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Income Tax Officer Ward 1 (2) , Jaipur Versus Bharti Malpani and Vica-Versa

2015 (8) TMI 1163 - ITAT JAIPUR

Trading addition - Justification of Gross Profit Rate - bogus purchases - Held that:- This Bench has already decided identical issue in the case of Shri Anuj Kumar Varshney Vs. ITO & others gems and jewellery cases [2015 (4) TMI 533 - ITAT JAIPUR ] wherein detailed findings are given on bogus purchases. Therefore, by respectfully following our own decision the above case on same identical facts and circumstances, we apply 15% N. P. on bogus purchases claimed by the assessee. It is clarified that .....

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sessee had filed reasonable explanation before the Assessing Officer and relied on the decision in case of Lal Chand Bhagat Ambica Ram Vs. CIT (1959 (5) TMI 12 - SUPREME Court) and Harish Kumar Vs DCIT (2002 (5) TMI 218 - ITAT HYDERABAD-B ) and prayed to confirm the order of the ld CIT(A).The addition under the head bogus purchases has already been confirmed by this Bench and the ld DR had not controverted the findings of the ld CIT(A). The depreciation is a statutory deduction, therefore, we up .....

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are as under:- Ground in Revenue s Appeal. On the facts and in the circumstances of the case and in law, the ld CIT(A)-I, Jaipur is justified in:- i) Granting relief of ₹ 10,37,461/- on account of trading addition made by the A.O. ii) Deleting the disallowance of ₹ 68,081/- made on account of ad-hoc expenses made by the A.O. Ground in Assessee s C.O. 1. Under the facts and circumstances of the case the ld CIT(A)-I, Jaipur went wrong in partly confirming the trading addition of ₹ .....

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The Assessing Officer asked the assessee to give the particular of the parties from whom purchases were made during the year under consideration. On verification of the information submitted by the assessee before the Assessing Officer, it was found that the assessee had made mostly purchases from two parties namely M/s Balaji Traders, 14, Jagdamba Colony, Sikar Road, Jaipur and purchase amount was ₹ 36,13,125/- and M/s Handicraft Enterprises, Navratan Complex, KGB Ka Rasta, Johari Bazar, .....

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of these parties. The ld Assessing Officer observed that the BCTT Wing of the Income Tax Department had investigated that these parties were providing bogus bills to the interested parties on commission basis. These parties were figured in the list of bogus entry providers as per list prepared by the BCTT Wing of the department. There was a survey in the case of M/s handicrafts Enterprises on 12/3/2008. Proprietor of M/s handicrafts Enterprises namely Shri Lalit Gupta had admitted that they hav .....

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d collected the required information from them but the Inspector submitted his report on 3/12/2010 and informed the Assessing Officer that there is no institution at the given address on the above name. the ld Assessing Officer again gave reasonable opportunity of being heard to the assessee which has been narrated on page 4-5 of the assessment order and accordingly, he applied Section 145(3) of the Act on book result. The assessee was also not maintained stock register, thus, opening, closing, .....

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16,08,982/- in the income of the assessee. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal partly by observing as under:- I have carefully perused the order of the A.O. and the submissions of the AR. It is a fact that purchases from M/s Balaji Traders and M/s Handicrafts Colony could not be verified and to that extent the assessee failed to discharge its onus of getting the purchases verified. The Hon ble .....

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the G.P. rate of the assessee in such cases. In A.Y. 2007-08 the Hon ble ITAT Bench Jaipur had confirmed a GP rate of ₹ 7.5% on total turnover of ₹ 4,49,53,113.78/- in the case of the appellant. During this A.Y. the turnover has declined to ₹ 3,45,82,024.64/-. It is a well accepted fact that the G.P. rate improves with the decline in turnover. Moreover to cover the loss of revenue on account of bogus purchases the GP rate is estimated at 13%. Thus a trading addition of ₹ .....

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IT(A) reduced it to 8.75% which was finally fixed at 7.5% by this Hon ble ITAT Bench. Copy of reply dated 09/8/2010 showing G.P. and N. P. chart is given on from page No. 22 of paper Book. Further copy of show cause notice and reply filed on 13/12/2010 is appearing from page No. 15 of paper book. Copy of reply filed before Ld. CIT(A) is from page No. 1 to 5 of paper book. 2. Facts of the case under consideration are similar with that of the A.Y. 2006-07and the alleged bogus party is same with wh .....

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see has shown better trading results. As such it was urged that the accounts of the assessee need not be rejected by invoking provisions of Section 145(3). 5. Further submitted humbly that as the declared trading results are better than the trading results of last year as such the decision of Hon ble Jaipur Bench of ITAT in assessee s own case following CIT Vs. Gotan Lime Khanij Udhyog (2002) 256 ITR 243 (Raj.) needs to be followed. 6. Even otherwise the G.P. rate of 11.34% shown in the current .....

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n rejected on the same basis in which last year s accounts were rejected. 8. The net profit of the assessee has also increased which is evident from following chart:- Financial year Sales (Rs) Net Profit NP Rate (%) 2007-08 34582025 1263790 3.65% 2006-07 44953113 736217 1.64% 2005-06 89005491 1005479 1.12% 2004-05 89069773 1027726 1.15% 9. Complete documents were presented before the ld A.O. regarding verification of purchases:- The assessee has made available photo copy of invoices containing s .....

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Court in the case of Baocock Power Ltd. Vs. DCIT reported at 131 Taxman 86 wherein the Hon ble ITAT has held that without confronting the material, on which reliance was placed by the A.O. no adverse inference can be drawn against the assessee. 11. As such the assessee request that in the light of facts and circumstances of the case and particularly considering the previous history of the assessee it is requested that the accounts of the assessee need not be rejected as they reflected true and .....

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s. Therefore, by respectfully following our own decision the above case on same identical facts and circumstances, we apply 15% N. P. on bogus purchases claimed by the assessee. It is clarified that by applying 15% N. P., the addition is worked out at ₹ 17,39,682/-. However, we do not have any power to enhance the addition under the law, therefore, we confirm the addition made by the ld Assessing Officer at ₹ 16,08,982/-. Accordingly, revenue s appeal is allowed and assessee s appeal .....

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llowed expenses @ 20% out of total expenditure claimed by the assessee on the ground that no proper bill vouchers were maintained. Payments were made in cash, self made vouchers, which was not subject to verification and also personal use of car. Thus, he made total addition of ₹ 68,081/-. 7. The assessee challenged this issue before the ld CIT(A), who had deleted the addition by observing as under:- I have carefully perused the order of the A.O. and the submissions of the AR and find that .....

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