C I T CENTRAL JAIPUR vs. SMT MAMTA HALDIA

(1 of 10) HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 202 / 2012 Commissioner of Income Tax-Central, New Central Revenue, Building, Statue Circle, Jaipur(Raj) ----Appellant Versus Smt. Mamta Haldia, W/o Ravi Haldia, C-18, Jyoti Marg, Bapu Nagar, Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 203 / 2012 The Commissioner of Income Tax-Central, New Central Revenue Building, Statue Circle, Jaipur (Raj) ----Appellant Versus Smt. Mamta Haldia W/o Shri Ravi Haldia C-18, Jyoti Marg, Bapu Nagar , Jaipur ----Respondent D.B. Income Tax Appeal No. 204 / 2012 The Commissioner of Income Tax, Central, New Central Revenue Building . Statue Circle, Jaipur(Raj) ----Appellant Versus Smt. Mamta Haldia W/o Shri Ravi Haldia C-18, Jyoti Marg, Bapu Nagar , Jaipur ----Respondent D.B. Income Tax Appeal No. 205 / 2012 Commissioner of Income Taz- Central, New Central Revenue Building, Statue Circle, Jaipur (Raj) ----Appellant Versus Shri Dinesh Haldia, Prop. M/s, D.H. Exports, C-18, Jyoti Marg, Bapu Nagar, Jaipur. ----Respondent

(2 of 10) D.B. Income Tax Appeal No. 206 / 2012 Commissioner of Income Tax-Centra, New Central Revenue Building Statue Circle Jaipur (RAj) ----Appellant Versus Shri Dinesh Haldia Prop., D.H. Exports, C-18, Jyoti Marg, Bapu Nagar, Jaipur ----Respondent D.B. Income Tax Appeal No. 208 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle , Jaiupr(Raj) ----Appellant Versus Shri Ravi Haldia, C-18, Jyoti Marg, Bapu Nagar, Jaipur a ----Respondent D.B. Income Tax Appeal No. 214 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur (Raj) ----Appellant Versus Shri Ravi Haldia, C-18, Jyoti Marg, Bapu Nagar, Jaipur. ----Respondent D.B. Income Tax Appeal No. 216 / 2012 The Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur (Raj) ----Appellant Versus Shri Ravi Haldia, C-18, Jyoti Marg, Bapu Nagar, Jaipur ----Respondent

(3 of 10) [ITA-202 / 2012] _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Mahendra Gargieya with Mr. Amit Jindal, Mr. ML. Borad ____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 24/08/2017 1. In these appeals, common question of law and facts are involved therefore, they are decided by the common judgment. 2. By way of these appeals, the appellant has challenged the judgment and order of the tribunal whereby the tribunal has dismissed the appeal preferred by the department and partly allowed the appeal of the assessee modifying the order of the CIT(A). 3. This court while admitting the appeal has framed following substantial questions of law:- D.B. Income Tax Appeal No.202/12 admitted on 03.01.2014 (i) Whether the Tribunal was justified in not only confirming the deletion of addition of Rs.12,92,947/-, but, further deleting the addition of Rs.4,30,983/- confirmed by CIT(A), thereby, deleting the addition of Rs.17,23,930/- made on account of unverifiable purchases, despite upholding the rejection of books of accounts u/s 145(3) of the Act? (ii) Whether the Tribunal was justified in reversing the finding recorded by CIT(A) as well as Assessing Officer and thereby, despite confirming the rejection of books of accounts u/s 145(3), reducing the trading addition of Rs.9,11,038/- to merely Rs.2,16,220/- by applying gross profit rate of 15% as against 30%?”

(4 of 10) [ITA-202 / 2012] D.B. Income Tax Appeal No.203/12 admitted on 03.01.2014 “(i) Whether the Tribunal was justified in not only deleting the addition of Rs.52,22,973/- made on protective basis by the Assessing Officer and confirmed by CIT(A), but, even confirming the deletion of addition of Rs.48,16,027/- made on account of excess stock found during search and valued by a registered valuer thereby, deleting the entire addition of Rs.1,00,39,000/-?” (ii) Whether, the Tribunal was justified in reversing the finding recorded by CIT(A) as well as Assessing Officer and thereby, despite confirming the rejection of books of accounts u/s 145(3), reducing the trading addition of Rs.2,50,116/- to merely Rs.52,819/- by applying gross profit rate of 15% as against 30%, which was applied by relying upon Tribunal’s own order in the case of Ravi Haldia?” D.B. Income Tax Appeal No.204/2012 admitted on 03.01.2014 “1. Whether the Tribunal was justified in deleting the addition of Rs.2,96,016/- made on account of unverifiable purchases by the Assessing Officer and confirmed by CIT(A), despite upholding the rejection of books of accounts u/s 145(3) of the Act? 2. Whether the Tribunal was justified in reversing the finding recorded by CIT(A) as well as Assessing Officer and thereby, despite confirming the rejection of books of accounts u/s 145(3), reducing the trading addition of Rs.2,22,208/- to merely Rs.43,673/- by applying gross profit rate of 17% as against 30%?” D.B. Income Tax Appeal No.205/12 admitted on 03.01.2014 “1. Whether, the Tribunal was justified in deleting the addition of Rs.13,00,000/- made on account of unverifiable purchases by not only confirming the deletion of addition of Rs.9,75,000/-, but, further deleting the addition of Rs.3,25,000/-, which was even confirmed by CIT(A), despite upholding the rejection of books of accounts?” 2. Whether, the Tribunal was justified in

(5 of 10)

[ITA-202 / 2012] reversing the finding recorded by CIT(A) as well as Assessing Officer and thereby, despite confirming the rejection of books of accounts u/s 145(3), reducing the trading addition of Rs.1,95,137/- to merely Rs.87,447/- by applying gross profit rate of 20% as against 30%?” D.B. Income Tax Appeal No.206/12 admitted on 03.01.2014 1. Whether, the Tribunal was justified in discarding the valuation of registered valuer with respect to excess stock found during search, thereby, not only deleting the addition of Rs.97,74,948/-which was made by the Assessing Officer and confirmed by CIT(A) on protective basis, but even confirming the deletion of addition of Rs.93,41,052/-, thus, deleting

the

entire

addition

of Rs.1,91,16,000/-?” 2. Whether the Tribunal was justified in reversing the finding recorded by CIT (A) as well as Assessing Officer and thereby, despite confirming the rejection of books of accounts u/s 145(3), reducing the trading addition of Rs.1,75,393/- to merely Rs.76,489/- by applying gross profit rate of 20% as against 30%, which was applied by the Assessing Officer by relying upon Tribunal’s own order in the case of Ravi Haldia, without giving and finding of the same?” D.B. Income Tax Appeal No.208/12 admitted on 03.01.2014 “1. Whether the Tribunal was justified in reversing the finding recorded by CIT(A) as well as the Assessing Officer with respect to addition of Rs.10,16,558/- made on account of unverifiable purchases made by assessee in cash and from unregistered dealers for which no details whatsoever were filed and further, confirming the deletion of addition of Rs.26,24,674/- made by the Assessing Officer on account of unverifiable purchases, thereby deleting the entire addition of Rs.36,41,232/-? 2. Whether, the Tribunal was justified in reversing the finding recorded by CIT(A) as well as Assessing Officer and thereby, applying gross profit rate of 18% as against 30%, which was

(6 of 10) [ITA-202 / 2012] applied by the Assessing Officer by relying upon Tribunal’s own order for Assessment Year 2004- 05?” D.B. Income Tax Appeal No.214/2012 admitted on 03.01.2014 “1. Whether the Tribunal was justified in reversing the finding recorded by CIT(A) as well as Assessing Officer and thereby reducing the addition of Rs.35,66,906/- to merely Rs.6,50,514/- by applying gross profit rate of 15% as against 30%, even when it has confirmed the rejection of books of accounts by invoking section 145(3) of the Act?” D.B. Income Tax Appeal No.216/2012 admitted on 03.01.2014 1. Whether, the Tribunal was justified in discarding the valuation of registered valuer with respect to excess stock found during search, thereby, not only deleting the addition of Rs.3,50,12,643/- which was made by the Assessing Officer and confirmed by CIT(A), but even confirming the deletion of addition of Rs.3,54,24,420/-, thus, deleting the entire addition of Rs.7,04,37,063/-?” 2. Whether the Tribunal was justified in reversing the finding recorded by CIT (A) as well as Assessing Officer and thereby reducing the trading addition of Rs.2,33,963/- to merely Rs.77,243/- by applying gross profit rate of 18% as against 30%, which was applied by the Assessing Officer by relying upon Tribunal’s own order for Assessment Year 2004-05?” 4. Counsel for the appellant contended that the second issue is now covered by the decision of this Court in D.B. Income Tax Appeal No.201/2010 dated 02.11.2016 which reads as under:- “3. Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal (C) No.8956/2015 decided on

(7 of 10) [ITA-202 / 2012] 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 the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2009) 316 ITR 274 (Guj) and N.K. Industries 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.” 5. However, with regard to issue No.1, counsel for the respondent has relied upon the decision in the case of Chetnaben Shah Legal Heir of Jagdishchandra K.Shah Vs. The Income Tax Officer, War 10(3) decided on 14.07.2016 wherein the court has observed as under:- 6. We have heard learned Counsel for the respective parties and perused the records of the case. We are of the view that the CIT (Appeals) has rightly appreciated the case based on the sound principles of law and has also considered the statement made by the assessee at the relevant point of time. We are of the view that in light of the observations made by this Court in the case of Kailashben Manharlal Chokshi v. Commissioner of Income-tax (supra), mere speculation cannot be a ground for addition of income. There must be a some material substance either in the form of documents or the like to arrive at a ground for addition of income. Considering the ratio laid down in the above decision and in the facts of the present case, we are of the view that the issue raised in this Appeal is required to be answered in favour of the assessee and against the Department.” 5.1 He has also relied on the decision of the Gujarat High Court in

(8 of 10) [ITA-202 / 2012] the case of Kailashben Manharlal Choshi Vs. Commissioner of Income Tax reported in (2008) 14 DTR 0257 decided on 01.09.2008 wherein it has been observed as under:- “13. He has further relied on the Instructions dt. 10th March, 2003, issued by the CBDT, which states that instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based on credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. This Instruction further states that it is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the IT Department. Similarly, while recording statement during the course of search and seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under Section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not (sic) to disbelieve the retraction made by the AO (sic-assessee) and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition

(9 of 10) [ITA-202 / 2012] of Rs. 6 lacs on the basis of statement recorded by the AO under Section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee.” 5.2 He has also relied on the decision of this court in the case of Commissioner of Income Tax Vs. Shri Satya Narayan Pandey in D.B. Tax Appeal No.620/2011 decided on 31.07.2017 wherein this court has observed as under:- “Taking into account the concurrent finding of both the Courts below, the appeal deserves to be dismissed. Apart from that the judgments cited by the counsel for the appellant will not apply in the facts of the present case. The second question is not a question of law hence not required to be decided.”

(10 of 10) [ITA-202 / 2012] in tabular form as follows:- Sr. No. Appeal No. Ques. 1 Ques. 2 1. 202/2012 In favour of department against the assessee In favour of department against the assessee 2. 203/2012 In favour of assessee against the department In favour of department against the assessee 3. 204/2012 In favour of department against the assessee In favour of department against the assessee 4. 205/2012 In favour of department against the assessee In favour of department against the assessee 5. 206/2012 In favour of assessee against the department In favour of department against the assessee 6. 208/2012 In favour of department against the assessee In favour of department against the assessee 7. 214/2012 In favour of department against the assessee 8. 216/2012 In favour of assessee against the department In favour of department against the assessee 8. Accordingly, all the appeals are disposed of as indicated above. On the question of bogus purchase, the matter is remitted back to the A.O. It will be open for the parties to lead their evidence including the cross-examination of the witnesses. It will also be open for both the sides to produce documents which are relevant for deciding the issue. (INDERJEET SINGH)J. (K.S.JHAVERI)J. Jyoti Item No.55-62