ITO, Jaipur v. JEWELS AND GOLD PALACE, Jaipur

ITA 414/JPR/2015 | 2009-2010
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 41423114 RSA 2015
Assessee PAN AACFJ3657N
Bench Jaipur
Appeal Number ITA 414/JPR/2015
Duration Of Justice 1 year(s) 5 month(s)
Appellant ITO, Jaipur
Respondent JEWELS AND GOLD PALACE, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 30-09-2016
Assessment Year 2009-2010
Appeal Filed On 29-04-2015
Judgment 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 DQY HKKJR] U;KF;D LNL; OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT JM & SHRI VIKRAM SINGH YAD AV AM VK;DJ VIHY LA-@ ITA NO.414/JP/15 &CO NO.35/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER WARD 5(5) JAIPUR CUKE VS. M/S JEWELS AND GOLD PALACE DASHERA KOTHI AMER ROAD JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACFJ 3657 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI H.M. SINGHVI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND THE ASSE SSEES CROSS OBJECTION AGAINST THE ORDER OF CIT(A)-2 JAIPUR ON 06.02.2015 WHEREIN THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN: IN ITA NO. 414/JP/15 (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CITA) ERRED IN RESTRICTING THE TRADING ADDITION TO RS. 13 19 803/- AS AGAINST RS. 21 99 672/ MADE BY THE AO BY DISALLOWI NG 25% OF THE TOTAL PURCHASES OF RS. 87 98 686/-. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS . 15 00 000/- MADE BY THE AO ON A/C OF PREPAID EXPENSES. ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 2 IN CO NO. 35/JP/15 (1) THAT THE LD. CIT(A) ERRED IN APPLYING THE RATE OF 15% ON UN VERIFIED PURCHASES THROUGH THE PROVISIONS OF SECTION 145(3) WITHOUT GIVING ANY COMPARABLE CASE. (2) THAT THE LD. CIT(A) ERRED IN NOT FOLLOWING THE PAST HISTORY OF THE CASES WHEREIN THE G.P. RATE WAS APPLIED. 2. IN RESPECT OF GROUND NO.1 OF REVENUES APPEAL AN D THE ASSESSEES CROSS OBJECTION THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAD MADE PURCHASES FROM SOME PARTIES WHICH WERE BOGUS ENTRY PROVIDERS AS PE R SURVEYS/ ENQUIRIES CONDUCTED BY THE BCT WING IN THE MONTH OF MARCH 20 08 AND IN THESE ENQUIRES IT WAS NOTICED THAT THESE CONCERNS WERE ISSUING BOG US BILLS. FURTHER TO VERIFY THE GENUINENESS OF THE PURCHASES SUMMONS U/S 131 O F THE IT ACT 1961 WERE ISSUED AND THE SAME WERE EITHER RECEIVED BACK WITH THE POST REMARKS NOT KNOWN OR NO REPLY WAS FILED. FURTHER THE AO HAD SENT THE THE NOTICE SERVER AS WELL AS HIS INSPECTOR OF THE CIRCLE TO FIND OUT THA T WHETHER ANY SUCH BUSINESS CONCERN EXIST AT THE GIVEN ADDRESS. HE REPORTED TH AT NO SUCH BUSINESS CONCERN EXISTS ON THE GIVEN ADDRESSES. THIS FACT WAS APPRA ISED TO THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 05.12.2011 AND WAS ALSO ASK ED TO