TMI Blog2021 (6) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the ld CIT(A) in restricting the addition to 15% of unverified purchases. Appeal of the assessee is dismissed. - ITA. No. 235/JP/2020 (Assessment Years : 2007-08) - - - Dated:- 1-4-2021 - SHRI SANDEEP GOSAIN, JM AND SHRI VIKRAM SINGH YADAV, AM Assessee by : Shri P.C. Parwal (C.A.) Revenue by : Shri A.S. Nehra (ACIT) ORDER PER: VIKRAM SINGH YADAV, A.M. The assessee has filed the present appeal against the order of ld. CIT(A)-I, Jodhpur dated 11.12.2019 for the assessment year 2007-08 wherein the assessee has taken the following grounds of appeal:- 1. The Ld. CIT(A) has erred on fact and in law in upholding the rejection of books of accounts U/s 145(3) of the Act, 1961. 2. The ld. CIT(A) has erred on facts and in law in confirming the trading addition of ₹ 58,57,118/- by disallowing 15% of the alleged unverifiable purchases of ₹ 3,90,47,452/- made from 12 parties. 2. Briefly the facts of the case are that the assessee firm is engaged in the business of trading and export of gem stones, diamond, rough, etc. During the year it declared gross profit of ₹ 76,16,983/- on sales of ₹ 17,40,37,587/- giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sales. There cannot be sale without purchase. The AO has also accepted the stock register/ quantitative details. Hence, purchases claimed by the assessee cannot be held to be bogus. 4. It was submitted that in respect of alleged bogus purchases, complete details of 12 parties along with their address, TIN No., telephone no., copy of purchase bills, mode of payment was submitted during the course of assessment proceedings. Payment of the purchases was made by account payee cheque. On these parties summons were issued. Some of the parties have confirmed the sale made by them to the assessee by providing the copy of ITR, bank account, sale bill, etc. as has been accepted by the AO at Pg 4 of the assessment order. However, AO has not provided the details as to which parties have accepted the sale made by them but treated them as bogus only because they have not appeared before him but filed the written submission. This cannot be a reason to treat the purchases made from these parties as bogus/ unverifiable. 5. It was further submitted that the assessee has provided copy of purchase bills of these parties and linked it with the sales made by it. Out of total purchases of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar facts, Hon ble ITAT has applied G.P. rate for estimating the income. In AY 2006-07 G.P. rate was 8.54%. However, it can be noted that the turnover of assessee has increased manifolds as compared to the turnover of last year. In fact AY 2006-07 was the first year of business which started on 18.09.2005. Therefore, G.P. rate of last year cannot be compared with the G.P. rate for the year under consideration. Otherwise also, a businessman in interested in the volume of profit and not in the percentage of profit. In terms of volume, gross profit has increased from ₹ 5,51,602/- to ₹ 76,16,983/-. The decline in G.P. rate is on account of reduced margin on increase in turnover. The position of turnover and G.P. rate in previous and subsequent years is as under:- AY Sales Gross profit G.P. Rate declared Remark 2006-07 ₹ 64,57,290/- ₹ 5,51,602/- 8.54% Assessment was framed u/s 143(3) by making addition of ₹ 17,92,158/- by disallowing 25% of unverifiable purchases. The Ld. CIT(A) confirmed the trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 10,29,930/-. From the above table it can be noted that G.P. rate is fluctuating on year to year basis. It can t be constant. Even in AY 2012-13, Hon ble ITAT considered the g.p. rate of 3.64% as reasonable. In these circumstances even if books of accounts are rejected, it should not necessarily lead to trading addition. 7. It was submitted that it is a settled proposition of law that trading addition need not necessarily made only because books of accounts are rejected. One is to consider the other facts and circumstances of the case. For this reliance was placed on the following cases:- Shankar Export Vs. ACIT 42 DTR 441 dt. 01.06.2010(Jpr.) CIT Vs. Smt. Poonam Rani 41 DTR 194 (Del) Malani Ramjivan Jagannath Vs. ACIT 207 CTR 19 (Raj.) CIT Vs Gotan Lime Khaniz Udhyog 256 ITR 243 (Raj.) 8. Per contra, the ld. DR relied on the finding of the lower authorities and our reference was drawn to the findings of the ld. CIT(A) which are contained at para 4.3 of his order which reads as under:- 4.2 I have considered the facts of the case, assessment order, documents on record and appellant's submissions. The AO noted that the assessee had re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defects pointed out by the Assessing Officer are sufficient to reject the book result U/s 145(3) of the Act. The department had conducted survey and search in various cases as mentioned by the Assessing Officer as well as the learned CIT(A). On investigation, it is found that four parties were also indulged in providing accommodation bills. The sufficient opportunities have been given by the Assessing Officer to prove the genuineness of the purchases. The Assessing Officer himself issued the notices to these parties but notices were returned back by the Postal Department with remark no such party exists at given address . The assessee could not produce these parties for verification during the course of assessment proceedings. Even the Assessing Officer provided sufficient time to the assessee. The unverifiable purchases were ₹ 3,28,40,664/- whereas the assessee exported the goods during the year at ₹ 93,42,720/- during the year under consideration. Therefore, the assessee's claim that all the goods were exported during the year is not correct. Further the learned Assessing Officer had not precluded by the law if the assessee even exported the goods 100% to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, Jaipur in appellant's own case, the disallowance of 25% of total unverifiable purchases appears to be on higher side. Disallowance of 15% out of unverifiable purchases is reasonable in the present case. Held accordingly. The appellant gets partial relief on this ground. Thus, ground No. 1 and its parts are treated as partly allowed. 9. We have heard the rival contentions and perused the material available on record. The ld CIT(A) has affirmed the rejection of books of accounts on account of non-genuine purchases which could not be verified during the course of assessment proceedings relying on the decision of the Hon ble Rajasthan High Court in case of Vimal Singhvi (supra). We donot any infirmity in the said findings of the ld CIT(A) and the same is hereby confirmed. Regarding disallowance of 25% of the alleged purchases, the ld CIT(A) has followed the Coordinate Bench decision in assessee s own case for A.Y 2008-09 and has restricted the disallowance to 15% of alleged purchases. It is also noted from the assessee s assessment history, for instance, A.Y 2010-11, where under similar facts and circumstances of the case, disallowance of 15% of unverifiable purchases were ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
