ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, Jaipur V. DESIGN CORE, Jaipur

MA 88/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1429 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 18-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Bogus purchase; Additional evidence; Right to appeal; Retraction; Revised return; Bonafide mistake

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ MA NO. 88/JP/2018 (ARISING OUT OF ITA NO. 617/JP/2014) THE ACIT, CIRCLE-2, JAIPUR. CUKE VS. M/S DESIGN CORE, 225, LAXMI COMPLEX, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAEFD 2504 Q VIHYKFKHZ@ APPE LLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 24/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 15/11/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN FILE D BY THE REVENUE AGAINST THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 617/JP/2014 DATED 08.02.2018. 2. IN ITS APPLICATION, THE REVENUE HAS SUBMITTED TH AT DURING THE ASSESSMENT PROCEEDINGS, THE AO MADE ADDITION OF RS. 39,04,150/- ON ACCOUNT OF UNVERIFIABLE PURCHASE S FROM M/S SHANKAR TRADING CO & M/S S K ENTERPRISES. THE L D. CIT(A) UPHELD THE ADDITION OF RS. 39,04,150/- WHILE OBSERV ING THAT THE M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 2 ADDITIONAL EVIDENCE SUBMITTED BY APPELLANT CANNOT B E ADMITTED BEING AFTERTHOUGHT OF ASSESSEE. HOWEVER, THE TRIBUN AL SUSTAINED THE ADDITION TO THE EXTENT OF 15% OF TOTAL PURCHASE S OF RS. 39,04,150/- I.E. RS. 5,85,623/- AND DELETED THE REMAINING ADDITION OF RS. 33,18,527/-. 3. IT WAS SUBMITTED THAT THE TRIBUNAL BY CONSIDERIN G THE SAME SUBMISSIONS ON ISSUE OF UNVERIFIABLE PURCHASES, WHI CH HAVE ALREADY BEEN ENTERTAINED BY THE LD. CIT(A) HAS OBSE RVED THAT THE WHOLE OF THE PURCHASES FROM THESE TWO CONCERNS SHOU LD NOT HAVE BEEN DISALLOWED. THE TRIBUNAL FURTHER OBSERVED THAT ONLY PART OF IT AS ESTIMATED INCOME ON THESE UNVERIFIABLE PURCHASES SHALL BE SUFFICIENT TO PLUCK THE LEAKAGE OF REVENUE WHICH IS TOTALLY AGAINST THE SPIRIT OF THE IT ACT, AS THE ASSESSEE HIMSELF D URING THE COURSE OF ASSESSMENT PROCEEDINGS THROUGH ITS SUBMISSION DA TED 07.12.2009 IN FULL MIND WITHOUT ANY PRESSURE HAS AD MITTED THAT PURCHASES OF CONSTRUCTION MATERIAL FROM THESE TWO I MPUGNED PARTIES MIGHT HAVE BEEN CHARGED AGAINST THE PERSONA L CAPITAL EXPENSES OF THE PARTNERS AND CONSIDERING ALL ITS MA TERIAL HAS PROPOSED ADDITIONAL INCOME OF RS. 40 LACS FOR THE Y EAR UNDER CONSIDERATION. IT IS ALSO WORTH TO STATE THAT THE A SSESSEE FIRM ITSELF HAS VOLUNTARILY REVISED THE RETURN OF INCOME BEFORE THE COMPLETION OF THE ASSESSMENT IN THE CASE ON 30.12.2009 AFTER P AYING THE TAX ON ADDITIONAL INCOME OF RS. 40 LACS AFTER ABOUT 24 DAYS OF THE FIRST PROPOSAL OF DECLARING ADDITIONAL INCOME. 