SHRI RAM AVTAR VIJAY, JAIPUR v. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 84/JPR/2019 | 2010-2011
Pronouncement Date: 08-11-2019 | Result: Allowed

Appeal Details

RSA Number 8423114 RSA 2019
Assessee PAN AARPV4039R
Bench Jaipur
Appeal Number ITA 84/JPR/2019
Duration Of Justice 9 month(s) 15 day(s)
Appellant SHRI RAM AVTAR VIJAY, JAIPUR
Respondent ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 08-11-2019
Last Hearing Date 12-03-2019
First Hearing Date 12-03-2019
Assessment Year 2010-2011
Appeal Filed On 23-01-2019
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE S A 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-@ ITA. NO. 446/JP/2018 & 84/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10 & 2010-11 SHRI RAM AVTAR VIJAY 32 SHOPPING CENTRE JANTA COLONY JAIPUR. CUKE VS. THE ACIT CIRCLE-5 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AARPV 4039 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.R. SHARMA (C.A.) & SHRI R.K. BHAT RA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI P.P. MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 07/11/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 08/11/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF LD. CIT(A)-2 JAIPUR BOTH DATED 20.11.201 8 FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 RESPECTIVELY. THE ASSESSEE HAS RAISED COMMON GROUNDS IN BOTH THE APPEALS EXCEPT THE QUANT UM OF ADDITION. THE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2009-10 READS AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (A) IS WRONG UNJUST AND HAS ERRED IN LAW IN CONFIRMING RE JECTION OF BOOKS OF ITA NO. 446/JP/2018 & 84/JP/2019 SHRI RAM AVTAR VIJAY VS. ACIT 2 ACCOUNTS OF THE APPELLANT BY THE ASSESSING OFFICER U/S 145(3) OF THE I.T. ACT 1961 ON THE GROUND THAT PURCHASE TO THE EXTENT OF RS. 1 28 56 000/- ARE ALLEGEDLY NOT GENUINE AND NOT VERIFIABLE. 2. THAT THE LD. CIT (A) IS FURTHER WRONG AND HAS ER RED IN LAW IN LACE IN CONFIRMING ADDITION TO THE EXTENT OF RS. 19 28 400/ - BEING 15% OF ALLEGED UNVERIFIABLE PURCHASES REFERRED TO IN GROUN D NO. (1) ABOVE. 2. THE ASSESSEE IS AN INDIVIDUAL CARRYING ON THE B USINESS OF EXPORT OF PRECIOUS AND SEMI PRECIOUS GEMS STONES IN HIS PR OPRIETORSHIP CONCERN M/S. SUGEMS EXPORTS. THE ASSESSEE FILED HIS RETURN OF INCOME UNDER SECTION 139(1) ON 30.09.2009 DECLARING TOTAL INCOME OF RS. 36 44 680/- WHICH WAS PROCESSED UNDER SECTION 143(1) ON 04.10.2 015. SUBSEQUENTLY THE AO REOPENED THE ASSESSMENT BY ISS UING NOTICE UNDER SECTION 148 AND COMPLETED THE REASSESSMENT ON 14.12 .2016. IN THE REASSESSMENT PROCEEDINGS THE AO AFTER REJECTION OF BOOKS OF ACCOUNT MADE ADDITION OF 25% OF ALLEGED UNVERIFIABLE PURCHA SES AMOUNTING TO RS. 32 14 000/-. ON APPEAL THE LD. CIT (A) HAS UP HELD THE ADDITION TO THE EXTENT OF 15% OF ALLEGED UNVERIFIABLE PURCHASES FOR A.Y. 2009-10 HOWEVER FOR A.Y. 2010-11 HAS ADOPTED A DIFFERENT A PPROACH AND RESTRICTED THE ADDITION BY APPLYING GP RATE OF 23%. AGGRIEVED BY THE IMPUGNED ORDERS OF LD. CIT (A) THE ASSESSEE HAS FI LED THESE TWO APPEALS. ITA NO. 446/JP/2018 & 84/JP/2019 SHRI RAM AVTAR VIJAY VS. ACIT 3 3. DURING THE COURSE OF HEARING THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS AN EXPORTER AND ONCE THE EXPORT OF GOODS ARE NOT DENIED THEN THE CORRESPONDING PURCHA SES CANNOT BE HELD AS BOGUS. THE AO HAS NOT MADE OUT A CASE OF INFLAT ION OF PURCHASE PRICE BUT HAS DOUBTED THE PURCHASE ITSELF WHICH IS NOT POSSIBLE WHEN THE ASSESSEE IS IN THE 100% EXPORT SALE. THUS THE LD. A /R HAS CONTENDED THAT AFTER REJECTION OF BOOKS OF ACCOUNT THE AO WA S REQUIRED TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF SOME REASONABLE AND PROPER BASIS. HE HAS REFERRED TO VARIOUS DECIS IONS OF THIS TRIBUNAL INCLUDING THE DECISION DATED 15.12.2017 IN CASE OF ACIT VS. M/S. ALLIED GEMS CORPORATION IN ITA NO. 794/JP/2011 AS WELL AS DECISION DATED 29.01.2018 IN CASE OF VIJAY KEDIA (HUF) VS. ACIT IN ITA NOS. 197 & 248/JP/2016. THE LD. A/R HAS SUBMITTED THAT WHEN T HE GP DECLARED BY THE ASSESSEE IS IN LINE WITH THE PAST HISTORY AS WE LL AS THE GP PREVAILING IN THIS TRADE THEN NO ADDITION IS JUSTIFIED. 4. ON THE OTHER HAND THE LD. D/R HAS SUBMITTED THA T IT IS A CASE OF BOGUS PURCHASE. THEREFORE THE GP DECLARED EVEN IN THE PREVIOUS YEARS CANNOT BE CONSIDERED AS REASONABLE OR PROPER BASIS FOR ESTIMATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. HE HAS REL IED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 446/JP/2018 & 84/JP/2019 SHRI RAM AVTAR VIJAY VS. ACIT 4 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE AO HAS REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE IT ACT ON THE G ROUND THAT SOME OF THE PURCHASES WERE MADE BY THE ASSESSEE FROM M/S AV I EXPORTS AND M/S SUN DIAM OF RS. 1 28 56 000/- WHICH WAS MANAGED BY SHRI RAJENDRA S. JAIN AND SHRI DHARMICHAND JAIN GROUP WH O ARE FOUND TO BE INDULGING IN PROVIDING ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS BILLS ETC. THE AO AFTER REJECTION OF BOOKS OF ACCO UNT DISALLOWED 25% OF THOSE PURCHASES MADE FROM THESE TWO CONCERNS AND CO NSEQUENTLY AN ADDITION OF RS. 32 14 000/- WAS MADE FOR THE ASSESS MENT YEAR 2009-10 AND SIMILARLY 25% OF THE PURCHASES MADE FROM TWO CO NCERNS MANAGED BY THE SAME GROUP OF PERSONS WAS DISALLOWED FOR THE ASSESSMENT YEAR 2010-11 AND CONSEQUENTLY AN ADDITION OF RS. 17 22 9 03/- WAS MADE. ON APPEAL THE LD. CIT (A) HAS UPHELD THE ADDITION TO THE EXTENT OF 15% OF ALLEGED UNVERIFIABLE PURCHASES FOR A.Y. 2009-10 HO WEVER FOR A.Y. 2010- 11 HAS ADOPTED A DIFFERENT APPROACH AND RESTRICTED THE ADDITION BY APPLYING GP RATE OF 23%. 6. NO SPECIFIC ARGUMENTS HAVE BEEN TAKEN AGAINST TH E REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) AND HENCE THE REJECTI ON OF BOOKS OF ITA NO. 446/JP/2018 & 84/JP/2019 SHRI RAM AVTAR VIJAY VS. ACIT 5 ACCOUNTS AND RESULTS SO DECLARED THEREIN IS CONFIRM ED. THE GROUND NO. 1 SO TAKEN IN BOTH THE APPEALS ARE THUS DISMISSED. 