (RS. 39.68 PER DOLLAR), IN COMPARED TO THE EARLIER YEAR (I.E. RS.42.72 PER DOL LAR). THIS PHENOMENON HAS RESULTED INTO EXCHANGE LOSS OF RS.2566061/- AS SUCH. IF THE ABOVE LOSS IS IGNORED, THEN THE GP WOULD HAVE COME TO 10.65% I N THE CURRENT YEAR, WHICH WOULD HAVE BEEN BETTER THEN THE IMMEDIATE PRE VIOUS YEAR. TO DECIDE THE ABOVE ISSUE, THE LATEST DECISION OF HONBLE ITAT, JAIPUR BENCH IN THE CASE OF M/S.DWARKA GEMS LTD., F OR A.Y. 06-07 (ITA NO.1372/JP/2010 DATED 10.3.2011) WAS REFERRED TO, W HEREIN THE SIMILAR ISSUE HAS BEEN DEALT WITH. WHILE DECIDING SUCH DISP UTE, HONBLE BENCH HAS EXPRESSED THEIR VIEWS IN FOLLOWING MANNER. 12. AFTER GOING THROUGH THE ORDER OF THE AO AND TA KING INTO CONSIDERATION THE SUBMISSIONS AND ORDER OF THE TRIB UNAL FOR IMMEDIATELY PRECEDING YEAR, IT IS FOUND THAT ON IDE NTICAL BASIS THE ADDITIONS WERE MADE FOR EARLIER YEAR ALSO. IN EARLI ER YEAR THE AO FOUND THAT THE PURCHASES OF RS.97066885/- FROM VARI OUS PARTIES REMAINED UNVERIFIABLE AND ACCORDINGLY ENTIRE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. THE LD.CIT(A) DELETED T HIS ADDITION AND THE ORDER OF THE LD.CIT(A) WAS AFFIRMED IN PART . THE LD.CIT(A) HAS SUSTAINED THE ADDITION OF RS.2361407/ - FOR EARLIER YEAR. THE TRIBUNAL SUSTAINED THE ADDITION TO RS.600 000/-. THE TRIBUNAL TOOK INTO CONSIDERATION THE PAST HISTORY O F THE CASE. IT WAS SEEN THAT FOR A.Y. 2004-05 AN ADDITION OF RS.170000 000/- WAS MADE AND AN ADDITION OF RS.1000000/- WAS SUSTAINED BY THE TRIBUNAL. FOR A.Y. 2005-06 OUT OF UNVERIFIABLE PURC HASES OF RS.9 CRORES OR ODD, THE LD.CIT(A) SUSTAINED THE ADDITION OF RS.23 LACS OR ODD WHICH WERE REDUCED BY THE TRIBUNAL TO RS.600000 /-. THE FINDING OF THE TRIBUNAL HAS BEEN GIVEN IN PARA 15 A T PAGE 9 WHICH IS AS UNDER..... IN THE YEAR UNDER CONSIDERATION THE UNVERIFIABLE P URCHASE WERE ONLY RS.21238159/-. THEREFORE, WE ARE OF THE V IEW THAT IF AN ADDITION OF RS.300000/- IS SUSTAINED ON ACCOUNT OF UNVERIFIABLE PURCHASES THAT WILL MEET THE ENDS OF JUSTICE. THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART. FROM THE SUBJECT MATTER OF THE ABOVE APPELLATE ORDE R OF THE HONBLE ITAT JAIPUR, IT IS EVIDENT THAT THE MAJOR I SSUE/DISALLOWANCE IS SIMILAR AND IDENTICAL TO THE PRESENT PROCEEDING AS SUCH, THEREFORE, THE SAME IS FOUND RELEVANT AND A PROPER GUIDELINE TO DE AL WITH THE PRESENT PROCEEDING TOO. THUS, IN THE LIGHT OF THE VIEWS/RUL INGS OF THE HONBLE ITAT EXPRESSED IN THE ABOVE REFERRED APPEAL AND ALSO FOL LOWING THE PRINCIPLE OF JUDICIAL DISCIPLE, I AM OF THE CONSIDERED OPINION T HAT THE RATIO UPHELD THEREIN, IS SQUARELY APPLICABLE TO THE PRESENT PROC EEDING ALSO. - 4 - ACCORDINGLY, WHILE