4. IT WAS FURTHER SUBMITTED THAT SINCE THE IMPLIED DECLARATION OF REVISED INCOME ITSELF REFRAIN ASSESSEE FROM CHALLEN GING IT ON LEGAL GROUNDS AND THE SAID CONTENTION WAS WRONGLY ACCEPTE D BY THE TRIBUNAL, M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 3 THERE IS AN APPARENT MISTAKE IN THE ORDER OF THE HO NBLE ITAT. SINCE THE MISTAKE IS APPARENT FROM THE ORDER OF THE TRIBUNAL, THE SAME MAY KINDLY BE RECTIFIED UNDER SECTION 254(2) OF IT ACT, 1961 B Y RECALLING THE APPEAL ORDER DATED 08.02.2018 AND DECIDING THE SAME ON MER ITS. 5. PER CONTRA, THE LD. AR HAS SUBMITTED THAT ONLY C ONTENTION RAISED IN THE REVENUES MISC. APPLICATION IS THAT WHEN THE ASSESSEE ITSELF HAD OFFERED THE ADDITIONAL INCOME OF RS. 40 LAC I.R.T. UNVERIFIABLE PURCHASES DURING THE ASSESSMENT PROCEEDINGS AND THE ASSESSEE ITSELF HAD VOLUNTARILY REVISED THE ROI BEFORE THE COMPLETITION OF THE ASSESSMENT, ITAT WAS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANC E UPTO 15% ONLY. 6. IT WAS FURTHER SUBMITTED THAT FIRSTLY, NO SUCH C ONTENTION WAS EVER RAISED BY THE ID. D/R DURING THE COURSE OF HEARING BEFORE THE HON'BLE ITAT. SECONDLY, THE AO ITSELF DID NOT ACCEPT SUCH O FFER BUT MADE DISALLOWANCE OF RS.39,04,150/- ON ITS OWN AND THIRD LY, THE ASSESSEE ITSELF RETRACTED FROM THE OFFER SO MADE, AFTER EXPL AINING THE DETAILED REASONS BEHIND THIS WHICH WERE SUBMITTED BEFORE THE CIT(A) AS ALSO BEFORE THE TRIBUNAL THROUGH ITS WRITTEN SUBMISSIONS REPRODUCED AT PG 6 & 7 OF THE TRIBUNAL ORDER ITSELF. EVEN CASE LAWS WERE CITED IN SUPPORT OF SUCH RETRACTION. FURTHER, THE VERY FACT THAT THE ID. CIT(A) HAS NOT ONLY ADMITTED THE APPEAL BUT ALSO ADJUDICAT ED THE SAME, IS SUFFICIENT TO DEMOLISH THE FURTHER CONTENTION OF TH E REVENUE IN THE MA THAT IN VIEW OF THE IMPLIED DECLARATION OF THE REVI SED ROI, THE ASSESSEE WAS REFRAINED FROM CHALLENGING ON LEGAL GROUND, WHE REAS, THE AO HIMSELF HAS HELD THE REVISED ROI AS INVALID. HENCE, THE STRESS OVER THIS FACT, IS OF NO AVAIL. FURTHER, NO SUCH CONTENTION W AS TAKEN BY THE ID. D/R WHO, SUPPORTED THE ORDERS OF AUTHORITIES BELOW IN PARA 8 AT PG 20 M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 4 OF ITAT ORDER. PERTINENTLY AND INTERESTINGLY, THE R EVENUE HAS NOT COME IN APPEAL CHALLENGING THE VERY ADMISSION OF THE APP EAL BY THE LD.CIT(A). 7. IT WAS FURTHER SUBMITTED THAT IN THE OPERATIVE P ARA 9 PAGE 20 ONWARDS, THE HON'BLE ITAT HAS CONSIDERED THE CONTEN TIONS RAISED BY BOTH THE SIDES, THE CASE LAWS CITED AND ONLY AFTER LOOKING INTO VARIOUS FACTS, FIGURES AND RECORDS ADJUDICATED UPON THE ISS UE BEFORE THEM. THE HON'BLE ITAT, SPECIFICALLY REFERRED TO THE CONTRACT OR RECEIPTS FROM THE TWO CLIENTS OF REPUTATION AND TO THE FACT THAT THE ASSESSEE HAD DONE THE CONTRACTUAL WORK TO SATISFY THE OBLIGATION TO T HE SATISFACTION OF THE CLIENTS, WHICH FACT REMAINED UN-DENIED BY THE REVEN UE TO DRIVE HOME THE POINT THAT THE MATERIAL PURCHASED WAS CONSUMED TOWARDS THE CONTRACT RECEIPTS. MOREOVER, ALSO OBSERVED THAT THE NP DECLARED THIS YEAR WAS MUCH BETTER. CONSIDERING THE ENTIRE FACTUA L MATRIX ONLY, THE ITAT WAS OF THE VIEW THAT THE WHOLE OF THE PURCHASE S FROM THESE TWO CONCERNS SHOULD NOT HAVE BEEN DISALLOWED, HENCE RES TRICTED TO 15%. THE HON'BLE ITAT ALSO REFERRED TO VARIOUS DECISIONS OF THE CO-ORDINATE BENCH WHICH ALSO INCLUDED DECISIONS OF HON'BLE HIGH COURTS. 