7. GIVEN THAT THE BOOKS OF ACCOUNTS HAVE BEEN REJEC TED THE ASSESSING OFFICER IS REQUIRED TO MAKE THE ASSESSMEN T ON THE BASIS OF BEST JUDGMENT INSTEAD OF RESORTING TO MAKING THE AD DITION TO THE BOOK RESULTS. THE ASSESSING OFFICER WHILE EXERCISING HIS JURISDICTION CANNOT ACT ARBITRARILY OR CAPRICIOUSLY. THE ASSESSMENT MUST P ROCEED ON JUDICIAL CONSIDERATIONS IN LIGHT OF RELEVANT MATERIAL AVAILA BLE ON RECORD. IN OTHER WORDS IN ANY CASE OF BEST JUDGMENT THOUGH THE ELE MENT OF GUESS WORK IS INVOLVED HOWEVER THE GUESS WORK SHOULD HAVE NEX US WITH THE MATERIAL ON RECORD AND DISCRETION MUST NOT BE EXERC ISED ARBITRARILY OR CAPRICIOUSLY. FOR THE PURPOSES OF MAKING THE BEST JUDGMENT ASSESSMENT PAST HISTORY OF THE ASSESSEE HAS BEEN H ELD AS RELIABLE AND REASONABLE BASIS FOR ESTIMATION OF PROFITS. THE LD . CIT (A) IS THEREFORE NOT CORRECT IN UPHOLDING 15% OF ALLEGED UNVERIFIED PURCHASES FOR AY 2009-10 HOWEVER THE LD CIT(A) IS CORRECT IN MODIFY ING THE ORDER OF THE AO BY ESTIMATING THE INCOME FOR AY 2010-11. A CONS ISTENT APPROACH THUS HAS TO BE ALLOWED FOR BOTH THE YEARS WHILE EST IMATING THE INCOME BASED ON PAST HISTORY OF THE ASSESSEE WHICH HAS ATT AINED FINALITY. ITA NO. 446/JP/2018 & 84/JP/2019 SHRI RAM AVTAR VIJAY VS. ACIT 6 8. IT IS PERTINENT TO NOTE THAT THE PAST HISTORY OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2006-07 TO 2008-09 DECLARING GP RA TE AND FOR TWO YEARS UNDER CONSIDERATION IS AS UNDER :- A.Y. TURNOVER GROSS PROFIT GROSS PROFIT RATE 2006-07 1 89 21 442 39 84 832 21.06% 2007-08 1 69 56 842/- 35 81 285/- 21.12% 2008-09 22 07 151/- 4 85 570/- 22.00% 2009-10 2 47 86 712/- 48 56 391/- 19.59% 2010-11 2 25 57 214/- 47 40 803/- 21.01% THE AVERAGE G.P DECLARED AND WHICH HAS ATTAINED FIN ALITY FOR PAST THREE YEARS I.E AY 2006-07 TO AY 2008-09 COMES TO 21.39% . FOR AY 2009- 10 THE ASSESSEE HAS DECLARED THE GP AT 19.59% WHIC H IS LESS THAN THE AVERAGE GP DECLARED FOR THE PAST THREE YEARS BY 1.8 % AND THEREFORE ADDITION TO THAT EXTENT IS CONFIRMED AND GROUND NO. 2 OF ASSESSEES APPEAL IS PARTLY ALLOWED. 9. FOR ASSESSMENT YEAR 2010-11 THE GP DECLARED BY THE ASSESSEE AT 21.01% IS HOWEVER IN LINE WITH THE GP DECLARED AND ACCEPTED/ADJUSTED FOR PAST THREE YEARS (TAKING INTO CONSIDERATION ADJ USTED GP FOR AY 2009- 10 AT 21.39%) WHICH COMES TO 21.05%. THUS DESPITE THE REJECTION OF ITA NO. 446/JP/2018 & 84/JP/2019 SHRI RAM AVTAR VIJAY VS. ACIT 7 BOOKS OF ACCOUNT AS THE GP DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS IN LINE WITH GP DECLARED AND ACCEP TED IN THE PRECEDING YEARS THEN NO ADDITION IS CALLED FOR. HENCE IN V IEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION SUSTAINED B Y THE LD. CIT (A) IS NOT JUSTIFIED AND THE SAME IS DELETED AND GROUND NO . 2 IS ALLOWED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR A Y 2009-10 IS PARTLY ALLOWED AND FOR AY 2010-11 IS ALLOWED IN LIGHT OF A BOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 08/11/2019. 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:- 08/11/2019. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAM AVTAR VIJAY JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT CIRCLE-5 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 { ITA NO. 446/JP/2018 & 84/JP/2019} VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASST. REGISTRAR