PERSONALLY PRODUCED THE FOLLOWING PARTIES FOR VERIFICATION BUT THE ASS ESSEE SHOWS HIS INABILITY TO PRODUCE THESE PARTIES FOR VERIFICATION. SL.NO. NAME OF THE PARTIES PURCHASES (RS.) 1. ABHISHEK ENTERPRISES 4 98 700/- 2. BLUE WORLD 13 95 050/- 3. EMERELED WORLD 7 67 143/- 4. KRISHNA IMPEX 9 91 250/- 5. NAMAN GEMS 2 95 000/- 6. PRINCE JEWELLER 1 53 900/- 7. R.V. IMPEX 11 48 000/- 8. SANSKAR JEWELS 5 42 400/- 9. SNEHAIMPEX 10 80 000/- 10. UNIQUE EXPORT 19 27 243/- TOTAL 87 98 686/- THE AO DRAWN REFERENCE TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT REPORT I N (2008) 10 DTR GUJ. 153 ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 3 WHEREIN IT WAS HELD THAT THE APPELLATE AUTHORITIES WERE JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF PAYMENT MADE TOWARDS BOGUS PURC HASES THE DECISION IN CASE OF M/S VIJAY PROTEINS LD. VS.ACIT 58 ITD 428 WHEREIN THE ITAT AHMEDABAD HAS HELD THAT 25% OF BOGUS PURCHASES SHOULD BE DI SALLOWED AND THE DECISION OF THE ITAT JAIPUR BENCH IN THE CASE OF BCIT CIRC LE-1 VS. M/S NAND KISHORE MEGHRAJ JEWELLERS A.Y. 2006-07 IN ITA NO.433/JP/20 09 DATED 19 09 2009 WHERE IT WAS HELD THAT WHERE NONE OF THE BOGUS PURC HASES HAVE BEEN GOT VERIFIED AND THEREFORE THE PURCHASES REMAIN UNVERI FIED WHICH IS A DEFECT IN THE BOOKS OF ACCOUNTS AND THE PROVISIONS OF SECTION 145 (3) OF THE IT ACT 1961 ARE APPLICABLE. FOLLOWING THE ABOVE SAID DECISIONS TH E AO REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE PROFIT OF THE ASSESSEE WHEREBY 25% OF THE UNVERIFIABLE PURCHASES WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AND A TRADING ADDITION OF RS. 21 99 672/- WAS MADE. BE ING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) W HO REDUCED THE ADDITION ON ACCOUNT OF UNVERIFIED PURCHASES TO 15%. NOW BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. 2. THE FINDING OF THE LD. CIT(A) IS GIVEN AS UNDER: I HAVE PERUSED THE FACTS OF THE CASE THE ASSESSME NT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSEE IS ENGAGED IN THE P URCHASE AND SALE OF PRECIOUS AND SEMI PRECIOUS STONES GOLD AND SILVER JEWELLERY ETC. DURING THE YEAR UNDER CONSIDERATION ITS G.P RATE WAS 25.10% AS AGAINST 23 .11% IN ASSESSMENT YEAR 2008-0-9 AND 23.17% IN A.Y. 2007-08. THE PURCHASES FROM TEN CONCERNS AMOUNT TO RS. 87 98 686/- WERE HELD TO BE UNVERIFIABLE IN VIEW OF THE FACT THAT (I) THE SELLERS WERE NOT AVAILABLE AT THE ADDRESSES MENTIO NED (II) THE ASSESSEE WAS UNABLE TO PRODUCE THESE SELLERS AND (III) INQUIRIES CONDUCTED BY THE INVESTIGATION WING SHOWED THAT THE ABOVE CONCERNS W ERE MERELY ISSUING BOGUS BILLS. THE CONTENTION OF THE APPELLANT THAT ADDRESS PAN SALES TAX REGISTRATION NUMBER CONFIRMATIONS MODE OF PAYMENT PURCHASE BI LLS HAVE BEEN SUBMITTED DOES NOT DISCHARGE THE ONUS