8. IT WAS FURTHER SUBMITTED THAT WHAT THE REVENUE I S TRYING TO POINT OUT REQUIRE A LONG DRAWN PROCESS OF REASONING AND MAY OR MAY NOT BE AN ERROR OF THE JUDGMENT FOR WHICH THE REMEDY LIES ELSEWHERE. HOWEVER, NO PATENT, MANIFEST OR SELF-EVIDENT MISTAK E HAS BEEN POINTED OUT BY THE REVENUE IN ITS MA. 9. IN ORDER TO APPRECIATE THE RIVAL CONTENTIONS, WE HAVE GONE THROUGH THE ORDER PASSED BY THE COORDINATE BENCH IN ITA NO. 617/JP/2014 DATED 08.02.2018 AND IT IS NOTED THAT I N PARA 3, THE M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 5 COORDINATE BENCH HAS STATED THE GROUNDS OF APPEAL T AKEN BY THE ASSESSEE WHICH INTER ALIA INCLUDES THE FOLLOWING GROUND:- 2.2 THE ID. CIT(A) FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN RECORDING AN INCORRECT FINDING OF FACT THAT THE APPELLANT SURRENDERED RS.40,00,000/- ON ACCOUNT OF UNVERIFIABLE PURCHASES AS PERSONAL EXPENDITURES WRONGLY BOOKED I N ACCOUNT. SUCH FINDING BEING A MISREADING AND INCORRECT, KIND LY BE QUASHED AND IGNORED. 10. FURTHER, THEREAFTER, IN PARA 7, THE COORDINATE BENCH HAS TAKEN NOTE OF THE PLEADINGS ON BEHALF OF THE ASSESSEE WHICH INTER ALIA INCLUDES THE FOLLOWING PLEADINGS:- 7. IN THE GROUNDS NO. 2.1, 2.2 AND 2.3 OF THE APPE AL, THE ISSUE INVOLVED IS REGARDING DISALLOWANCE OF RS. 39,04,150/- TOWARD S THE UNPROVED PURCHASES. ON THIS ISSUE, THE LD. AR, WHILE PLEADIN G ON BEHALF OF THE ASSESSEE HAS SUBMITTED AS UNDER: 1. BEFORE PROCEEDINGS TO MAKE SUBMISSIONS ON MERITS OF THE GROUNDS TAKEN, IT IS VERY ESSENTIAL TO SUBMIT THAT WHY THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF RS.39,04,150/- EVEN THOUGH IT H AD ALREADY OFFERED SOME INCOME ON 17.12.2009 (PB 29). IN FACT, SUCH AN OFFER WAS MADE UNDER THE FACTUAL BACKGROUND THAT THE LD. AO COMMEN CED THE ASSESSMENT PROCEEDINGS IN THE MONTH OF JAN., 2009 T HROUGH LETTER DATED 5 TH JAN., 2009 AND CONTINUED THEREAFTER, TIME TO TIME. A DETAILED QUERY LETTER WAS ISSUED ON 07.08.2009 WHEREIN VIDE PARA 6 , THE LD. AO REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF THE PARTIES FROM WHOM PURCHASES OF MORE THAN RS.1 LAC WERE MADE. WHILE MA KING PREPARATION, IT CAME TO NOTICE THAT SOME MISTAKES MIGHT HAVE BEE N COMMITTED IN AS MUCH AS SOME OF THE PURCHASES OF CONSTRUCTION MATER IAL MIGHT HAVE BEEN CHARGED TO THE WORKS ACCOUNT AS AGAINST THE PE RSONAL CAPITAL EXPENSES OF THE PARTNERS OF THE PRESENT ASSESSEE FI RM. SINCE THE M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 6 CONSTRUCTION OF THEIR OFFICE BUILDING WAS ALSO GOIN G ON IN THE SAME VERY FINANCIAL YEAR AND THE WORK AT THE SITE OF THE CLIE NT M/S IDEA WAS ALSO GOING ON SIMULTANEOUSLY, IT COULD POSSIBLY HAPPEN T HAT A PART OF SOME COST OF THE OFFICE CONSTRUCTION