INCOME TAX OFFICER, WARD-6-2, JAIPUR vs. J K JEWELLERS INTERNATIONAL, JAIPUR

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ITA 1118/JPR/2018Status: DisposedITAT Jaipur06 June 2019AY 2014-155 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the Gross Profit (GP) declared by the assessee for the assessment years in question was higher than the GP declared in earlier years which were accepted, no further addition was warranted. The AO was directed to verify the GP rates and not make additions if they were found to be as declared.

What were the facts?

The Assessing Officer (AO) reopened the assessment and made an addition of 25% on alleged bogus purchases after rejecting the assessee's books of account. The CIT(A) deleted this addition. The Revenue appealed against the deletion.

What were the issues?

Whether the addition made by estimating profit on bogus purchases was justified when the assessee's declared GP rate was higher than previous accepted rates.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 148,Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES “A”, JAIPUR

Before: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA No. 1117 & 1118/JP/2018

Hearing: 20/05/2019Pronounced: 06/06/2019

ORDER PER: R.C. SHARMA, A.M. These are the appeals filed by the revenue against the separate orders of ld.CIT(A)-3, Jaipur dated 06/07/2018 for the A.Y. 2009-10 and 2014-15 respectively in the matter of order passed U/s 143(3) read with Section 148 of the Income Tax Act, 1961 (in short, the Act).

2.

Common grievance of the Revenue in both the appeals relate to deleting the addition by the ld. CIT(A) which was made by the A.O. by 2 ITA 1117 & 1118/JP/2018_ ITO Vs J.K. Jewellers International estimating the profit of 25% on bogus purchases after rejecting the books of account U/s 145(3) of the Act.

3.

Rival contentions have been heard and record perused. The facts in brief are that there was an information with the department regarding the assessee having made bogus purchases. Accordingly, the A.O. reopened the assessment and made addition by estimating of 25% on alleged bogus purchases which was deleted by the ld. CIT(A) after following the decision of the Tribunal in assessee’s own case for the A.Y. 2008-09. Now the revenue is in appeals before the ITAT.

4.

The ld AR of the assessee placed on record the order of the Tribunal dated 28/3/2018 in assessee’s own case wherein similar addition of 25% was made by the A.O. and the ld. CIT(A) upheld the addition on ad hoc basis to the extent of Rs. 3.00 lacs out of total addition of Rs. 1,19,58,445/-. The Tribunal for elaborately dealt with the issue in its order dated 28/03/2018 and held that when the G.P. declared by the assessee for the year under consideration is more than the G.P. for the earlier assessment year which was accepted by the Tribunal, no further addition was warranted.

1.

3 ITA 1117 & 1118/JP/2018_ ITO Vs J.K. Jewellers International 5. The ld AR also placed on record the G.P. declared by the assesee during the A.Y. 2005-06 to 2009-10 as well as the G.P. declared for the A.Y. 2009-10 to 2014-15, which are as under: A.Y. Turnover Gross Profit G.P. Rate 2009-10 87369875.00 16499885.00 18.89% 2008-09 69102064.00 12818695.00 18.55% 2007-08 41047348.00 7127117.00 17.36% 2006-07 52321252.00 8736740.00 16.69% 2005-06 Firm was constituted on 01/04/2005 Average GP rate 17.87% A.Y. Turnover Gross Profit G.P. Rate 2014-15 81784481.00 15359976.00 18.78% 2013-14 145655485 24986022.00 13.39% 2012-13 74397796.00 13400769.00 11.07% 2010-11 46751902.00 8598887.00 18.39% 2009-10 87369875.00 16499885.00 18.89% Average GP rate 16.10% 6. In view of the above declared G.P. it was contended by the ld AR that the G.P. during the A.Y. 2009-10 at 18.89% was better than the average G.P. of 17.87%, no further addition was warranted. Similarly for the A.Y. 2014-15, the G.P. declared by the assessee at 18.78% was better than the average G.P. of 16.10%, accordingly, no further addition was warranted. He has further relied on the finding of the Tribunal in assessee’s own case.

7.

On the other hand, the ld DR has relied on the order of the A.O.

4 ITA 1117 & 1118/JP/2018_ ITO Vs J.K. Jewellers International 8. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that similar addition made with regard to bogus purchases has been deleted by the Tribunal after observing that the G.P. rate for the year under consideration is more than the G.P. rate for the earlier A.Y. which was accepted by the Tribunal. The precise observation of the Tribunal was as under:

“Accordingly, we set aside the orders of the authorities below and delete the addition confirmed by the ld. CIT(A) when the GP declared by the assessee for the year under consideration is more than the GP for the earlier assessment which was accepted by this Tribunal. Though the assessee has raised other grounds regarding the validity of reopening, however, once the appeal of the assessee is decided in favour of the assessee on the merits and the addition is deleted, then the legal issue raised by the assessee becomes academic in nature and accordingly we do not propose to go into the same.”

9.

We had carefully gone through the order of the Tribunal as well as the order passed by the lower authorities and found that as per charts produced hereinabove for the A.Y. 2005-06 to 2009-10 and 2009-10 to 2014-15, the G.P. declared in both the years is more than the average G.P., accordingly, no addition is warranted. However, the A.O. is directed

5 ITA 1117 & 1118/JP/2018_ ITO Vs J.K. Jewellers International to verify the correctness of G.P. rate calculated by the assessee which has been reproduced above and we direct the A.O. not to make any addition if the G.P. for the A.Y. 2009-10 is found to be at 18.89% and for the A.Y. 2014-15 at18.78%, which are more than the G.P. rate declared by the assessee in terms of the above charts.

10.

In the result, both the appeals of the Revenue are allowed for statistical purposes in terms indicated hereinabove.

Order pronounced in the open court on 06th June, 2019.

Sd/- Sd/- ¼fot; iky jko½ ¼jes'k lh 'kekZ½ (VIJAY PAL RAO) (RAMESH C SHARMA) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06th June, 2019 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The ITO, Ward 6(2), Jaipur. 1. izR;FkhZ@ The Respondent- M/s J.K. Jewellers International, Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 1117 & 1118/JP/2018) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत

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