M/S GEM EXPORTS JAIPUR vs. ASSTT COMMISSIONER OF I T CIRCLE-1 JAIPU

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ITA/597/2011HC RajasthanRJHC02019653201119 July 20173 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the controversy was squarely covered by its own previous decision in CIT, Jaipur-II, Jaipur Vs. M/s Aditya Gems (D.B. Income Tax Appeal No. 234/2008, decided on 2.11.2016). This decision, in turn, relied on Supreme Court and Gujarat High Court judgments, including Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Sanjay Oilcake Industries Vs. Commissioner of Income Tax, and N.K. Industries Ltd. Vs. Dy. C.I.T. The High Court held that the parties are bound by the principle of law pronounced in these judgments. Consequently, the High Court remitted the case back to the Assessing Officer for a fresh decision on the factual matrix. The Assessing Officer was directed to accept the law but verify whether the transactions were genuine based on the aforementioned judgments. The issue was answered in favour of the department, and the matters were remitted back to the Assessing Officer. The assessee was given the liberty to raise all contentions, including the opportunity of cross-examination, before the Assessing Officer. No issue was expressly left undecided.

What were the facts?

These are two appeals filed by M/s Gem Exports (the assessee) against the order of the Income Tax Appellate Tribunal (ITAT). The ITAT had partly allowed the assessee's appeal. The appeals concern assessment years not explicitly stated in the provided text. The core dispute revolves around the genuineness of purchases made by the assessee amounting to Rs. 3,28,67,126/- in one appeal and Rs. 2,61,18,135/- in the other. The assessee contends that these purchases were vouched, detailed, verifiable, the sellers were assessed to Income-Tax and Sales-tax, and payments were made by account payee cheques. The revenue, represented by the Assistant Commissioner of Income-tax, Circle-1, Jaipur, disputed the genuineness of these purchases. The High Court admitted the appeals, framing substantial questions of law.

What were the issues?

1. Whether on the facts, the learned Income Tax Appellate Tribunal was right in law in holding that purchases of Rs. 3,28,67,126/- made by the appellant from various parties are non-genuine/bogus when all purchases are vouched, detailed, verifiable, and all sellers are assessed to Income-Tax and Sales-tax, and payments were by A/c Payee Cheques? (Section 68 of the Income Tax Act, 1961 is implicitly relevant here concerning unexplained cash credits/purchases). 2. Whether on the facts, the learned Income Tax Appellate Tribunal was right in law in holding that purchases of Rs. 2,61,18,135/- made by the appellant from various parties are non-genuine/bogus when all purchases are vouched, detailed, verifiable, and all sellers are assessed to Income-Tax and Sales-tax, and payments were by A/c Payee Cheques? (Section 68 of the Income Tax Act, 1961 is implicitly relevant here). Assessee's Contention: The assessee argued that the purchases were genuine as they were supported by documentation, the sellers were tax-compliant, and payments were made through proper banking channels. Revenue's Contention: The revenue disputed the genuineness of the purchases, which was upheld by the ITAT in part.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 597 / 2011 M/S Gem Exports through its partner Shri Akshat Ghiya S/o Shri Brijesh Ghiya, 103, Ridhi Sidhi, Ahimsa Circle, ‘C’-Scheme, Jaipur in the state of Rajasthan ----Assessee-Appellant Versus The Assistant Commissioner of income tax, Circle-1, Having it’s office at Central Revenue Building, Statue Circle, Bhagwan Das Road, Jaipur in the state of Rajasthan. ----Respondent-Other party Connected With D.B. Income Tax Appeal No. 605 / 2011 M/S Gem Exports through its partner Shri Akshat Ghiya S/o Shri Brijesh Ghiya, 103, Ridhi Sidhi, Ahimsa Circle, ‘C’-Scheme, Jaipur in the state of Rajasthan ----Assessee-Appellant Versus The Assistant Commissioner of income tax, Circle-1, Having it’s office at Central Revenue Building, Statue Circle, Bhagwan Das Road, Jaipur in the state of Rajasthan. ----Respondent-Other party _____________________________________________________ For Appellant(s) : None present. For Respondent(s) : Mr. Anuroop Singhi _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH

Judgment 19/07/2017

1.

In both these appeal common question of law and facts are involved hence they are decided by this common judgment.

2.

By way of these appeals, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has (2 of 3) [ITA-597/2011]

partly allowed the appeal of the assessee.

3.

This court while admitting the appeals framed following substantial question of law:-

3.

1 DB ITA No. 597/2011 admitted on 25.4.2012 “Whether on the facts, the learned Income Tax Appellate Tribunal was right in law in holding that purchases of Rs.3,28,67,126/- made by the appellant from various parties are non-genuine/bogus when all purchases are vouched detailed verifiable & all sellers are assessed to Income-Tax, assessed to Sales-tax & payments were by A/c Payee Cheques?”

3.

2 DB ITA No. 605/2011 admitted on 25.4.2012 “Whether on the facts, the learned Income Tax Appellate Tribunal was right in law in holding that purchases of Rs.2,61,18,135/- made by the appellant from various parties are non- genuine/bogus when all purchases are vouched detailed verifiable & all sellers are assessed to Income-Tax, assessed to Sales-tax & payments were by A/c Payee Cheques?

3.

1 It is not in dispute that controversy involved in this case is squarely covered by the decision of this Court in CIT, Jaipur-II, Jaipur Vs. M/s Aditya Gems, D.B. Income Tax Appeal No. 234/2008, decided on 2.11.2016, wherein it has been held as under: “Considering the law declared by the Supreme Appeal (C) No.8956/2015 decided on 06.04.2015 whereby the Supreme Court has dismissed the SLP and confirmed the order dated 09.12.2014 passed by the Gujarat High Court and other decisions of (3 of 3) [ITA-597/2011] Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, the parties are bound by the principle of law pronounced in the aforesaid three judgments.

4.

We remit back the case to the Assessing Officer for deciding afresh on the factual matrix. The authority will accept the law but the transaction whether it is genuine or not will be verified by the Assessing Officer on the basis of the aforesaid three judgments.”

4.

The issue is answered in favour of the department. The matters are remitted back to the Assessing Officer. It will be open for the asseessee to raise all contentions including opportunity of cross-examination before the Assessing Officer. The appeals stand disposed of. A copy of this order be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Bmg/54-55.

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