MIGHT HAVE BEEN CHA RGED TO THE REVENUE OF ASSESSEE FIRM BY A BONAFIDE MISTAKE AND CLERICAL ERROR ON THE PART OF THE ACCOUNTS DEPARTMENT. HENCE AS A MATTER OF PRECA UTION, A NOTE (PB- 28) WAS APPENDED BELOW THE STATEMENT OF PURCHASES F URNISHED TO THE LD. AO, READING AS UNDER: SOME PURCHASES PERHAPS FROM THESE PARTIES (*) STOO D WRONGLY CHARGED TO THE EXPENSES, THOUGH PERTAINED TO PERSONAL CAPIT AL EXPENDITURE OF PARTNERS. HENCE SUCH PURCHASES OF RS.40 LACS APPROX , IS ADDED TO OUR DECLARED RETURN INCOME. DETAILED LETTER FOLLOWS. RE VISED TAX COMES TO RS.1438053/- AFTER ADJUSTMENT OF CREDITS, BALANCE O F RS.3,01,670/- IS BEING PAID WITH REVISED RETURN. THE SAME WAS SUBMITTED TO THE LD. AO LETTER DATED 1 7.12.2009 (PB 29). IN THE MEANWHILE, THE JURISDICTION STOOD TRANSFERRE D TO A DIFFERENT OFFICER. THE PRESENT AO FURTHER COMMENCED THE PROCE EDINGS. MERELY ALLEGING THAT SOME DISCREPANCIES WERE NOTICED, HE I MPOUNDED THE COMPLETE BOOKS OF ACCOUNT AND OTHER RECORDS ON 26 TH AUG., 2009 AND SINCE THEN IT CONTINUES IN HIS POSSESSION. HOWEVER, IT WAS SUFFICIENT TO CREATE AND INTENSIFY TENSION IN THE MIND OF THE PAR TNERS OF THE ASSESSEE FIRM. LIMITATION BEING NEAR, THE LD. AO WAS OTHERWI SE PRESSING HARD FOR COMPLIANCE OF VARIOUS REQUIREMENTS AND IN PARTICULA R TO PRODUCE THE TWO SUPPLIERS. THEREFORE, THE LD. AO HIMSELF WAS IN A H ASTE. ON THE OTHER HAND, THE PARTNERS WERE ALREADY OUT OF STATION DUE TO THEIR PROFESSIONAL WORK AND THEREFORE, IT WAS NOT POSSIBLE TO TRACE TH E SELLERS FOR THE TRANSACTIONS WHICH HAVE ALREADY TAKEN PLACE ALMOST THREE YEARS BACK. M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 7 OTHERWISE ALSO, THESE PARTIES HAVING COMPLETED THE TRANSACTIONS, IT WAS NOT BINDING UPON THEM AND THE ASSESSEE WAS ALWAYS A T THE MERCY OF THIRD PARTY. THERE WAS NO TIME TO LOOK INTO THE VAR IOUS RECORDS. THE ACCOUNTANT EMPLOYED WAS SEMI-QUALIFIED AND NON-PROF ESSIONAL AND THERE WERE POSSIBILITIES OF SOME MISTAKES ETC. DUE TO CONTINUED IMPOUNDING, NEITHER THE ASSESSEE WAS ABLE TO RECONC ILE THE MISTAKES, IF ANY NOR THE LD. AO WAS IN POSITION TO PERMIT OPPORT UNITIES DUE TO PRESSURE OF TIME BARRING ASSESSMENT. THEREFORE, LOOKING TO THE TIME CONSTRAINT, THE TENS ION AND PRESSURE DEVELOPED, ON THE BASIS OF WHATEVER MATERIAL AVAILA BLE WITH THE ASSESSEE, IT WAS THOUGH FIT AND IN A LARGER INTERES T, TO AVOID PANEL AND OTHER SEVERE CONSEQUENCES, TO MAKE AN OFFER OF ADDI TIONAL INCOME OF AN ESTIMATED/ADHOC AMOUNT OF RS.40,00,000/- (APPROX.) FOR TAXATION. SUCH AN OFFER WAS MADE WITH A VIEW TO BUY PEACE AND TO A VOID POSSIBLE LITIGATION WITH THE DEPARTMENT AND WAS SUBJECTED TO THE CONDITION THAT NO PENALTY AND PROSECUTION PROCEEDINGS WOULD BE INI TIATED AGAINST THE ASSESSEE. HOWEVER, WHEN AFTER THE COMPLETION OF THE ASSESSMEN T THE ASSESSEE COULD LOOK INTO THE ACCOUNTS AND OTHER RECORD WITH A PATIENCE AND TRIED TO REMOVE DEFICIENCIES, IF ANY AND BASED ON THE INF ORMATION GATHERED FROM THE INSPECTIONS CARRIED OUR DURING THE HEARING , IT REACHED TO A FIRM CONCLUSION THAT THE OFFER OF ADDITIONAL INCOME MADE AT A HUGE AMOUNT OF RS.40 LACS WITH A HUGE TAX, WAS WRONGLY MADE AS WAS NOT AT ALL REQUIRED. THE DECISION TO MAKE SUCH OFFER AT THE RE LEVANT POINT OF TIME WAS THE NEED OF THE HOUR. HOWEVER, FOR THE ABOVE RE ASON AND ALSO WHEN THE ASSESSEE FOUND FROM THE ASSESSMENT ORDER T HAT THE LD. AO HAS NOWHERE ACCEPTED THE OFFER WHICH WAS MADE NOR HE HO NOURED THE M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 8 CONDITIONS AND RATHER ALLEGED THE SAME TO BE AN AFT ERTHOUGHT AND EVEN INITIATED PENALTY PROCEEDINGS ALSO. HENCE, THE ASSE SSEE HAD TO TAKE HIS STEPS BACK. ONCE AN OFFER MADE WAS NOT ACCEPTED, THE ASSESSEE I S ALSO NOT BOUND BY THE OFFER SO MADE AND HENCE, FREES TO AGITATE TH E ADDITION/DISALLOWANCE. OTHERWISE ALSO THE MERITS OF THE ASSESSEES CASE WERE NOT WEAK AND IT WAS ONLY TIME CONSTRAINT AND O THER CIRCUMSTANCES IT OFFERED. THE LAW IS SETTLED THAT ADMISSION IS AN EXTREMELY I MPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIV E. MOREOVER, IT IS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY T O SHOW THAT THE BOOKS OF ACCOUNTS DO NOT DISCLOSE THE CORRECT STATE OF FACTS AS WAS HELD IN PULLANGODE RUBBER PRODUCE CO. LTD. V/S STATE OF KERALA & OTHERS (1973) 91 ITR 18 (SC). MOREOVER, THERE CANNOT BE ANY ESTOPPEL AGAINST THE STATUTE. THEREFORE, EVEN IF THE ASSESSEE HAS MADE SOME COMMITMENT, IT C ANNOT WORK AS AN ESTOPPEL AND IF THE ASSESSEE STILL FEELS AGGRIEVED OF THE ADDITION MADE BY THE AO, HE CAN AGITATE IN THE APPEAL. KINDLY REFER SANJAY TANDON (INDIVIDUAL) V/S ACIT (2008) 119 TTJ 277 (LUCKNOW). ALSO REFER RAGHAVA HEALTH CARE LTD. V/S CIT (2008) 14 DTR 341 (VISAKA) . THE CASE OF CIT V/S M. PYNGROPE (1993) 200 ITR 106 (GUJ.) APPROVED OF THE RIGHT OF THE ASSESSEE TO PREFER AN APPEAL TH OUGH ASSESSMENT WAS MADE ON THE BASIS OF RETURN FILED BY THE ASSESSEE, HOLDING THAT SEC. 246(1) OF THE ACT IS VERY WIDE. IN NIRMALA L. MEHTA S CASE (2004) 269 ITR 1 (BOM) OBSERVED THERE CANNOT BE ANY ESTOPPELS AGAINST THE M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 9 STATUTE, ARTICLE 265 OF THE CONSTITUTION OF INDIA I N UNMISTAKABLE TERMS PROVIDES THAT NO TAX SHALL BE LEVIED OR COLLECTED E XCEPT BY AUTHORITY OF LAW. ACQUIESCENCE CANNOT TAKE AWAY FROM A PARTY THE RELIEF THAT HE IS ENTITLED TO WHERE THE TAX IS LEVIED OR COLLECTED WI THOUT AUTHORITY OF LAW. IN CWT V/S APAR LIMITED (2002) 175 CTR 312(BOM) MAI NTAINED THE RIGHT OF APPEAL WHEN RETURN WAS FILED UNDER PROTEST , WITHOUT PREJUDICE TO ITS LEGAL RIGHTS AS ACCORDING TO THE ASSESSEE TH E DISPUTED ASSET WAS NOT CHARGEABLE TO TAX. IN MAYANK PODDAR (HUF) V/S W TO (2003) 181 CTR 362 (CAL) PERMITTED AN APPEAL WHEN THE ASSESSEE HAD INCLUDED CERTAIN ASSET IN HIS RETURN UNDER MISTAKE, ADMISSIO N OR MISUNDERSTANDING OF THE ASSESSEE, WOULD NOT JUSTIFY TAXABILITY. THE LD. CIT(A) HOWEVER HAS NOT AT ALL CONSIDERED TH E ABOVE FACTS AND THE CASE LAWS AND WRONGLY ALLEGED THAT SINCE THE AP PELLANT COULD NOT PROVE THE PURCHASES HENCE OFFERED THE SAME TO TAX, WHICH IS COMPLETELY CONTRARY TO THE FACTS. THE ASSESSEE OFFERED THE INC OME COMPLETELY ON A DIFFERENT GROUNDS AS EVIDENT FROM LETTER DATED 7.12 .2009 (PB-29). 