RAVI KUMAR RAWAT,JAIPUR vs. ACIT CC-2, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.260 and 261/JPR/2026 (Assessment Year:2019-20 and 2020-21)

Ravi Kumar Rawat Vs. ACIT 14, Bhairav Path, Jawahar Central Circle 2 Lal Nehru Marg, Jaipur Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:AATPR 5739A Appellant .. Respondent Assessee by : Sh. Vinod Kr. Gupta & Sh. Mohd. Azharuddin, CA Departmentby : Mrs. Arti Rawat, JCIT Date of Hearing 30.07.2026 Date of Pronouncement 29.10.2026 O R D E R Per Annapurna Gupta, AM:- Both the present appeals relates to the same assessee against the separate orders passed by the Office of the Commissioner of Income Tax, Appeal CIT(A), Jaipur 04 (hereinafter referred to as “Ld. CIT(A)”), dated both 26.12.2025under Section 250of the Income Tax Act,

P a g e | 2 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat 1961(hereinafter referred to as “the Act”) pertain to different assessment years i.e. AY 2019-20 and 2020-21 respectively. 2. The issue it was stated was common and identical in both the appeals, therefore both the appeals were taken up for hearing together and are being disposed of by way of this common consolidated order. 3. Brief facts relating to the case are that, a search and seizure action u/s 132 of the Act and survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of the Rawat (MPR Group) on 22.03.2022 of which the assessee is one of the members. For the impugned year, proceedings u/s 147 of the Act were initiated by issuing notice u/s 148 of the Act. The assessee had filed return for the impugned year declaring income of Rs.21,59,130/- in AY 2019-20 and declaring a total loss at Rs.8,39,202/- for AY 2020-21 in the ITR. The assessee had declared its income from proprietorship concern M/s Precious Jewels (which is mainly engaged in the trading business of precious gem stones) and income from interest under the head Income fromOther Sources. 4. Thereafter the AO noted that during search proceedings at the residence of the assessee, Sh. Ravi Rawat, in his statement recorded u/s 132(4) of the Act, he was asked to explain the source of cash, jewellery and stock found at premises of himself, and his family members and concerns, to which it was categorically admitted by the assessee that said unaccounted cash, jewellery and stock was earned year-to-year from unaccounted business income. For AY 2022-23 the unaccounted cash,

P a g e | 3 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat jewellery and stock offered for taxation was Rs.26,27,60,790/- being as follows:-

P a g e | 4 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat the basis of cost or market price, whichever is less. The AO however held that considering the nature of business carried out by the assessee the fact that it did not maintain stock register made the financial results of the assessee completely unreliable. He contended that the maintenance of stock register was necessary by the assessee to keep a qualitative and quantitative record of the stock being dealt in by him. 7. Accordingly, he held that there was strong and sufficient reasons to conclude that the books of accounts were not reliable and therefore invoking Section 145(3) of the Act, he rejected the books of accounts of the assessee and thereafter resorted to estimate the income of the assessee. Noting that there was a drastic decline in the net profit rate, he made a trading addition of 1% of the total turnover of the assessee to the income of the assessee resulting in an addition of Rs.4,62,494/- in AY 2019-20 and Rs.2,82,446/- in AY 2020-21. 8. The order of the AO was confirmed by the Ld. CIT(A). 9. Aggrieved by the same the assessee has come up in appeal before us raising following grounds of appeal:- ITA No.260/JPR/2026 for AY 2019-20 1. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO of passing the order u/s 147 of the Income Tax Act, 1961. The very action taken u/s 147 of the act and its confirmation, is bad in law and without jurisdiction. Hence, the assessment order as well as the impugned order deserves to be quashed. 2. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld. AO in determining the total income at Rs. 25,98,500/-. The income so determined is unjustified, illegal or excessive. 3. The Ld. CIT(A) has erred in confirming the action of Ld.AO in making an arbitrary trading addition of Rs. 4,62,494/ being 1 percent of total declared turnover of Rs.

P a g e | 5 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat 4,62,49,352/- without appreciating the facts and circumstances of the case. The said action and resultant addition are excessive and deserves a complete deletion. 4. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO in initiating penalty proceeding u/s 270A. The initiation so made and its confirmation is against the law and deserves to be deleted. 5. That the appellant craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing.

ITA No.261/JPR/2026 for AY 2020-21 1. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO of passing the order u/s 147 of the Income Tax Act, 1961. The very action taken u/s 147 of the act and its confirmation, is bad in law and without jurisdiction. Hence, the assessment order as well as the impugned order deserves to be quashed. 2. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld. AO in determining the total income at Rs. (5,57,450). The income so determined is unjustified, illegal or excessive. 3. The Ld. CIT(A) has erred in confirming the action of Ld.AO in making an arbitrary trading addition of Rs. 2,82,446/ being 1 percent of total declared turnover of Rs. 2,82,44,640/- without appreciating the facts and circumstances of the case. The said action and resultant addition are excessive and deserves a complete deletion. 4. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO in initiating penalty proceeding u/s 270A. The initiation so made and its confirmation is against the law and deserves to be deleted. 5. That the appellant craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing. 10. Arguments in writing on behalf of the assessee have been filed before us, but during the course of hearing before us, the solitary contention of the ld. Counsel for the assessee was that addition made on estimate basis in the hands of the assessee was grossly unjustified. To this effect he pointed out that for AY 2021-22, i.e. subsequent assessment year, also assessment had been framed on identical lines in the case of the assessee and in the said case, the AO had adopted the gross profit rate

P a g e | 6 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat returned by the assessee in the immediately preceding year i.e. AY 2020- 21 , one of the years impugned before us, for making addition in the hands of the assessee. Copy of the assessment order was placed before us and our attention was drawn to para 9.5 of the order recording the findings of the AO as stated above:- ….. 9.5 In view of the above facts and circumstances the books of accounts of the assessee are rejected by invoking the provisions of section 145(3) of the I.T. Act. Once the books of account are rejected, I have no alternate but to estimate the income of the assessee. It is also worthwhile to mention that in the case of JCIT VS Kanchwala Gems 288 ITR 10 (2007) the Hon'ble Apex court has held that in a best judgment case there is always a certain degree of guess work and no doubt the authorities should try to make an honest and fair estimate of the income even in a best judgment assessment. The comparative trading results of the assessee for the last 2 years are as under:

Considering the facts of the case along with the previous history, I hereby apply a g.p. rate of 12.84% as declared in the immediately preceding year to the total turnover of Rs. 1,06,41,499/- which will result in total gross profit of Rs. 13,66,368/-as against Rs. 11,58,598/- declared by the assessee. This results in an addition of Rs. 2,07,770/- to the total income of the assessee. …… 11. Ld. Counsel for the assessee contended that when for AY 2021-22, the AO found the gross profit results of the assessee for AY 2020-21 to be correct and reliable, there was no reason for making any adjustment to the income of the assessee in AY 2020-21 which is the impugned year before us. And further he pointed out that the trading results for AY

P a g e | 7 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat 2019-20 showed gross profit which was in consonance with the gross profit reflected in AY 2020-21, which the AO in AY 2021-22 had found to be just and reasonable. He therefore contended that addition made in the hands of the assessee in AY 2019-20 and 2020-21 on an estimation basis at the rate of 1% of the gross turnover of the assessee was therefore grossly unjustified and inconsistent with his stand adopted in AY 2021- 22. This was the only argument which was raised before us. 12. However, Ld. DR supported the order of the Ld. CIT(A) contending that the method adopted for estimating the income of the assessee in both the years was justified afterrejecting the books of accounts of the assessee. 13. We have considered the arguments of both the parties and the only grievance raised before us by the ld. Counsel for the assessee is with respect to the estimation of income of the assessee in both the years before us after rejecting the books of accounts of the assessee. Ld. Counsel for the assessee has contended that the method adopted by the AO in the two years impugned before us i.e. AY 2019-20 and 2020-21 is contradictory and inconsistent to the method adopted by him in AY 2021- 22 in the case of the assessee itself wherein he has categorically found that the Gross profit rate of the assessee for AY 2020-21 to be justified. 14. This fact has remained uncontroverted before us. We therefore find merit in the contention of the assessee that the assessment done by the AO in the present case by adopting a different estimation, is inconsistent and not justified as per his own stand taken in the case of the assessee for AY 2021-22. When the AO himself found the gross profit returned by the

P a g e | 8 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat assessee for AY 2020-21 to be justified when estimating the net profits for AY 2021-22 there was no justifiable reason therefore for him to have made any addition in AY 2020-21 by estimation. Similarly, the ld. Counsel for the assessee has fairly demonstrated before us that the gross profit for AY 2019-20 was in consonance with the gross profit shown in AY 2020-21. We agree with the ld. Counsel for the assessee that the assessment made by the AO in AY 2019-20 also was not justified, considering his stand taken in AY 2021-22. 15. In the light of the above, we hold that the addition made to the income of the assessee of Rs.4,62,494/- in AY 2019-20 and Rs.2,82,446/- in AY 2020-21 is grossly unjustified being inconsistent with his stand taken in A.Y 21-22 in the case of the assessee. The addition made is therefore directed to be deleted. 16. In effect, both the appeals of the assessee are allowed. Order pronounced in the Open Court on 29.10.2026

Sd/- Sd/- (T.R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 29.10.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

P a g e | 9 ITA Nos.260 and 261/JPR/2026 Ravi Kumar Rawat

By Order, Mittali Digitally signed by: Mittali Asst. Registrar DN: CN = Mittali email = ITAT, Jaipur mittaligupta34671@gmail.com C = IN O = Personal Date: 2026.10.30 12:48:39 +05'30'