SHREE ASHOK KUMAR GUPTA,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,o Jh HkkxpUn] ys[kk lnL; lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 95/JP/2017 fu/kZkj.k o"kZ@Assessment Year: 2013-14 cuke Shri Ashok Kumar Gupta The ITO Vs. K-10, Durgapura Das Path Ward- 4(2) Malviya Marg, C-Scheme,Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABDPG 2277 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by: Shri Saurabh Harsh, Advocate jktLo dh vksj ls@ Revenue by:Smt. Seema Meena, JCIT - DR lquokbZ dh rkjh[k@ Date of Hearing : 29/05/2018 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30 /05/2018 vkns'k@ ORDER PER BHAGCHAND, AM This appeal filed by the assessee emanates from the order of the ld. CIT(A)-2, Jaipur dated 30-11-2016 for the Assessment Year 2007-08 raising therein solitary ground as under:- ‘’That on the facts and in circumstances of the case, the lower authorities grossly erred in imposing a penalty of Rs. 1,72,981/- u/s 271(1)(c ) of the I.T. Act, 1961 on account of filing of inaccurate particulars of income and concealment of income.’’

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

2.1 Apropos solitary ground of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’3.3 I have perused the facts of the case, the penalty order and the submissions of the appellant. The appeal is against the penalties levied under section 271(1)( c) of I.T. Act, 1961 on the addition made for bogus purchases. During the assessment proceeding on verification of purchases relating to 10 parties that is (i) Aman Enterprises (ii) Anupam Exports and Imports (iii) Ayush Enterpries (iv) Bright Jewels (v) Esdire International (vi) Gaurav Exports (vii) G.V. Gems International (viii) Metro Gems House (ix) Nidhi Gems (x) Sumit Gems. The Assessing Officer found that in these cases the notices under section 131 could not be served and same were returned back by the postal authorities. Further in the course of BCIT survey under section 133A of I.T. Act, 1961 also information was available against these parties. The parties could also not be produced by the assessee in spite of adequate opportunity. In view of the above, the Assessing Officer rejected the books of accounts under section 145(3) of I.T. Act, 1961 and also found that the assessee did not maintain the quality and quality details of stock. He applied 25% income on unverifiable of Rs. 22,61,216/- at Rs. 5,65,304/-.

In the appellate proceedings, the CIT (A) relying on the findings in course of survey and search by the BCTT Wingh was found that these parties are not in real business and only providing accommodation entries as well as the assessee's failure to prove the genuineness of purchases, confirmed the addition of 25% of such bogus purchases.

The Assessing Officer then levied a penalty of Rs. 1,72,981/- on the addition made. In the present proceedings, assessee has neither filed any written submissions nor appeared before me.

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

The purchases in question are from parties where information was available with the department as a result of search and survey operation conducted by it that these parties were in the business of giving accommodation entries without actual delivery of goods. The amounts received through cheque were then returned after deducting small amount of commission. The onus thus in these cases on the assessee was to prove that in a normal case of purchase. The payment by cheque under which the assessee was taking shelter and the invoices filed were not enough proof in view of the information available with the department. The Hon'ble ITAT in its finding has clearly held that there is a rampant practice in this case that parties are taking accommodation bills from the market to reduce the profitability.

The Assessing Officer imposed a penalty of Rs. 1,72,981/- on the addition made of 25% of unverifiable purchases. The assessee's plea in such cases usually is that the addition is on an estimated basis, the assessee has discharged his obligation of proving the purchases.

The facts of the case clearly show that consequent to survey and search by the department and subsequent investigation, it has been found that the various parties were found to indulge in providing accommodation bills. Sufficient opportunity was given by Assessing Officer to the assessee and he himself made efforts to verify those purchases. The assessee could not lead any evidence in furtherance of filing confirmatory letters. The parties were not produced for verification. The addition is not on estimate basis as it relates to specific parties from whom purchases were made and in whose cases verifications were sought to be made.

Further, the Hon'ble Jaipur Bench of ITAT in the case of ITO vs Bhansali Trading Corporation (42 ITR (Trib) 254) where similar issue was involved has confirmed the penalty 3

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

levied by the Assessing Officer. The relevant para is reproduced. Reliance is placed on this decision.

‘’6. We have heard the rival contentions of both the parties and perused the material available on the record. The addition made by the Assessing Officer was specific on account of unverifiable purchases on which G.P. @ 25% was applied and added in the income. However, the same was reduced by the ld CIT(A) and applied different G.P. rate. However, the additions were specific. The assessee has not been able to produce these parties for verification and also summons were returned back to the officer unserved. This Bench recently decided this issue in detail in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other cases in ITA No. 187/JP/2012 order dated 22/10/2014 and gave detail findings on unverifiable purchases in number of cases. The department has been able to prove that in gems and jewellery business, some of the parties were giving accommodation entry and some of them accepting the accommodation bill to reduce the profit. The parties names figured in this case also were similar to those cases, therefore, we hold that the addition made by the Assessing Officer was specific and assessee had concealed the income and furnished inaccurate particulars of income. Further the assessee’s explanation is not bonafide. The case laws referred by the assessee are not squarely applicable. In this case, the addition was specific with reference to unverifiable purchases.’’

Thus from these observation, it is clear that the assessee has indulged in activities of taking accommodation entries and hence reduced its profitability. Thus the assessee has furnished incorrect particulars and concealed its income. Thus addition is not made on estimation is made for bogus/ unverifiable purchasing resulting in conclusive concealment of income. In view of the above the penalty under section 271(1)( c) is confirmed. The ground of appeal is dismissed.’’

2.2 During the course of hearing, the ld.AR of the assessee prayed for

deletion of penalty of Rs. 1,72,981/- u/s 271(1)© of the Act sustained by

the ld. CIT(A) for which the ld.AR of the assessee relied on the orders of

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

the ITAT Jaipur bench in the case of Deepak Dalela vs ITO (ITA No.

1027/JP/2013 for the Assessment Year 2006-07 dated 22-12-2016) and in

the case of Euro Jewels vs ITO (ITA No. 712/JP/2017 for the Assessment

Year 2009-10 dated 10-01-2018). The ld.AR of the assessee further

submitted that the issue in question is covered by the above decisions and

the penalty sustained by the ld. CIT(A) may kindly be deleted.

2.3 On the other hand, the ld. DR supported the orders of the

authorities below.

2.4 We have heard the rival contentions and perused the materials

available on record. Brief facts of the case are that the AO during the

course of assessment proceeding noted that the assessee had not

maintained the books of account besides the assessee did not maintain the

quality details of the stock. The AO thus rejected the books of account of

the assessee u/s 143(3) of the Act and made the addition of Rs. 5,65,304/-

i.e. @ 25% on unverifiable purchases of Rs. 22,61,216/-. In appellate

proceedings, the ld. CIT(A) confirmed the addition of 25% on

unverifiable/bogus purchases observing that the assessee is involved in

activities of taking accommodation entries in order to reduce the

profitability. It is further noted that the AO vide his order dated 28-08-

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

2013 imposed the penalty of Rs. 1,72,981/- u/s 271(1)( c) of the Act

which was confirmed by the ld. CIT(A). We have further observed that

on similar issue of imposing penalty u/s 271(1)(c ) of the Act, the ITAT

Jaipur Bench in the case of Deepak Dalela vs ITO (supra) has deleted the

penalty by observing as under:-

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

specific and assessee had concealed the income and furnished inaccurate particulars of income. Further the assessee’s explanation is not bonafide. The case laws referred by the assessee are not squarely applicable. In this case, the addition was specific with reference to unverifiable purchases. Therefore, we reverse the order of the ld CIT(A).” Ld. AR of the assessee has placed reliance on the decision in the case of Shiv Lal Tak Vs CIT (supra) wherein the Hon'ble High Court has held that “in making computation of total income where the income returned has been rejected by rejecting the trading results, finding some discrepancy in the books of account and substituting the same by an estimated figure, in the strict sense, can neither be said to be addition of any amount in the returned income nor disallowance of any amount as deductions claimed. The word ‘‘amount’’ of which additions made or deductions disallowed also denotes reference to specific item of amount added or disallowed as deduction in contrast to substitution of altogether a new estimated sum in place of the income returned. It is a case neither of addition or disallowance but a case of substitution.” In view thereof, the Hon'ble High Court has upheld the decision of the Tribunal for deleting the penalty. In the light of the above decision of the Hon'ble Jurisdictional High Court, we hereby direct the Assessing Officer to delete the penalty as in the present case also the Assessing Officer has estimated the profit by rejecting the books of account. Accordingly, we delete the penalty levied by the Assessing Officer and confirmed by the ld. CIT(A).’’

Respectfully following the decision on similar issue by ITAT Jaipur

bench in the case of Deepak Dalela vs ITO (supra), we direct to delete the

ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur

penalty of Rs. 1,72,981/- u/s 271(1)( c ) of the Act confirmed by the ld. CIT(A). Thus the appeal of the assessee is allowed.

3 .0 In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 30 -05-2018.

Sd/- Sd/- ¼ fot; iky jko ½ ¼HkkxpUn½ (Vijay Pal Rao) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member

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