11. THEREAFTER, THE COORDINATE BENCH HAS GIVEN IT S FINDING AT PARA 9 OF ITS ORDER WHICH ARE REPRODUCED AS UNDER:- 9. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSU E AND ALSO TAKEN INTO CONSIDERATION VARIOUS CASE LAWS RELIED UPON. T HE TOTAL CONTRACTUAL RECEIPTS WERE OF RS. 4.75 CRORES OUT OF WHICH RS. 4 .20 CRORES WERE FROM M/S IDEA TELE COMMUNICATION LIMITED (A TATA GROUP C OMPANY) AND THE BALANCE FROM SHREE CEMENT LIMITED. THUS, ALMOST ALL THE CONTRACTUAL RECEIPTS WERE FROM THE COMPANIES OF REP UTE. THE NET PROFIT FOR THE YEAR UNDER CONSIDERATION WAS COMPARATIVELY BETTER THAN IMMEDIATE PRECEDING YEAR AS IT WAS 4.64% WHILE IT W AS 2.05% IN THE M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 10 IMMEDIATE PRECEDING YEAR. ALTHOUGH, TWO SUPPLIERS O F MATERIAL WERE NOT RESPONDING TO THE INCOME TAX ENQUIRIES AS THE SUMMO NS WERE RETURN UNSERVED. IN THE INSPECTORS ENQUIRIES, THESE PARTI ES COULD NOT BE TRACED OUT. THE ASSESSING OFFICER DISALLOWED WHOLE OF THE AMOUNT OF PURCHASES DEBITED IN THE NAME OF THESE CONCERNS. THE PAYMENTS WERE MADE THROUGH THE BANKING CHANNELS BY ACCOUNT PAYEE CHEQU ES TO THESE CONCERNS. THE ASSESSEE HAS DONE THE CONTRACTUAL WOR K TO SATISFY THE CONTRACTUAL OBLIGATIONS TO THESE REPUTED CONCERNS M /S IDEA TELE COMMUNICATION LIMITED AND SHREE CEMENT LIMITED. THE RE IS NO ALLEGATION THAT ASSESSEE HAD NOT PERFORMED ITS CONT RACTUAL OBLIGATION TO THE SATISFACTION OF THE CLIENTS. HAD IT BEEN THE CA SE THEN THE ASSESSEE COULD NOT HAVE REALIZED THE WHOLE OF ITS CONTRACT R ECEIPTS. THUS, THERE IS NO DENIAL OF THE FACT THAT THE ASSESSEE HAS NOT DIS CHARGED THE CONTRACTUAL OBLIGATIONS. SINCE THE ASSESSEE COULD N OT PRODUCE THESE PARTIES DURING THE ASSESSMENT PROCEEDINGS AND AT TH E LATER STAGE BUT PAYMENTS WERE MADE BY BANKING CHANNELS. THE NET PRO FIT IS BETTER THAN PRECEDING YEARS. CONSIDERING THESE ENTIRE FACTUAL M ATRIX, THE BENCH IS OF THE VIEW THAT THE WHOLE OF THE PURCHASES FROM THESE TWO CONCERNS SHOULD NOT HAVE BEEN DISALLOWED. ONLY PART OF IT AS ESTIMATED INCOME ON THESE UNVERIFIABLE PURCHASES SHALL BE SUFFICIENT TO PLUCK THE LEAKAGE OF REVENUE. THE ITAT, JAIPUR BENCH IN VARIOUS DECISION S HAD CONSIDERED SUCH ISSUE OF UNVERIFIABLE PURCHASES AND IT HAS CON SIDERED 15% OF SUCH PURCHASES AS REASONABLE AND FAIR TO ESTIMATE THE PR OFIT ELEMENT ON SUCH UNVERIFIABLE PURCHASES. THE ITAT, JAIPUR BENCH IN T HE CASE OF ANUJ KUMAR VARSHNEY VS ITO IN ITA NO. 187/JP/2012 ORDER DATED 22/10/2014 HAS CONSIDERED THE DISALLOWANCE AND HELD AS UNDER: 8.6 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS DI SCUSSED IN