SHRI RAVI KUMAR RAWAT,JAIPUR vs. INCOME TAX OFFICER, WARD-2-5, JAIPUR

In this appeal, the assessee is aggrieved for reopening of assessment U/s 147 of the Act and also on merit of trading addition made to the extent of Rs. 3,02,073/- after rejecting the books of account.

2 ITA 1013/JP/2018_ Ravi Kumar Rawat Vs ITO 3. Rival contentions have been heard and record perused. The facts in brief are that the assessee is engaged in the business of import and export of precious and semi-precious stones. After completing the assessment U/s 143(3) for the year under consideration, the A.O. reopened the assessment by issuance of notice U/s 148 of the Act on the basis of information received from the Investigation Wing of the department that the assessee has taken accommodation entries in the form of bogus purchases bills of Rs. 23,60,295/- from M/s Sparsh Exports, Surat and Rs. 27,87,133/- from M/s Vitrag Jewels, Surat, entities controlled and managed by Shri Rajendra Jain, an entry operator at Mumbai, in whose case a search was conducted by the Income Tax Department, wherein it was admitted by him that he was in the business of providing accommodation entries. After recording the reasons for reopening, the A.O. has issued notice U/s 148 of the Act. The ld. CIT(A) has confirmed the action of the A.O. after discussing various judicial pronouncements on the issue wherein reopening on the basis of report of Investigation Wing was held to be justified. We also found that there was sufficient reason to believe that there was an escapement of income, accordingly, there is no infirmity in the order of the A.O. in reopening the assessment U/s 147 of the Act.

It was argued by the ld AR of the assessee that the issue under consideration is squarely covered by the decision of the Coordinate Bench in the case of Shri Rajendra Prasad Choudhary Vs ACIT order dated 12/06/2019 in & 1496/JP/2018.

We had carefully gone through the order of the Coordinate Bench and found that the facts in the case of Shri Rajendra Prasad Choudhary Vs ACIT are different from the facts of the instant case. However, we found that in assessee’s own case, the Tribunal have passed the order for similar bogus purchases and upheld the addition by taking G.P. rate at 10.28%. The precise observation of the ld. CIT(A) while upholding the addition by estimating G.P. rate of 10.80% which resulted into trading addition of Rs. 3,02,073/- was as under:

On the other hand, it was contended by the ld DR that after considering all the facts and circumstances and the past history of the assessee, the ld. CIT(A) has very reasonably estimated the G.P. rate of 10.80%, accordingly, no interference is required.

We have considered the rival contentions and carefully gone through the orders of the authorities below and found that under similar facts and 5 ITA 1013/JP/2018_ Ravi Kumar Rawat Vs ITO circumstances for the A.Y. 2006-07, the Tribunal have upheld the addition by estimating G.P. rate of 10.28%. Facts and circumstances during the year under consideration are same, therefore, we respectfully following the order of the Tribunal for the A.Y. 2006-07, we direct the A.O. to restrict the addition by estimating G.P. rate of 10.28% in place of G.P. rate of 10.20% declared by the assessee. We direct accordingly.

In the result, appeal of the assessee is allowed in part. Order pronounced in the open court on 12th July, 2019.