FROM THE ASSESSEE IN VI EW OF THE FACT THAT THESE CONCERNS ARE NOW UNTRACEABLE AND THESE DOCUMENTS DO NOT SHOW THAT DELIVERY ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 4 OF GOODS HAVE TAKEN PLACE. THEREFORE THE FINDING OF THE AO THAT THESE PURCHASES ARE UNVERIFIABLE IS UPHELD. ALSO THE AC TION OF THE AO IS REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) IS THEREFORE UPHELD. THE AO HAS DISALLOWED 25% OF THE ABOVE UNVERIFIABLE PURCHASES BY RELYING ON T HE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIE S (2008) 10 DTR 153 AND THE DECISION OF THE ITAT AHMEDABAD IN THE CASE OF VIJA Y PROTEINS LTD. 58 ITD 428. THE ITAT JAIPUR BENCH IN ITA NO. 241/JP/2012 DATED 22.10.2014 HAS RECENTLY HELD ON PAGES 67-69 OF THE CONSOLIDATED ORDER AS U NDER: WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE HAS NOT CHALLENGED THE REJECTION OF BOOK RESULT AS DEFECTS POINTED OUT BY THE AO ARE SUFFICIENT TO REJECT THE BOOK RESULT U/S 145(3) OF THE ACT. THE D EPARTMENT HAD CONDUCTED SURVEY AND SEARCH IN VARIOUS CASES AS MEN TIONED BY THE AO AS WELL AS THE LD. CIT(A). ON INVESTIGATION IT IS FO UND THAT FOUR PARTIES WERE ALSO INDULGED IN PROVIDING ACCOMMODATION BILLS. TH E SUFFICIENT OPPORTUNITIES HAVE BEEN GIVEN BY THE AO TO PROVE TH E GENUINENESS OF THE PURCHASE. THE AO HIMSELF ISSUED THE NOTICES TO THE SE PARTIES BUT NOTICES WERE RETURNED BACK BY THE POSTAL DEPARTMENT WITH R EMARK NO SUCH PARTY EXIST AT GIVEN ADDRESS. THE ASSESSEE COULD NOT PRODUCE THESE PARTIES FOR VERIFICATION DURING THE COURSE OF ASSES SMENT PROCEEDINGS. EVEN THE AO PROVIDED SUFFICIENT TIME TO THE ASSESSE E. THE UNVERIFIABLE PURCHASES WERE RS.3 28 40 664/- WHEREAS THE ASSESSE E EXPORTED THE GOODS DURING THE YEAR AT RS. 93 42 720/- DURING TH E YEAR UNDER CONSIDERATION . THEREFORE THE ASSESSEES CLAIM THA T ALL THE GOODS WERE EXPORTED THE GOODS DURING THE YEAR AT RS.93 42 720/ - DURING THE YEAR UNDER CONSIDERATION. THEREFORE THE ASSESSEES CLAI M THAT ALL THE GOODS WERE EXPORTED DURING THE YEAR IS NOT CORRECT. FURT HER THE LD. AO HAD NOT PRECLUDED BY THE LAW IF THE ASSESSEE EVEN EXPORTED THE GOODS 100% TO INVESTIGATE THE UNVERIFIABLE PURCHASES. THE LD. AO SENT NOTICED TO THESE PARTIES WHICH WERE RETURNED BACK UNSERVED WITH RE MARK PARTY 9IS NOT EXISTENT. THE ASSESSEE WAS ALSO PRODUCED THESE P ARTIES FOR VERIFICATION WHATEVER EVIDENCE WERE PRODUCED BY THE ASSESSEE ARE NOT SUFFICIENT TO PROVE THE PURCHASE GENUINE EVEN PAYMENTS THROUGH A CCOUNT PAYEE CHEQUES IS NO SACROSANCT AND HAD NOT DISCHARGED O NUS ON IT. DURING THE COURSE OF INVESTIGATION CONDUCTED BY THE DEPARTMENT THESE PARTIES WERE FIGURED IN THE LIST OF ENTRY PROVIDES AND THEY HAD ADMITTED THAT THE ONLY PROVIDED BILLS NO ANY REAL BUSINESS WITH DELIVERY O F GOODS. THE AO APPLIED HONBE GUJARAT HIGH COURT DECISION IN THE C ASE OF SANJAY OIL CAKE INDUSTRIES (SUPRA) AND ITAT AHMEDABAD BENCH DECISIO N IN THE CASE OF ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 5 VIJAY PROTEINS WHEREIN 25% DISALLOWANCE HELD REASON ABLE ON UNVERIFIABLE PURCHASES. THE AR OF THE ASSESSEE TRIED TO DISTING UISH THIS CASE WITH FACTS AND CIRCUMSTANCES AND ARGUED IT APPLY PAST HISTORY OF THE CASE. THE ONUS IS ON THE ASSESSEE TO PROVE THESE PURCHASES AS GENU INE AND SUFFICIENT PURCHASES FROM THE PARTIES HAVE BEEN CLAIMED TO BE MADE BY HIM. THE ASSESSEE ALSO COULD NOT BE ABLE BE LEAD ANY EVIDENC E IN FURTHERMORE OF FILING OF CONFIRMATORY LETTER OR MERELY SHOWING THA T THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE WAS AWAR E OF THE WHEREABOUTS OF THE PARTIES AND HE SHOULD HAVE PRODU CED THESE PARTIES THEREFORE THE AO FOR VERIFICATION OR PURCHASES W HICH COULD NOT BE DONE AT THE STAGE OF ASSESSMENT PROCEEDINGS. THE ADDITI ON ON ACCOUNT OF UNVERIFIABLE PURCHASES WERE MADE IN A.Y. 2006-07. THUS PAST HISTORY OF THE ASSESSEE IS NOT RELIABLE AND DOCTORED. THIS FU NDING IS ALSO GOT SUPPORT FROM THE RECENT DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF VENUS ARTS & GEMS ORDER DATED 20.08.2014 WHEREIN IT HAS BEEN HELD THAT ORDER PASSED BY THE ITAT FOR CONFIRMING GP AFTER REJECTION OF BOOKS OF ACCOUNTS ON THE BASIS OF VARIOUS DISCREPANCIES FOUN D BY THE AO THERE IS NO QUESTION OF LAW INVOLVED IN SUCH PROFIT ESTIMATE S. EVEN THE ASSESSEE MAY BE 100% EXPORTER WITH DOES NOT PRECLUDE THE AO FROM ENQUIRING INTO THE GENUINENESS OF THE PURCHASES. THEREFORE WE AR E OF THE CONSIDERED VIEW THAT 15% NP ON UNVERIFIABLE PURCHASE IS REASON ABLE IN THIS CASE. ACCORDINGLY THE ASSESSEES APPEAL IS PARTLY ALLOWED . FOLLOWING THE ABOVE ORDER OF THE ITAT JAIPUR DISAL LOWANCE OF 15% OF THE UNVERIFIABLE PURCHASES AMOUNTING TO RS. 13 19 803/- IS UPHELD. THE BALANCE ADDITION IS DIRECTED TO BE DELETED. THE ABOVE GROU NDS ARE PARTLY ALLOWED. 3. DURING THE COURSE OF HEARING THE LD AR SUBMITTE D THAT IN THE ENQUIRY LETTER IN POINT NO.8 THE AO ASKED THE ASSESSEE TO FILE DE TAILS OF PURCHASES OVER 1 LA C FROM A SINGLE PARTY GIVING RST/CST NO./PAN NOS. IT EMS PURCHASED AND TOTAL AMOUNT OF PURCHASES MADE DURING THE YEAR. ALL THES E DETAILS WERE FILED VIDE LETTER DATE 03.10.2011. ON PAGE NO.2 IN PARA 3 THE AO OBSERVED THAT MOREOVER IT WAS SEEN THAT THE ASSESSEE HAD MADE PU RCHASE FROM SOME PARTIES WHICH WERE RELATED TO THE INFORMATION RECOR DED FROM BCIT AND INVESTIGATION WING. SEVENTY SURVEYS/ENQUIRIES WERE CONDUCTED IN THE MONTH OF MARCH 2008. IN THESE ENQUIRIES IT WAS NOTICED THAT THESE WERE ISSUING BOGUS BILLS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FROM THE INFORMATION RECEIVED AS A RESULT OF THESE INQUIRIES IT AS NOTIC ED THAT CONCERNS FROM WHICH ASSESSEE HAS SHOWN PURCHASES ARE BOGUS ENTRY PROVID ERS. THE AO HAD NOT PASSED ON SUCH MATERIAL TO THE ASSESSEE FOR CROSS E XAMINATION. THE ASSESSEE ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 6 VIDE LETTER DATED 30.11.2011 FILED THE INFORMATION AND EXPLANATION AS NOTED IN THE PROCEEDING SHEETS WITH COPIES OF PAN CARDS OF P ROP. OF ABHISHEK ENTERPRISES & UNIQUE EXPORTS AND CONFIRMATIONS OF N AMAN GEMS SAGAR EXPORTS VIJAY GEMS T.R. JEWELLERS SIDDHI EXPORT S RITIKA INTERNATIONAL UNIQUE EXPORTS SNEHA IMPEX PAWAN INTERNATOIONAL R.V. IMPEX & SUNRISE INTERNATIONAL. THE AO ISSUED NOTICES U/S 131 TO 12 PARTIES MENTIONED ON PAGE 2 OF THE AO. AS MENTIONED IN THE ASSESSMENT ORDER ON PAGE 3 NOTICE ISSUED TO 10 PARTIES AS MENTIONED ON PARA 3 RETURNED UNSERVED WITH REMARKS NOT KNOWN OR NO REPLY WAS FILED. NOTICE SERVER AS WEL L AS INSPECTOR ALSO REPORTED THAT NO SUCH BUSINESS CONCERNS EXISTS IN THE GIVEN ADDRESS. BUT THE AO NEVER SHOWED THE REMARKS OF POST OFFICE NOR THE REPORT OF INSPECTOR AND NOTICE SERVER. IT IS SURPRISING THAT ON THE ONE HAND AO I S SAYING THAT THESE PARTIES HAVE GIVEN STATEMENT THAT THEY ARE ENTRY PROVIDERS ON THE OTHER HAND AO IS SAYING THAT THEY DO NOT EXIST. WHY THE AO HAS NOT M ADE ANY ENQUIRY FROM THE CONCERNING AO AND BANK? THE PARTIES ARE IDENTIFIED. THE AO ASKED TO PRODUCE 10 PARTIES AS MENTIONED ON PAGE 3 OF AO. HOWEVER THE ASSESSEE FILED CONFIRMATION. THE AO HAS ACCEPTED THE SALE. THE AO REJECTED THE BOOKS OF ACCOUNTS AND ADDED RS.21 99 622/- CALCULATED AT TH E RATE OF 25% OF THE UNVERIFIED PURCHASES OF RS. 87 98 686/-. THE AO AP PLIED THIS RATE OF 25% ON THE BASIS OF JUDGEMENT OF HIGH COURT IN THE CASE O F SANJAY OIL CAKE INDUSTRIES VS. CIT (10 DTR 153 GUJ) & ITAT AHMEDABAD C BE NCH IN THE CASE OF VIJAY PROTEINS LTD. VS. ACIT (38 ITR 428). THE FACTS OF THESE CASES ARE TOTALLY DIFFERENT. THE RATIO CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE. IN A.Y. 2005-06 & 2007-08 HONBLE ITAT JAIPUR IN ASSESSEE S OWN CASE HAS HELD THAT THE FACTS OF THE ABOVE CASES RELIED BY THE AO DO NO T EXIST IN THE CASE OF THE ASSESSEE BUT APPLIED RATE OF 24% AS AGAINST 23% SHO WN BY THE ASSESSEE. THE GP RATE OF CURRENT YEAR IS 25.21% AS AGAINST 23.11% IN IMMEDIATELY PRECEDING YEAR. THUS THE GP IS BETTER THAN THE PAST YEAR. THE LD. CIT(A) ON PAGE 6 FOLLOWING THE ITAT ORDER IN ITA NO. 241/JP/2012 DAT ED 22.10.2014 APPLIED THE RATE OF 15% ON UNVERIFIED PURCHASES. THESE FINDING S ARE THE FINDINGS OF FACT. THE FINDING OF THE CASE IN ONE CASE COULD NOT BE AP PLIED UNIVERSALLY IN ALL THE CASES. IT CANNOT ALSO BE CONSIDERED AS A COMPARABL E CASE. IF IT IS CONSIDERED AS A COMPARABLE CASE THE OPPORTUNITY OUGHT TO HAVE BE EN GIVEN TO THE ASSESSEE FOR COMMENTS. AS HELD BY THE RAJASTHAN HIGH COURT I N INANI MARBLES THAT THE PAST HISTORY OF THE CASE IS BEST GUIDE OR ESTIMATIO N OF PROFITS. SINCE IN THE ASSESSES OWN CASES ITAT JAIPUR BENCH IN 2005-06 & 2007-08 WHEREIN SIMILAR FACTS EXISTED HELD AND SUSTAINED THE ADHOC ADDITI ON SUSTAINED BY CIT(A). IT IS THEREFORE PRAYED THAT THE RATE OF 15% APPLIED ON UN VERIFIED PURCHASES BE DELETED AND A MARGINAL ADDITION TO COVER UP THE AMO UNT INFLATED @ 0.20 PAISE TO 0.25 PAISE PER RS. 100/- FOR ISSUING THE BILLS B E SUSTAINED. ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 7 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY THE BOOKS OF ACCOUNTS HAVE B EEN REJECTED ON ACCOUNT OF CERTAIN PURCHASES WHICH REMAIN UNVERIFIED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. THE REJECTION OF BOOKS OF ACCOUNTS IS THEREFORE NOT UNDER CHALLENGE BEFORE US. THE AO HAS TAKEN THE NECESSAR Y STEPS IN TERMS OF VERIFYING THESE PURCHASE TRANSACTIONS BY ISSUING TH E SUMMONS U/S 131 AND THE ASSESSEE WAS ALLOWED AN OPPORTUNITY TO PRODUCE THES E PARTIES FOR VERIFICATION. HOWEVER BESIDES SHARING THE PAN NUMBERS AND SOME C ONFIRMATIONS THE PURCHASES REMAIN UNVERIFIABLE. ONLY LIMITED ISSUE BEFORE US THEREFORE RELATES TO ESTIMATION OF PURCHASES WHICH CAN BE DISALLOWED BY THE AO. THE AO HAS ESTIMATED 25% OF PURCHASES WHEREAS THE LD CIT(A) HA S REDUCED THE SAME TO 15% FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ANUJ KUMAR VARSHNEY (SUPRA). AS PER THE LD AR EVEN IN EARLIER YEARS SIMILAR ADDITIONS HAVE BEEN MADE ON ACCOUNT OF UNVERIFIED PURCHASES AND ESTIMAT ION OF G.P HAS BEEN MADE BASED ON PAST RESULTS. IT IS NOTED THAT THE DECISI ONS IN CASE OF ANUJ KUMAR VARSHNEY AND OTHERS WERE IN RESPECT OF COMPANIES EN GAGED IN SIMILAR LINE OF BUSINESS I.E GEMS AND JEWELLERY. FURTHER SIMILAR ARGUMENTS WERE MADE IN TERMS OF FOLLOWING THE PAST HISTORY OF THE ASSESSEE IN THOSE CASES AS WELL. THE COORDINATE BENCH HAS HELD THAT THE PAST HISTORY CAN BE TAKEN AS A BASIS WHERE THE SAME IS RELIABLE. IN THE INSTANT CASE IN THE PAST YEARS BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND PROFIT HAS BEEN ESTIMATED AN D THEREFORE IT CANNOT BE SAID WITH CERTAINTY THAT THE PAST HISTORY WILL BE T HE RELIABLE BASIS IN THE INSTANT CASE. IN OUR VIEW LD CIT(A) HAS RIGHTLY ESTIMATED UNVERIFIABLE PURCHASES @ 15% BASED ON DECISION OF THE COORDINATE BENCH IN CASE O F ANUJ KUMAR VARSHNEY (SUPRA). WE ACCORDINGLY CONFIRM THE ORDER OF THE LD CIT(A). THE RESPECTIVE GROUNDS OF APPEAL TAKEN BY THE REVENUE AND THE ASSE SSEE ARE DISMISSED. 5. IN RESPECT OF GROUND NO.2 OF THE REVENUES APPEA L THE RELEVANT FACTS AND THE THE FINDING OF THE LD. CIT(A) AS UNDER: THE ASSESSEE HAS DEBITED A SUM OF RS. 75 00 000/- ON ACCOUNT COMMISSION ON SALES TO TRAVEL CORPORATION OF INDI A (TCI). THE AO HAS DISALLOWED RS. 15 00 000/- OUT OF THE ABOVE EXPEND ITURE ON THE GROUND THAT IT RELATES TO THE PRIOR PERIOD OF 30.12.2007 TO 31.03.2008. THE AO HAS ARRIVED AT THIS CONCLUSION ON THE BASIS OF A CO PY OF AGREEMENT BETWEEN THE ASSESSEE AND TCI WHICH STATES THAT THIS COMMISSION ON SALES PERTAINS TO THE PERIOD 30.12.2007 TO 31.03.2009. T HIS AGREEMENT IS SIGNED ONLY BY TCI AND NOT THE ASSESSEE. THE APPEL LANT HAS CLAIMED THAT THIS EXPENDITURE PERTAINS WHOLLY TO THIS PREVIOUS Y EAR. IN SUPPORT THEREOF HE HAS SUBMITTED A COPY OF CONFIRMATION OF TCI SHOW ING THAT THIS ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 8 EXPENDITURE PERTAINS TO THE PERIOD FROM 01.04.2008 TO 31.03.2009. THE APPELLANT HAS ALSO DENIED ENTERING INTO ANY SUCH AG REEMENT WITH TCI WHICH COMMENCED ON 30.12.2007. IT IS NOT IN DISPU TE THAT SUCH AN EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT THE ONLY DISPUTE IS WITH RESPECT TO THE PERIOD TO WHICH THE EXPENDITURE PERT AINS. THE CONTENTION OF THE APPELLANT THAT THIS EXPENDITURE PERTAINS TO THIS PREVIOUS YEAR ONLY APPEARS TO BE CORRECT BECAUSE IT WOULD HAVE BEEN BE NEFICIAL TO THE ASSESSEE TO CLAIM THIS AMOUNT IN A.Y. 2008-09 BECAU SE IN THAT YEAR ITS RETURNED INCOME WAS RS. 5 83 030/- WHEREAS IN THE C URRENT ASSESSMENT YEAR IT HAS SHOWN A RETURNED LOSS. MOREOVER THE CO NFIRMATION TCI CLEARLY SHOWS THAT THIS EXPENDITURE PERTAINS TO F.Y. 2008-0 9. ALSO THE AGREEMENT WHICH STATES THAT THIS COMMISSION PERTAIN S TO A PERIOD OF 15 MONTHS HAS NOT BEEN SIGNED BY THE ASSESSEE. IN VIE W OF THE ABOVE DISCUSSION IT IS HELD THAT THIS EXPENDITURE PERTA INS TO THE PREVIOUS YEAR UNDER CONSIDERATION AND DISALLOWANCE OF PREPAID EXP ENSES OF RS. 15 00 000/- IS DIRECTED TO BE DELETED. THIS GROUND IS ALLOWED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL ON RECORD. THE ABOVE FINDINGS OF THE LD CIT(A) REMAIN UNCONTRO VERTED BEFORE US. IN ANY CASE THERE IS NO LOSS TO THE REVENUE AS THE TAX RA TES REMAIN THE SAME IN BOTH THE YEARS. WE ACCORDINGLY CONFIRM THE FINDING OF T HE LD.CIT(A). THE GROUND TAKEN BY THE REVENUE IS ACCORDINGLY DISMISSED. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND C ROSS OBJECTION BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 30/09/2016 ITA NO. 414/JP/15 & CO BO. 35/JP/15 ITO WARD 5(5) JAIPUR VS. JEWELS & PALACE JAIPUR 9 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO WARD 5(5) JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S JEWELS & GOLD PALACE JAIPUR 3. VK;DJ VK;QDR@ CIT II JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-II JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 414/JP/2015 & CO. NO.35/JP/15) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASSISTANT. REGISTRAR