M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 11 ABOVE CASES, THE MATERIAL AVAILABLE ON RECORD ESTAB LISHED THAT IN JAIPUR, A RAMPANT PRACTICE IS IN VOGUE TO GET AND I SSUE ACCOMMODATION BILLS OF PURCHASES TO DEFLATE THE PRO FIT. THE LEARNED ASSESSING OFFICER MADE DISALLOWANCE @ 25% O F SUCH BOGUS PURCHASES ON THE BASIS OF DECISION IN THE CAS E OF SANJAY OIL CAKE INDUSTRIES AND VIJAY PROTEIN LTD. (SUPRA). IN OUR VIEW THE 25% DISALLOWANCE APPEARS TO BE HIGHER SIDE, THE REFORE, KEEPING IN VIEW OF THE FACTS OF THE ASSESSEES CASE AS WELL AS OTHER CASES AS DISCUSSED ABOVE, WE FEEL THAT 15% DI SALLOWANCE OUT OF BOGUS PURCHASES IS REASONABLE ON UNVERIFIABL E PURCHASES AND WILL MEET THE ENDS OF JUSTICE. THE REJECTION OF BOOKS OF ACCOUNT IS JUSTIFIED. THE ASSESSEE GETS RELIEF PART LY. CONSIDERING ALL THESE FACTUAL AND LEGAL POSITION, T HE ADDITION TO THE EXTENT OF 15% OF PURCHASES IS SUSTAINED AND BALANCE IS DIRECTED TO BE DELETED. 12. FURTHER, WE REFER TO THE FINDINGS OF THE LD. CI T(A) WHICH HAS FORMED THE BASIS OF THE ASSESSEE FOR FILING THE APP EAL BEFORE THE COORDINATE BENCH WHICH READS AS UNDER:- 5. I HAVE CONSIDERED FACTS OF THE CASE. IT IS NOTE D THAT THE AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT THE PURCHA SES FROM THE TWO SUPPLIERS NAMELY SHANKAR TRADING CO. AND S.K. ENTER PRISES WERE NOT GENUINE. SUMMONS ISSUED TO THESE TWO PARTIES WERE R ETURNED WITH REMARKS 'NOT KNOWN'. THE INSPECTOR ALSO REPORTED TH AT THERE WERE NO SUCH CONCERNS AT THE GIVEN ADDRESSES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT SURRENDERED RS.40,00,000 /- ON ACCOUNT OF UNVERIFIABLE PURCHASES STATING THAT THESE EXPENSES HAD BEEN WRONGLY M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 12 DEBITED IN THE ACCOUNT. THE AO, HOWEVER, DID NOT AC CEPT THE SURRENDER AND MADE AN ADDITION OF RS.39,04,150/- ON ACCOUNT OF UNVERIFIABLE PURCHASES. 5.1 IT IS CLEAR FROM THE DETAILS FURNISHED BY THE A PPELLANT AT THE ASSESSMENT STAGE THAT THESE TWO PARTIES WHO HAD SUP PLIED THE MATERIAL WORTH RS. 19,00,000/- AND RS. 20,04,150/- WERE NOT TRACEABLE. THE SUMMONS ISSUED BY THE AO WERE ALSO RETURNED BY THE POSTAL AUTHORITIES AND THE INSPECTORS OF THE WARD COULD ALSO NOT TRACE THEM. IT IS ALSO CLEAR FROM THE FACTS OF THE CASE THAT THE APPELLANT COULD NOT PROVE THESE PURCHASES AND, THEREFORE, OFFERED THE SAME TO TAX A S PERSONAL CAPITAL EXPENSES. THE APPELLANT HAS FAILED TO PRODUCE ANY C REDIBLE EXPLANATION FOR RETRACTING THE SUBMISSION AT THE APPELLATE STAG E. 5.2 SO FAR AS THE ARGUMENT THAT ONLY THE BOOKS OF ACCOUNT SHOULD BE REJECTED AND INCOME SHOULD BE ESTIMATED IS CONCERNE D, SUFFICE IT TO SAY THAT IT IS A CASE WHERE THE PURCHASES IN QUESTION H AVE NOT BEEN ESTABLISHED AT ALL. IN SUCH A SITUATION, WHERE PURC HASES STAND TOTALLY UN- PROVED, THE QUESTION OF ESTIMATION OF GP/NP DOES NO T ARISE. THE EXPENDITURE CLAIMED TO HAVE BEEN INCURRED ON SUCH B OGUS PURCHASES HAS TO BE TOTALLY