TMI Blog2011 (6) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... ections are objecting in confirming the addition of ₹ 50,000/- and confirming the rejection of books of account. 6. Both these assesses deals in precious and semi precious stones and jewellery. In case of M/s. Dhandia Gems Corporation, on the sales of ₹ 5,01,51,531/- the assessee declared g.p. rate of 5.19% against g.p. rate of 5.73% declared in the immediately preceding year. The AO further noted that purchases of ₹ 4,32,75,505/- made from 7 parties of Surat and purchases of ₹ 2,82,454/- from two parties of Jaipur remained unverifiable. Therefore, he rejected the books of account placing reliance on the decision of ITAT Jaipur Bench in the case of ACIT vs. Shri Krishan Malpani, 32 Tax World 122 as well the decision of Hon ble Supreme Court in the case of Kachwala Gems vs. JCIT, 288 ITR 10 (SC). To held the purchases non genuine, the AO conducted enquiries. Summons issued were received back. Assessee was required to produce these parties. However, they were not produced. Placing reliance on the report in cases of Ravi Halidia Group and survey conducted by BCTT Wing of the department, it was found that for issuing bogus bills these persons were charging co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) sent the details along with written submissions to the file of AO for his comments. Remand report of the AO was received on 24.11.2009. The AO mentioned that quality-wise details is the main factor in determining the correct price of the item. That the assessee was maintaining stock register on the basis of weight of stone which is in lots. In a particular lot, the quality may be different for each stone and, therefore, an average rate cannot be applied for a whole lot. The two stones of same weight may have rate difference in many multiples. Regarding purchases from Surat parties, the AO again relied on the ADIT Surat s report and observed that these parties were not found at the given address. Thereafter considering the remand report and submissions of the assessee, the ld. CIT (A) gave the following findings recorded at pages 8 to 10 of his order :- Contention of the AR is considered. The appellant has maintained stock register giving quantity in lots. The AO failed to find out any defect in maintenance of stock register except that quality wise stock register was not maintained. In his remand report the AO has stated that even in one lot there are different quality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. The copy of their bank a/c also reveal various other transactions which prove that those concerns were in actual business. Again it is not the case of the AO that summons issued by him to the Surat parties remained unserved. The AO s admission that notice issued u/s 133(6) to 2 out of 7 parties ere returned unserved also indirectly proves that at least in the remaining 5 cases the notices were served. As the genuineness and existence of the Surat parties could not be proved wrong conclusively, purchases made from 7 Surat parties which are supported by other evidences cannot be held as non genuine. On this account also the rejection of books of account cannot be supported. Regarding purchase of ₹ 282454/- from M/s AUM Jewellers and M/s Anil Exports Jaipur summons were issued u/s 131 but the parties did not appear. There are independent investigation carried out by the Deptt. In those cases and some other related cases where it was established that M/s AUM jewelers and M/s Anil Exports were not traceable at the given addresses. The AO deputed his Inspector who has reported that these concerns were physically not existing at the given addresses. Thus, the enquiry conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e declared is 5.19% which is slightly lower than 5.73% g.p. rate of the immediate preceding year. However, turnover has increases from ₹ 3.72 cr to 5.01 cr in this year and therefore, to some extent fall in g.p. rate remains explained. At the same time a lumpsum disallowance of ₹ 50,000/- is confirmed to plug any loop hole or loss of revenue due to unverifiable purchases. The addition of ₹ 10889490/- is therefore, reduced to ₹ 50,000/-. Thus, though the ground of appeal No. 1 is decided against the appellant the second ground of appeal is decided partly in favour of the appellant. 7. Now the department is in appeal here before the Tribunal. 8. The ld. D/R first placed reliance on the order of AO. It was submitted that by taking bills only the assessee manipulates its purchase price to avoid the tax liability. Most of the purchases remained unverifiable and, therefore, the AO was justified in disallowing 25% of purchases and adding the same to the income. 9. On the other hand, the ld. A/R of the assessee placed reliance on the order of ld. CIT (A). Contentions raised before ld. CIT (A) were reiterated. The purchases made from the Surat parties were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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