Income Tax Appellate Tribunal - Jaipur
Goenka Jewellers, Jaipur vs Ito, Jaipur on 7 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
vk;dj vihy la-@ITA No. 111/JP/2016
fu/kZkj.k o"kZ@Assessment Year: 2007-08
M/s. Goenka Jewellers cuke The ITO
401, Panchratna, MSB Ka Rasta Vs. Ward- 2(5)
Johri Bazar, Jaipur Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABFG 8810 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by: Shri S.R. Sharma, CA
jktLo dh vksj ls@ Revenue by:Smt. Seema Meena, JCIT - DR
lquokbZ dh rkjh[k@ Date of Hearing : 07/03/2018
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 7/05/2018
vkns'k@ ORDER
PER BHAGCHAND, AM
The assessee has filed an appeal against the order of the ld. CIT(A)-I, Jaipur dated 07-12-2015 for the Assessment Year 2007-08 raising therein following grounds of appeal.
''1. That on the facts and in the circumstances of the case, the CIT is wrong, unjust and has erred in law in confirming finding recorded by the assessing officer that purchase of Rs. 2,09,45,850/- made by the appellant from two concerns viz: M/s. Ankit Exports and M/s. Natasha Enterprises are allegedly not genuine and unverifiable. ITA No.111/JP/2016
M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur
2. That ld. CIT(A) is further wrong and has erred in law in confirming addition to the extent of 15% of above said alleged unverified purchase to the income of the appellant.
The assessee vide its letter dated 05-02-2018 raised following additional ground as Ground No. 3 with the prayer that while filing the appeal in the prescribed Form No. 36, the assessee inadvertently could not raise the additional ground which may kindly be allowed.
''3. The ld. CIT(A) is wrong and has erred in law in upholding the reopening of assessment u/s 147 by issue of notice uu148 as valid in law while the reopening of assessment uu147 by issue of notice by AO is wrong and bad in law and consequent thereto the assessment on the assessee's u/s 148/143(3) is wrong and bad in law.'' The Bench has taken into consideration the request of the assessee for considering the ground no. 3 as additional ground raised by the assessee in view of the prayers raised before the Bench. Thus the assessee has raised in total three grounds of appeal which are being adjudicated upon hereunder:-
2.1 Apropos Ground No. 1 and 2 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:-2 ITA No.111/JP/2016
M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur ''3.2.2 Determination
(i) I have carefully perused the submissions of the appellant and the assessment order. It is evident from the assessment order that the AO made enquiries from the two concerns under consideration through issue of letters at the address provided by the appellant at Mumbai and Jaipur, but the letter were received back as 'unserved'. During assessment proceeding, the AO required the appellant to produce the two parties under consideration alongwith the books of accounts in order to prove the genuineness of the transactions but no compliance was made. The AO has discussed the issue in detail in the assessment order and concluded that:-
- The primary onus is on the assessee to establish the genuineness of the purchases made or claimed by it.
- Since the primary facts are in the knowledge of the assessee, it is his duty to prove the correct address or contract modes of the alleged supplier.
- Payment by account payee cheque is not sacrosanct.
(ii) The AO made addition at the rate of 25% of Rs.
2,09,45,850/- i.e. amounting to Rs. 52,36,462/- on account of bogus purchases made by the appellant from the concerns controlled by Shri Jain by relying on the decision of Hon'ble ITAT, Jaipur Bench, Jaipur in case of Trident Jewellers (ITA No. 552/JP/2013 dated 10-07-2013).
(iii) During appellate proceedings, the similar contentions as were made before the AO were submitted by the appellant. I agree with the order of AO in treating the purchases made from the two 3 ITA No.111/JP/2016 M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur concerns controlled by Shri Jain as bogus as the onus was upon the appellant to prove the genuineness of its purchases claimed to be made from the concern of Shri Jain which it failed to discharge not only at the assessment stage but at appellate stage also.
(iv) In view of the above discussion since the appellant failed to prove the genuineness of the so called purchases from the concerns under consideration, it is held that it had made bogus purchases from the said concern amounting to Rs. 2,09,45,850/-. It may be mentioned that the Hon'ble ITAT, Jaipur Bench while dealing with a bunch of appeals of various assessee (ITA No.187/JP/2012 Shri Anuj Kr. Varshney vs ITO & Ors Revenue Authorities
-order dated 22 Oct. 2014) have upheld the addition of 10% / 15% of value of purchase depending on facts of each case in all cases involving similar issues of bogus/ unverifiable purchases in the case of persons dealing in jewellery. Looking to the facts and circumstances of the case and respectfully following the decision of Hon'ble ITAT, Jaipur, as referred above, the disallowance is restricted to 15% of the purchases claimed to be made from the concerns under consideration. The AO is directed to compute the disallowances accordingly.'' 2.2 During the course of hearing, the ld.AR of the assessee prayed that the ld. CIT(A) has erred in confirming the findings recorded by the AO that purchases of Rs. 2,09,45,850/- made by the assessee from two concerns namely M/s. Ankit Exports and M/s. Natasha Enterprises are not genuine and unverifiable and thus the ld. CIT(A) confirmed the addition 4 ITA No.111/JP/2016 M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur to the extent of 15% of above unverified purchases to the income of the assessee which should be deleted. To this effect, the ld.AR of the assessee also relied on the decision dated 29-01-2018 of ITAT Jaipur Bench in ITA No. 197/JP/2016 for the Assessment Year 2007-08 in the case of Vijay Kedia (HUF) vs ACIT and ITA No.248/JP/2016 in the case of ACIT vs M/s. Vijay Kedia (HUF).
2.3 We have heard the rival contentions and perused the materials available on record. The assessee had shown purchases of Rs. 2,09,45,850/- from two concerns namely M/s. Ankit Exports (Rs. 59,45,850/-) and M/s. Natasha Enterprises (Rs. 1,50,00,000/-), Mumbai. These purchases were from the concerns controlled by Shri Praveen Jain who is the key persons of these companies engaged in providing entries for bogus purchases. During the course of search at the premises of Shri Jain, many incriminating documents were found and seized. Statements of various key persons including Shri Praveen Jain were recorded u/s 132(4) of the Act wherein it has been established that the group was indulged in providing accommodation entries for bogus purchase and sale through these concerns. The concerns controlled were found non-existing at the given addresses and also found non-genuine. Shri Praveen Jain has 5 ITA No.111/JP/2016 M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur also admitted this fact in his sworn statements during the course of search operation. From the documents and evidences, it has been clearly established that the assessee was beneficiary of accommodation entries from Shri Praveen Jain and his concerns by obtaining bogus purchase bills amounting to Rs. 2,09,45,850/- from M/s. Ankit Exports, Mumbai and M/s. Natasha Enterprises, Mumbai. These were the paper concerns of Shri Praveen Jain Group of Mumbai. The AO asked the assessee to produce the these parties alongwith the books of accounts in order to prove the genuineness and verification of the transactions made. The assessee failed to do so. The notices sent by the AO to these concerns M/s. Ankit Exports, Mumbai and M/s. Natasha Enterprises, Mumbai were returned back unserved. The assessee could not prove the genuineness of the purchases made from M/s. Ankit Exports, Mumbai and M/s. Natasha Enterprises, Mumbai. The assessee failed to discharge the primary onus to establish the genuineness of purchases from these concerns. The assessee could not prove the genuineness of the purchases. The AO made the addition of Rs. 52,36,462/- (i.e. 25% of the total purchases of Rs. 2,09,45,850/-). The ld. CIT(A) has restricted the disallowance to the extent of 15% in view of the decision of ITAT Jaipur bench in the case of 6 ITA No.111/JP/2016 M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur Shri Anuj Kumar Varshney vs ITO and others (ITA No.187/JP/2012 dated 22-10-2014). Since the ITAT, Jaipur Bench has already taken the decision of confirming the addition of 15% on unverifiable purchases in the similar line of cases, therefore, we concur with the findings of the ld. CIT(A). Thus the Ground No. 1 & 2 of the assessee are dismissed. 3.1 Apropos Ground No. 3, the facts as emerges from the order of the ld. CIT(A) are as under:-
''3.1.2. Determination
(i) I have duly considered the submisons of theap and the assessment order . The appellant challenged the validity of the notice issued u/s 148 of the Act by alleging that earlier assessment was made u/s 143(3) of the Act and issue of notice u/s 148 is nothing but change of opinion of the same set of facts available on record.
(ii) The appellant deals in gold and diamond jewellery. It is evident from the assessment order that the AO was having sufficient information in his possession that the appellant had taken accommodation entries from Shri Praveen Kumar Jain, who admitted himself to be working as an entry operator in the statement recorded on oath u/s 132(4) of the Act. It was deposed by Shri Praveen Kumar Jain (Jain) that he was issuing bogus invoices to the needy parties on commission basis. The appellant had also claimed to make purchases amounting to Rs. 2,09,45,850/- from the two concerns i.e. M/s. Ankit Exports and M/s. Natasha Enterprises, controlled and manager by Shri Jain. It is therefore, held that the AO has reason to believe that the income had escaped assessment as the appellant had not disclosed all the material facts fully and truly necessary for the assessment.7 ITA No.111/JP/2016
M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur
(iii) It may be mentioned that in the cae of Kamalchadn Nathmal Lunia vs ITO (2014) 40 CCH 0199 Ahd. Trib, it was held by Hon'ble ITAT that:-
''The assessee in individual capacity had filed the Income Tax Return for Rs. 88,664/- on 13th of Feb. 2006, which was processed u/s 143(1) of the I.T. Act. The proviso prescribes that no action should be taken u/s 147 after the expiry of four years from the end of relevant Assessment Year, unless any income chargeable to tax has escaped assessment order for such Assessment Year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, it was required to be examined whether the disclosure was full and true of all material facts by the assessee when the return was filed or when the assessment was made. The information which was received after the search operation was new information which was not revealed by the assessee and that information came to the notice of the AO consequently after the search was concluded. Because of that reason, it was held by the AO that there was a failure on the part of the assessee.'' (Para 5.1).
''Although the notice was issued after the expiry of four years but it was issued within six year. This fact has not been controverted by the appellant. Therefore, the time limit for notice as prescribed u/s 149 of I.T. Act was not in controversy because the amount which has escaped the assessment had exceeded Rs. 1 lac. Thus reopening of assessment was upheld.'' (Para 5.3)
(iv) In the instant case under consideration, though earlier the assessment was made u/s 143(3) of the Act but at the time of filing of return of income, the fact about the bogus purchase from the concerns controlled by Shri Jain was not disclosed by the appellant. The AO initiated the proceedings u/s 147/148 of the Act after receiving new information from the investigation wing of the Income Tax Department.
Therefore, it was not the case of change of opinion as the assessment was reopened on the basis of new information 8 ITA No.111/JP/2016 M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur received from the Investigation Wing of the Department. Further, the appellant has not disclosed truly and fully all the material fact which were necessary for determining the true and correct income of the appellant. In view of the above discussion, it is held that the AO has validly reopened the case of the appellant u/s 147 of the Act.
3.2 During the course of hearing, the ld.AR of the assessee prayed that the proceedings u/s 148 of the Act and consequent made on the assessee u/s 148/143(3) of the Act is wrong and bad in law which should be quashed.
3.3 On the other hand, the ld. DR supported the orders of the lower authorities.
3.4 We have heard the rival contentions and perused the materials available on record. Brief facts of the case are that the assessee is engaged in the business of gold and diamond jewellery. The AO had information in his possession that the assessee had taken accommodation entries from Shri Praveen Kumar Jain group who himself admitted in his statement recorded u/s 132(4) of the Act that he is providing accommodation entries for commission. He was issuing bogus invoices to the needy parties on commission basis. The assessee had made purchases amounting to Rs. 2,09,45,850/- from two concerns namely M/s. Ankit Exports, Mumbai 9 ITA No.111/JP/2016 M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur and M/s. Natasha Enterprises, Mumbai, controlled and managed by Shri Jain. Thus the AO had sufficient reason to believe that the income had escaped assessment as the assessee had not disclosed all the material facts fully and truly necessary for assessment. The earlier the assessment was made u/s 143(3) of the Act, however, the fact about the bogus purchases from the concerns controlled by Shri Jain was not disclosed by the assessee during assessment proceeding. The fresh information was received by the AO and the AO initiated the proceedings u/s 147/148 of the Act. Thus, it is not the case of change of opinion as the assessment was reopened on the basis of fresh information received with regard to bogus purchases. The assessee has not disclosed truly and fully all materials facts which were necessary for determining the true and correct income of the assessee. During the course of hearing, it is also noted that the assessee could not controvert the findings of the ld. CIT(A). In this view of the matter, we concur with the findings of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed.
10 ITA No.111/JP/2016
M/s. Goenka Jewellers. vs ITO, Ward- 2(5) ,Jaipur 4.0 In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 07-05-2018.
Sd/- Sd/- ¼ fot; iky jko ½ ¼HkkxpUn½ (Vijay Pal Rao) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 07/05/ 2018 *Mishra
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s. Goenka Jewellers, Jaipur
2. izR;FkhZ@ The Respondent- The ITO, Ward- 2(5), Jaipur
3. vk;dj vk;qDr¼vihy½@ CIT(A).
4. vk;dj vk;qDr@ CIT,
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No.111/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar 11