DISALLOWED. AS REGARDS CONFIRMATI ON DATED 21.06.2014 FROM THE PROPRIETOR OF M/S S.K. ENTERPRISES, IT IS NOTED THAT THIS CONSTITUTES ADDITIONAL EVIDENCE UNDER RULE 46A. SIN CE NONE OF THE CONDITIONS SPECIFIED UNDER RULE 46A ARE FULFILLED I N THIS CASE, THE ADDITION EVIDENCE CANNOT BE ADMITTED. IT ONLY APPEA RS TO BE AN AFTERTHOUGHT AND, THEREFORE, CARRIES NO EVIDENTIARY VALUE. THE ARGUMENT THAT THE DISALLOWANCE WOULD INCREASE THE NP FROM 4. 64% TO 13.05% IS ALSO NOT RELEVANT IN VIEW OF THE CLEAR EVIDENCE OF BOGUS PURCHASES AND THE OFFER OF SURRENDER MADE BY THE APPELLANT ITSELF . SINCE THE APPELLANT M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 13 HAS FAILED TO PROVE THESE PURCHASES, I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE AO ON THIS ISSUE. T HE APPEAL ON THIS GROUND, ACCORDINGLY FAILS. 13. IN LIGHT OF ABOVE, WE FIND THAT THE FACT OF THE ASSESSEE SURRENDERING AN AMOUNT OF RS. 40,00,000/- DURING TH E COURSE OF ASSESSMENT PROCEEDING HAS BEEN TAKEN INTO CONSIDERA TION BY THE LD. CIT(A) BESIDES THE OTHER REASONS WHILE CONFIRMING T HE ADDITION SO MADE BY THE ASSESSING OFFICER. CONSEQUENTLY, IT HAS FORC ED THE ASSESSEE IN TAKING A SPECIFIC GROUND OF APPEAL NO 2.2, AS WE HA VE NOTED ABOVE, WHEREIN THE ASSESSEE HAS CHALLENGED THE FINDING OF THE LD. CIT(A) THAT THE ASSESSEE HAS SURRENDERED RS. 40,00,000/- ON ACC OUNT OF UNVERIFIABLE PURCHASES. FURTHER, DURING THE COURSE OF HEARING BEFORE THE COORDINATE BENCH IN ITS PLEADING SO TAKEN AND REPRODUCED BY THE COORDINATE BENCH AS WE HAVE NOTED ABOVE, THE ASSESS EE HAS ELABORATELY SUBMITTED ITS CONTENTIONS REGARDING THE ISSUE RELATING TO SURRENDER MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HOWEVER, WE FIND THAT THE FINDINGS SO ARRIVED AT BY THE COORDINATE BENCH HAS NOT CONSIDERED THE SAID FACT O F SURRENDER WHICH HAS WEIGHED HEAVILY IN THE MIND OF THE LD. CIT(A) W HILE CONFIRMING THE ADDITION SO MADE BY THE ASSESSING OFFICER. IN OUR V IEW, GIVEN THE SAID FACT AND SPECIALLY THE FACT THAT THE ASSESSEE HAS T AKEN A SPECIFIC GROUND OF APPEAL CHALLENGING THE FINDING SO RECORDED BY TH E LD. CIT(A), NON- ADJUDICATION OF THE SAID GROUND WHICH HAS A BEARING ON THE FINAL OUTCOME OF THE APPEAL, IS A MISTAKE WHICH IS MANIFE ST FROM RECORD. IN VIEW OF THE SAME, WE HEREBY RECALL THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITS ENTIRETY TO DECIDE THE SAME A FRESH. M.A. NO. 88/JP/2018 ACIT VS. M/S DESIGN CORE 14 THE REGISTRY IS ACCORDINGLY DIRECTED TO LIST THE MA TTER FOR HEARING IN DUE COURSE. ISSUE NOTICE TO BOTH THE PARTIES. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS ALL OWED WITH ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 15/11/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15/11/2018. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S DESIGN CORE, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { M.A. NO. 88/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR