Income Tax Appellate Tribunal - Jaipur
Meena Tiwari, P/O M/S Smgl , Jaipur vs Department Of Income Tax on 23 April, 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 430/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2008-09
I.T.O. cuke Meena Tiwari, P/O- M/s SMGL
Ward 1(2), Jaipur. Vs. Corporation, 830, SBBJ Street,
Chaura Rasta, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ADLPT 3018 M
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri Kailash Mangal (JCIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L. Poddar (ADV)
lquokbZ dh rkjh[k@ Date of Hearing : 07/04/2015
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 23/04/2015
vkns'k@ ORDER
PER: T.R. MEENA, A.M. This is an appeal filed by the revenue against the order dated 16/02/2012 passed by the learned CIT (A)-I, Jaipur for A.Y. 2008-09 The effective grounds of appeal are as under:-
"Whether on the facts and in the circumstances of the case and in law the ld. CIT(A)-1, Jaipur is justified in :-
2 ITA 430/JP/2012_ ITO Vs. Meena Tiwari
1. reducing the trading addition of Rs. 21,578/- against Rs. 9,97,571/- made by the A.O. without appreciating the fact that the A.O. has found certain discrepancies in maintaining of books of accounts and certain purchases remained unverified.
2. reducing the trading addition in a situation where rejection of books of accounts was upheld.
2. The ld Assessing Officer observed that the assessee is engaged in the business of manufacturing and trading of precious, semi precious stones and jewellery. The assessee filed return of income for A.Y. 2008- 09 on 21/08/2009 declaring total income of Rs. 3,20,340/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act). During the year under consideration, the assessee had disclosed gross profit at Rs. 27,10,518/- on total sales of Rs.1,95,16,258/-, which gives a GP rate of 13.89%, which is low in comparison to gross profit rate declared in immediate preceding year, which was 22.45% on turnover of Rs. 1,65,64,756/- and gross profit of Rs. 36,96,783/-. The assessee made the purchases of Rs. 1,71,11,215/- from various parties, which includes purchases from the following seller parties.
3 ITA 430/JP/2012_ ITO Vs. Meena Tiwari S.No. Name of parties from whom purchases Amount made
1. Shri Bhagwan Sahai, 1215 Pratap Nagar, Rs. 3,43,840/-
Jaipur.
2. Shri Ashok Kala, S-1A Sawarda Complex, Rs. 1,29,200/-
Jaipur
3. M/s R.K.M., Gopal Ji Ka Rasta, Johri Bazar, Rs. 1,91,119/-
Jaipur.
4. Shri Punit (Banwari Thakuria), 1499 Mukhia Rs. 6,72,700/-
Bhawan, C.P. Jaipur
5. MYU Gems, Prop Sh. Mohammad Unus, Ghat Rs. 2,58,354/-
Gate, Jaipur.
In order to verify the genuineness of purchases, the Assessing Officer asked to file the evidences, which has not been complied by the assessee on 28/10/2010. Thereafter, the ld Assessing Officer issued summons to the sellers U/s 131 of the Act to attend the proceedings personally, who had issued the sales bills to the assessee through Ward Inspector but out of five parties as mentioned above, only party on serial No. 5 complied the summon and remaining parties had not responded and it was reported by the Ward Inspector that no parties were found at the addresses given by the assessee. He further observed that the assessee was not produced the stock register. The ld Assessing Officer again asked the assessee to produce these parties for verification before him. In absence of this, he proposed to apply net profit @ 25% on bogus sales and also rejection of book result U/s 4 ITA 430/JP/2012_ ITO Vs. Meena Tiwari 145(3) of the Act. The assessee filed reply vide letter dated 22/10/2010 which has been considered by the Assessing Officer and held that no itemwise details of stock was maintained, no quantitative and qualitative tally of stock was maintained on day to day basis, no supporting evidence was furnished in support of contention regarding rise in the silver price but sale price of item was not increased, four seller parties were not found in existence on the given address and these parties could not be produced for verification of alleged purchases. The ld Assessing Officer further relied on the decisions in the cases of CIT Vs. Precision Finance (P) Ltd. 208 ITR 465 (Cal.) and Chuhar Mal Vs. CIT 172 ITR 250 (SC) and rejected the books result U/s 145(3) of the Act and estimated the profit of the assessee by relying on the Hon'ble Supreme Court decision in the of CIT vs. British paints India Ltd. 188 ITR 44, M/s Vijay Protein Ltd. Vs. ACIT 58 ITD 428 Ahmedabad, M/s Kanchwala Gems Vs. JCIT, ITD No. 134 ITAT, Jaipur Bench, M/s Indian Woolen Carpet Factor Vs. ITAT & Ors. (2002) 178 CTR 420 (Raj. H.C.) and VISP (P) Ltd. Vs. CIT & Anr 186 CTR 718 (MP H.C.). Therefore, the ld Assessing Officer applied G.P. 19% rate after considering the past history of the assessee and addition of Rs. 9,97,571/- was added in the income of the assessee.
5 ITA 430/JP/2012_ ITO Vs. Meena Tiwari
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had allowed the appeal partly by observing as under:-
"I have carefully perused the order of the A.O.. The fact of the matter is that during the year, the appellant has shown purchases from 4 parties that were found to nonexistent as business entities. Thus, these purchases remained unproved. The Hon'ble ITAT Jaipur Bench has consistently held unverifiable purchases in the case of gem stones traders to be a sufficient justification for rejection of books of accounts u/s 145(3). Therefore, the decision of the A.O. to reject the books of accounts by invoking provisions of Sec. 145(3) is upheld. Regarding estimation of income, I concur with the submissions of the AR regarding past history being the best guide for estimating the income. Reliance is placed on the case of Gotan Lime Khanij Udhyog 256 ITR 243 (Raj.). In the case of the assessee G.P. rate has decreased from 22.45% in the previous assessment year to 13.89% during this assessment year. However, the turnover has increased from Rs. 1.64 crores to Rs. 1.95 crores. It is a generally accepted principle that when there is increase in turnover the GP falls. Therefore, the G.P. is estimated at 14% which gives gross profit of Rs. 27,32,276/-. The impugned trading addition of Rs. 9,97,571/- is reduced to 6 ITA 430/JP/2012_ ITO Vs. Meena Tiwari Rs. 21,758/- (after giving set off of declared gross profit of Rs. 27,10,518/- by the appellant)."
4. Now the revenue is in appeal before us. The learned D.R. vehemently supported the order of the Assessing Officer also argued that the Hon'ble ITAT, Jaipur Bench has decided this issue in detail in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other cases in ITA No. 187/JP/2012 order dated 22/10/2014 wherein 15% N.P> on unverifiable/bogus purchases has held reasonable income. Therefore, same formula may please be followed on these bogus purchases.
5. At the outset, the learned A.R. for the assessee has reiterated the arguments made before the ld CIT(A) as the assessee's sale has increased, therefore, it is necessary to fall in the GP rate. Therefore, he prayed to confirm the order of the ld CIT(A).
6. We have heard the rival contentions of both the parties and perused the material available on record. The ld Assessing Officer had allowed sufficient time to prove the purchases as genuine to the assessee during the assessment proceedings. The Assessing Officer also tried to serve the notice issued U/s 131 of the Act through Ward Inspector, which were also not served as no parties were found on the given addresses. In the line of gems and jewellery business, this Bench 7 ITA 430/JP/2012_ ITO Vs. Meena Tiwari has already given a detailed order in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other cases in ITA No. 187/JP/2012 order dated 22/10/2014 wherein 15% N.P. has held reasonable on unverifiable/bogus purchases. In assessee's case, from four suppliers, total purchases had been shown by the assessee at Rs. 13,36,859/- and the 15% of this amount comes to Rs. 2,05,028/-. Therefore, we confirm the addition of Rs. 2,05,028/- as 15% on total unverifiable/bogus purchases of Rs. 13,36,859/-. The Assessing Officer is directed to recalculate the income as per above direction.
7. In the result, the revenue's appeal is partly allowed. Order pronounced in the open court on 23/04/2015.
Sd/- Sd/-
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(R.P.Tolani) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 23rd April, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- ITO, Ward 1(2), Jaipur.
2. izR;FkhZ@ The Respondent- Smt. Meena Tiwari, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
8 ITA 430/JP/2012_ ITO Vs. Meena Tiwari
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 430/JP/2012) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar