ITO, Jaipur v. NARENDRA LAHI, Jaipur

ITA 823/JPR/2010 | 2006-2007
Pronouncement Date: 08-07-2011 | Result: Dismissed

Appeal Details

RSA Number 82323114 RSA 2010
Bench Jaipur
Appeal Number ITA 823/JPR/2010
Duration Of Justice 1 year(s) 14 day(s)
Appellant ITO, Jaipur
Respondent NARENDRA LAHI, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-07-2011
Assessment Year 2006-2007
Appeal Filed On 24-06-2010
Judgment Text
1 ITA 823-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 823/JP/2010 ASSTT. YEAR : 2006-07. THE INCOME-TAX OFFICER VS. SHRI NARENDRA LAKHI WARD 1(1) PROP. M/S. ROYAL GEMS SOURCE JAIPUR. 395 HANUMAN KA RASTA JOHARI BAZAR JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI P.C. PARWAL ORDER DATED : 08/07/2011. PER SHRI R.K. GUPTA J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE DEPARTMENT IS OBJECTING IN REDUCING THE TRAD ING ADDITION OF RS. 7 05 720/- TO RS. 43 890/- BY APPLYING G.P. RATE OF 12.9% AS AGAI NST 25% APPLIED BY THE AO ON UNVERIFIABLE PURCHASES. THE DEPARTMENT IS ALSO OB JECTING IN DELETING THE ADDITION OF RS. 6 00 000/- MADE BY AO ON THE BASIS OF LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY. 3. THE ASSESSEE DERIVES INCOME FROM TRADING OF PREC IOUS AND SEMI PRECIOUS STONES. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED T HAT CERTAIN PURCHASES OF RS. 28 23 682/- MADE FROM 6 PARTIES REMAINED UNVERIFIAB LE. BY RELYING ON THE DECISIONS IN THE CASES OF PRECISION FINANCE PVT. LTD. 208 ITR 4 65 (CAL.) AND KANCHWALA GEMS 134 2 ITD (JP) HELD THAT PROVISIONS OF SECTION 145(3) ARE APPLICABLE. BY FURTHER RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES 10 DTR 153 (GUJ.) AND IN THE CASE OF VIJAY PROTEINS LT D. 58 ITD 428 DISALLOWED 25% OF UNVERIFIABLE PURCHASES WHICH RESULTED IN AN ADDITIO N OF RS.7 05 920/-. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A). IT WAS SUBMITTED THAT THE DECISIONS ON WHICH RELIANCE HAS BEEN PLACED WERE FOUND DISTINGUISHABLE BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF GEM PARADISE IN ITA NO. 700/JP/2009 DATED 18.12.2009. IT WAS FURTHER SUBMITTED THAT THE G.P. RATE IS SIMILAR AS SHOWN IN EARLIER YEAR. THEREFORE NO ADDITION IS WARRANTED. 3.1. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD THE LD. CIT (A) HELD THAT PROVISIONS OF SECTION 145(3) WERE RIG HTLY ATTRACTED. HOWEVER HE HELD THAT ADDITION MADE @ 25% OF UNVERIFIABLE PURCHASES IS NO T JUSTIFIED AS THE ADDITION CAN BE MADE ON THE BASIS OF PAST HISTORY AS HELD BY VARIOU S BENCHES OF THE TRIBUNAL. THE LD. CIT (A) NOTED THAT G.P. RATE SHOWN BY ASSESSEE IS 12.41 % AGAINST 13.40% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. AFTER TAKING INTO CONS IDERATION THE PAST HISTORY AND THE QUANTUM OF TURNOVER THE LD. CIT (A) HELD THAT IF A G.P. RATE OF 12.9% IS APPLIED THAT WILL MEET THE ENDS OF JUSTICE WHICH RESULTED IN A TRADIN G ADDITION OF RS. 43 890/- AGAINST THE TRADING ADDITION MADE BY THE AO. 4. THE LD. D/R PLACED RELIANCE ON THE ORDER OF A.O. 5. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE P LACED RELIANCE ON THE ORDER OF LD. CIT (A). 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A). THE JAIPUR BENCHES OF THE TRIBUNAL ARE TAKING A 3 CONSISTENT VIEW THAT WHERE CERTAIN PURCHASES REMAIN UNVERIFIABLE THEN REJECTION OF BOOKS OF ACCOUNT IS CORRECT. THE JAIPUR BENCHES OF THE T RIBUNAL ARE ALSO TAKING A CONSISTENT VIEW THAT NO ADDITION CAN BE MADE @ 25% OF THE UNVE RIFIABLE PURCHASES AS THE ADDITION CAN BE MADE ON THE BASIS OF PAST HISTORY AND TAKING INTO CONSIDERATION THE CURRENT EVENTS OF THE CASE. 6.1. IN THE PRESENT CASE THE LD. CIT (A) TAKING IN TO CONSIDERATION THE PAST HISTORY OF THE CASE AND TAKING INTO CONSIDERATION THE UNVERIFI ABLE PURCHASES HAS SUSTAINED AN ADDITION OF RS. 43 000/- OR ODD WHICH IN OUR CONSI DERED VIEW THE LD. CIT (A) HAS RIGHTLY SUSTAINED THIS ADDITION. ACCORDINGLY WE CONFIRM H IS ORDER. 7. REGARDING DELETION OF RS. 6 00 000/- IT IS SEEN THAT CERTAIN INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE ENTRIES OF THE PAPERS FOUND DURING THE COURSE O F SURVEY. DETAILED SUBMISSIONS WERE FILED. HOWEVER THE AO DID NOT ACCEPT THE EXPLANAT ION OF THE ASSESSEE THAT PART OF THE GOODS WERE RECEIVED ON APPROVAL FROM A BROKER WHICH WERE RETURNED AND BALANCE PURCHASES WERE PART OF STOCK ON THE GROUND THAT THI S WAS NOT SUBSTANTIATED BY ANY EVIDENCE. THE AO PRESUMED THAT UNACCOUNTED PURCHASE S WERE SOLD IN CASH. THE UNACCOUNTED MONEY INVOLVED IN SUCH PURCHASES WAS ES TIMATED AT RS. 5 00 000/- AND PROFIT @ 20% AMOUNTING TO RS. 1 00 000/- WAS ALSO E STIMATED BY THE AO AND THE IMPUGNED ADDITION WAS MADE. 7.1. DETAILED WRITTEN SUBMISSIONS WERE FILED BEFORE LD. CIT (A). IT WAS SUBMITTED THAT THE PAPER IN QUESTION CONTAINED DETAILS OF QUANTITY NAMES OF ITEMS RATE AND DATE OF PURCHASE MADE BY THE ASSESSEE THROUGH BROKER. SUCH PURCHASES WERE PART OF THE TOTAL 4 STOCK FOUND DURING THE COURSE OF SURVEY. IT WAS PO INTED OUT THAT UNRECORDED PURCHASES MADE BY THE GROUP WERE OFFERED FOR TAXATION IN THE CASE OF M/S. BIHARI LAL HOLA RAM WHEREIN THE ASSESSEE WAS A PARTNER. THE AMOUNT OFF ERED FOR TAXATION WAS RS. 1.35 CRORES OR ODD. THE LD. A/R CHALLENGED THE ASSUMPTION OF A. O. THAT THE UNRECORDED PURCHASES WERE SOLD ON THE GROUND THAT THERE WAS NO GROUND FO R SUCH ASSUMPTION. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD LD. CIT (A) WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDINGLY HE DELETE D THE ADDITION. 8. THE LD. D/R PLACED RELIANCE ON THE ORDER OF AO. 9. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 10. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) WE FIND NO INFIRMITY IN THE FOLLOWING FINDING OF LD. CIT (A) :- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE. FROM THE PERUSAL OF DETAILS ON RECORD IT IS S EEN THAT THE ENTRIES RECORDED IN THE LOOSE PAPERS RELATE TO INVE NTORY OF CERTAIN GOODS. THE QUANTITY AND THE RATE IS REFLECTED. THE DATE 15.04.2005 IS ALSO MENTIONED ALONG WITH THE NAME OF THE APPELL ANT BUT THERE IS NO MENTION THAT GOODS IN QUESTION MENTIONED IN THES E PAPERS HAVE EITHER BEEN PURCHASED OR SOLD. ON THE CONTRARY IT APPEARS TO BE AN INVENTORY OF GOODS SINCE IT MENTIONS THE QUANTITY A ND QUALITY OF THE ITEMS ALONG WITH THE RATE. THE ASSUMPTION OF THE AO THAT THE GOODS HAVE BEEN PURCHASED AND ALSO SOLD NOT EVIDENT FROM THE ENTRIES RECORDED IN THE SAID PAPERS. ON THE OTHER HAND TH E PLEA OF THE A/R THAT THE APPELLANT BEING A PARTNER IN THE FIRM M/S. BIHARI LAL HOLA RAM HAD OFFERED THE EXCESS STOCK AMOUNTING TO RS. 1 35.61.270/- 5 ALREADY FOR TAX AND A SEPARATE ADDITION ON THE BASI S OF THE STOCK INVENTORY FOUND IN THE SAID LOOSE PAPERS TO BE NOT ;JUSTIFIED APPEARS TO BE MORE CONVINCING. THIS HAS ALSO TO BE CONSIDER ED IN LIGHT OF THE FACT THAT DURING THE COURSE OF SURVEY PHYSICAL STOCK OF ALL THE CONCERNS WAS INTERMINGLED AND THE EXCESS STOCK WAS DECLARED FOR TAXATION IN THE HANDS OF M/S. BIHARI LAL HOLA RAM. THE EXCESS STOCK HAVING ALREADY BEEN DECLARED IN THE HANDS OF THE FIRM WHEREIN THE APPELLANT IS ALSO A PARTNER THERE APPE ARS TO BE NO JUSTIFICATION FOR THE SEPARATE ADDITION TO BE MADE IN THE HANDS OF THE APPELLANT. THE SAME IS THEREFORE DELETED. THE ABOVE FINDING OF LD. CIT (A) ARE FINDING OF FAC T WHICH REMAINED UNCONTROVERTED. ACCORDINGLY WE CONFIRM THE FINDING OF LD. CIT (A) IN THIS RESPECT ALSO. 11. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISM ISSED. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 .07.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR D/- COPY FORWARDED TO :- THE ITO WARD 1(1) JAIPUR. SHRI NARENDRA LAKHI JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 823/JP/2010) BY ORDER 6 AR ITAT JAIPUR.