RESPECTFULLY FOLLOWING THE ABOVE VERDICT OF THE HONBLE ITAT, I ALSO HOLD THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.1924294/- OF ENTIRE NON VERIFIABLE PURCHASES AS SUCH. CONSIDERING THE ABOVE FACTS AND ALSO THAT THE APPELLANT HAS SHOWN L OWER TRADING RESULT IN THE CURRENT YEAR, IN MY OPINION, AN ADHOC ADDITION OF RS. 2 LACS WOULD BE SUFFICIENT TO TAKE CARE OF ALL THE DISCREPANCIES AN D LEAKAGE OF PROFIT TOWARDS THE ADVERSE FINDINGS GIVEN BY THE AO, VIZ. THE ISSUE UNDER CONSIDERATION. ACCORDINGLY, THE AO IS HEREBY DIRECT ED TO RESTRICT THE ADDITION OF RS.1924294/-, MADE ON ACCOUNT OF BOGUS PURCHASES, TO RS.2 LACS ONLY. CONSEQUENTLY THIS GROUND OF APPEAL IS PA RTLY UPHELD. 7. AFTER CONSIDERING THE ORDER OF A.O. & CIT(A) WE FIND THAT CIT(A) TAKING INTO CONSIDERATION THERE ARE CERTAIN DISCREPANCIES AND T O COVER UP LEAKAGE OF REVENUE IF ANY HAS SUSTAINED AN ADDITION OF RS. 2 LAC OUT OF TOTAL ADDITION OF RS.19,24,294/-. IT IS NOTICED THAT THOUGH BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED IN THIS CASE BUT ON ACCOUNT OF UNVERIFIABLE PURCHASES THE ENTIRE PURCHASES HAVE BE EN ADDED U/S 69 OF THE ACT. THE JAIPUR BENCHES ARE TAKING A VIEW THAT WHERE UNVERIFIABLE P URCHASES ARE THERE THEN REJECTION OF BOOKS OF ACCOUNT IS JUSTIFIED AS IN MOST OF THE CAS ES THE DEPARTMENT IS REJECTING THE BOOKS OF ACCOUNT BY INVOKING PROVISION OF SECTION 145(3) ONLY ON ACCOUNT OF UNVERIFIABLE PURCHASES. IN THIS CASE ENTIRE PURCHASES HAVE BEEN ADDED WHEREAS THE SALES AGAINST PURCHASES HAVE BEEN ACCEPTED BY THE DEPARTMENT. COM PLETE BOOKS OF ACCOUNT ALONGWITH STOCK REGISTER HAS BEEN MAINTAINED. THEREFORE IN OU R VIEW ADDING OF ENTIRE UNVERIFIABLE PURCHASES WERE NOT JUSTIFIED AT THE END OF A.O. THE BENCHES ARE TAKING A CONSISTENT VIEW THAT IF THERE ARE CERTAIN UNVERIFIABLE PURCHASES AN D THERE IS NO OTHER DEFECT IN MAINTAINING BOOKS OF ACCOUNT THESE NOMINAL ADDITION CAN BE MAD E AFTER TAKING INTO CONSIDERATION PAST HISTORY AND CURRENT EVENTS OF THE CASE. SINCE CERTA IN PURCHASES REMAINED UNVERIFIABLE THEREFORE A NOMINAL ADDITION CAN BE MADE ON THE FAC TS OF THE PRESENT CASE. LD.CIT(A) HAS ALREADY SUSTAINED AND ADDITION OF RS. 2 L AC, THEREFORE WE SEEN NO REASON TO - 5 - INTERFERE IN THE ORDER OF LD.CIT(A). ACCORDINGLY ON THE BASIS OF FACTS DISCUSSED ABOVE, WE CONFIRM HIS ORDER. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16. 5.2012. SD/- SD/- (SANJAY ARORA) (R.K.GUPTA) ACCOUNTANT MEMBER JUDICIAL ME MBER JAIPUR, *BASANT* COPY FORWARDED TO :- THE ACIT, CIRCLE-7, JAIPUR. M/S.SILVEX & CO.(INDIA) LTD., JAIPUR. THE CIT(A) THE CIT THE D/R BY ORDER GUARD FILE (ITA NO.981/JP/11) AR, ITAT, JAIPUR.