K L TAMBI AND CO,JAIPUR V. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR

MA 37/JPR/2024

AI Insights

The case involves M/s K.L. Tambi & Company, who appealed against the order of the Deputy Commissioner of Income Tax, Central Circle-02, Jaipur, concerning the assessment for the year 2005-06. The primary issue was the treatment of bogus purchases, where the Tribunal initially set aside a 25% GP rate applied by the Assessing Officer and replaced it with a 20% GP rate. The assessee sought a rectification under section 254(2) of the Income Tax Act, claiming that the department did not implement the Tribunal's decision correctly. The Tribunal acknowledged the oversight and issued a clarificatory order to ensure the correct application of the 20% GP rate on the bogus purchases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469968 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR; . THR. V.C
• Keywords: Rejection of books of accounts; Bogus purchase; Bogus
• Section: 254(2); 145(3)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A-Bench” JAIPUR Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM MA No. 37/JPR/2024 (Arising out of ITA No. 104/JPR/2024) fu/kZkj.ko\"kZ@Assessment Year : 2005-06 M/s K.L. Tambi & Company 1839, IInd Floor, Bara Gangore Ka Rasta, Johari Bazar, Jaipur. cuke Vs. Dy. Commissioner of Income, tax, Central Circle-02, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABFJ8282B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : None jktLo dh vksjls@Revenue by: Shri Manoj Kumar, JCIT-DR.(thr. V.C) lquokbZ dh rkjh[k@Date of Hearing : 04/03/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 04/03/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . This order is to dispose of above captioned Miscellaneous Application presented by the assessee, on 4.9.2024, under section 254(2) of the Income Tax Act, seeking rectification of error so far as final order dated 1.8.2024 passed by this Appellate Tribunal in ITA No. 104/JPR/2024 is concerned. 2 MA No. 37/JPR/2024 K.L. Tambi and Co. vs. DCIT 2. Vide order dated 1.8.2024, abovesaid appeal filed by the assessee was partly allowed. It related to the Assessment Year 2005-2006. 3. For ready reference, relevant portion of the order needs to be reproduced. Same reads as under: “24. However, in the given facts and circumstances of the case i.e. the subject purchases and the persons represented as sellers, remained unverified, we find that the Assessing Officer was justified in rejecting the books of accounts under section 145(3) of the Act. 25. Having regard to the factum of rejection of the books of accounts, for the third time, and the appellant having failed to prove the claim put forth before this Appellate Tribunal in the written submission about decrease in US dollar or its any effect on the G.P.rate, the turnovers and GP rates of previous 2 years as well, and that the assessee has debited purchase account with fictitious invoices in order to inflate expenditure and lower the taxable profits, we deem it a fit case to apply Gross Profit at the rate of 20% for the AY 2005-6, as regards the bogus purchases. Accordingly, the impugned order passed by Learned CIT(A) upholding application of G.P. rate of 25%, applied by Assessing 3 MA No. 37/JPR/2024 K.L. Tambi and Co. vs. DCIT Officer, as regards the bogus purchases during the AY 2005-06 is set aside, and instead GP rate of 20% for the said AY 2005-6 is allowed to be applied in relation to the bogus purchases. 26. No other argument has been advanced or point agitated or decision cited before us. Result 27. As a result, the appeal is partly allowed, and addition of 20% of bogus or purchases from unverifiable persons or entities is upheld as regards AY 2005-06. 28. Assessing Officer to do the needful to give effect to this decision accordingly. 29. It may be mentioned here that while making calculations, the Assessing Officer shall also take into consideration the amount of tax already deposited by the assessee, so as to avoid double taxation on the same cause of action. File consignment to the record room after the needful is done by the office. “ 4. Learned AR for applicant has submitted copy of order dated 25.11.2024 passed while giving effect to the order dated 1.8.2024 passed by this Appellate Tribunal, and pointed out that the 4 MA No. 37/JPR/2024 K.L. Tambi and Co. vs. DCIT department has revised total taxable income by deleting a sum of Rs. 3,02,768/-towards bogus purchases, but without applying GP rate of 20% in relation to bogus purchases inspite of specific findings recorded by the Appellate Tribunal. Ld. AR has therefore requested that clarificatory order be issued to the department so as to apply GP rate of 20%, in relation to the bogus purchases. 5. The assessee had challenged order dated 5.12.2023 passed by Learned CIT(A), whereby its appeal was dismissed while observing that the invoices were obtained by the assessee from bogus parties and the goods were deemed to have been procured from some other unknown party, and further that in such a case 25% of such purchase was to be disallowed on account of inflation of purchase and saving tax, duties, compliance costs etc. In this way, the assessment order dated 8.12.2018 was upheld. As per assessment order, the Assessing Officer disallowed 25% of bogus purchases, which came to Rs. 15,13,844/- and added equal amount to the income of the assessee, which brought the total income of the company to Rs. 62,32,210/-. 5 MA No. 37/JPR/2024 K.L. Tambi and Co. vs. DCIT 6. While disposing of the appeal, the Appellate Tribunal held that the Assessing Officer was justified in rejecting the books of accounts under section 145(3) of the Act. As noticed above, while taking into consideration factum of rejection of books of accounts for the 3rd time, and the other factors as described in para 25 of the order, extracted above, we deemed it a fit case to apply Gross Profit @ 20% for the AY 2005-06 as regards the bogus purchases. In this manner, the order passed by Learned CIT(A) upholding application of G.P. rate of 25% applied by the Assessing Officer, as regards the bogus purchases, was set aside. Instead of said G.P. rate of 25%, GP rate of 20% for the AY 2005-2006 was allowed to be applied in relation to the bogus purchases. 7. Having regard to the specific findings already recorded in para 25 of the order and directing the department to apply Gross Profit @ 20% for the AY 2005-06 as regards the bogus purchases, this clarificatory order is issued that in terms of sub para of para 25 of the order dated 1.8.2025 passed by this Appellate Tribunal, the appeal stands partly allowed, the addition of 20% of bogus or purchases from unverifiable persons or entities stands upheld and 6 MA No. 37/JPR/2024 K.L. Tambi and Co. vs. DCIT instead of GP rate of 25%, the Assessing Officer to apply GP rate of 20% in relation to the bogus purchases, while making calculations and AO shall also give credit of G.P already offered by the assessee and make the balance amount addition so as to comply with the order already passed by this Appellate Tribunal. 8. The application is disposed of accordingly. Copy of the order be supplied to all concerned. Order pronounced in the open court on 04/03/2025. Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 04/03/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s K.L. Tambi & Co., Jaipur. 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-2, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File MA No. 37/JPR/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar "