Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY
आदेश / ORDER
PER R.S.SYAL, VP : These two cross appeals - one by the assessee and the other by the Revenue arise out of the order passed by the CIT(A)-2, Nashik, on 29-03-2016 in relation to the assessment year 2011-12.
2 ITA Nos. 963 and 1178/PUN/2016 M/s. Rajmal Lakhichand
The first issue raised by the assessee in its appeal and the
only issue raised by the Revenue is in relation to a certain
addition made by the Assessing Officer (AO) u/s.40A(2)(a) of
the Income-tax Act, 1961 (hereinafter also called as ‘the Act’).
Briefly stated, the facts of the case are that the assessee is
a trader in Gold, Silver, Diamond and Precious Stones. It made
certain purchases from its sister concerns. The AO, applying
the provisions of section 40A(2)(a), of the Act made an
addition of Rs.1,20,96,250/- in respect of purchase of Gold,
Bullion and Rs.10,00,38,042/- towards purchase of new
ornaments. This resulted into a total disallowance of Rs.11.21
crore u/s.40A(2) of the Act. The assessee challenged the
action of the AO contending before the ld. first appellate
authority that the AO applied the rates at the close of the day
for working out the excessive payments and conveniently
ignored other transactions in which the assessee made
purchases at lower than such standard rates at the close of the
day. As against excess paid calculated by the AO at Rs.11.21
crore, the assessee submitted that in the same way, the AO’s
calculation depicted lower payments at Rs.31.14 crore. It was
thus urged that no addition could have been made as the
3 ITA Nos. 963 and 1178/PUN/2016 M/s. Rajmal Lakhichand
assessee, in fact, made lower payments for purchase of Gold,
Bullion and Gold ornaments by Rs.19.92. crore on overall
basis. The ld. CIT(A) got convinced with the submissions
advanced on behalf of the assessee. He thus deleted the
addition u/s.40A(2) of the Act. He, however, noted that the
assessee’s transaction with its sister concerns were mostly
fictitious without delivery as was apparent from the
assessments made for the immediately preceding assessment
year and other group concerns. He, therefore, held that the GP
rate declared by the assessee at 0.54% could not be accepted
on the ground that the transactions were fictitious. He,
directed the AO to apply GP rate of 0.80% on total sales of
Rs.2,302 crore declared by the assessee. This resulted into a
fresh addition of Rs.5,89,29,258/-. The assessee is aggrieved
by the application of GP rate at 0.80% and making the
addition of Rs.5,89,29,258/-, whereas the Revenue is
aggrieved by the deletion of addition of Rs.11.21 crore made
by the AO u/s.40A(2) of the Act.
We have heard both the sides and gone through the
relevant material on record. It is seen that the AO as well as
the ld. CIT(A) have followed their respective actions for the
4 ITA Nos. 963 and 1178/PUN/2016 M/s. Rajmal Lakhichand
A.Yrs. 2009-10 and 2010-11. These assessment years came
up for consideration before the Tribunal in appeals filed both
by the assessee as well as the Revenue, in the same way as has
been done for the instant year. Vide order dated 16-01-2015, a
copy placed at pages 193 onwards of the paper book, the
Tribunal in ITA Nos. 532 and 663/PUN/2013 etc. has upheld
the deletion of addition u/s.40A(2) of the Act For the A.Y.
2010-11, i.e. immediately preceding assessment year, the
Tribunal has sustained the addition by directing to enhance the
GP rate by 0.09%. Since the facts and circumstances of the instant ground are mutatis mutandis similar to those of the
immediately preceding year, respectfully following the
precedent, we uphold the action of the ld. CIT(A) in holding
that the provisions of section 40A(2) were not attracted and it
is further held that the gross profit rate of 0.63% (0.54% as
declared by the assessee plus addition of 0.09%) be applied.
Thus, the grounds raised by the Revenue are dismissed and
those of the assessee are partly allowed.
The next issue taken up by the assessee in its appeal is
against confirmation of addition amounting to
Rs.2,07,84,694/- u/s.2(22)(e) of the Act.
5 ITA Nos. 963 and 1178/PUN/2016 M/s. Rajmal Lakhichand
The facts apropos this issue are that the AO found the
assessee to have received loans from M/s. Manraj Jewellers
Pvt. Ltd. and M/s. R.L. Gold Pvt. Ltd., with opening balances
at Rs.37.67 crore and Rs.42.76 crore respectively and
corresponding closing balances at Rs.55.69 crore and Rs.60.13
crore respectively. Considering the fact that he had made a
similar addition in the preceding year, the AO made an
addition of Rs.2,07,48,694/-, being, the amount of deemed
dividend of Rs.1.18 crore in respect of M/s. Manraj Jewellers
Pvt. Ltd. and Rs.89.01 lakh in respect of M/s. R.L. Gold Pvt.
Ltd. The ld. CIT(A) sustained the addition, against which the
assessee has come up in appeal before the Tribunal.
Having heard both the sides and gone through the
relevant material on record, it is observed that similar issue
came up for consideration before the Tribunal in assessee’s
own case for the A.Y. 2010-11. A detailed discussion has
been made in the order for such year and eventually the matter
has been restored to the file of AO for a fresh a decision.
Admittedly, the facts and circumstances of the ground for the
instant year are similar to those of the preceding year.
Respectfully following the precedent, we set-aside the
6 ITA Nos. 963 and 1178/PUN/2016 M/s. Rajmal Lakhichand
impugned order on this score and remit the matter to the file of
AO for deciding this issue in conformity with the directions
given by the Tribunal in its order for the preceding year.
The next issue raised in the appeal is against the
disallowance of interest of Rs.3,01,295/- u/s.36(1)(iii) of the
Act.
The ld. AR submitted that similar issue was raised in the
preceding year as well and the Tribunal was pleased to decide
it against the assessee. In view of the candid admission made
by the ld. AR, we countenance the impugned order on this
score. This ground is not allowed.
In the result, the appeal of the assessee is partly allowed
for statistical purposes and that of the Revenue is dismissed.
Order pronounced in the Open Court on 07th February, 2019.
Sd/- Sd/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 07th February, 2019 सतीश
7 ITA Nos. 963 and 1178/PUN/2016 M/s. Rajmal Lakhichand
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-2, Nashik 4. The Pr.CIT-2, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “ए” / DR 5. ‘A’, ITAT, Pune; गाड� फाईल / Guard file. // True copy // 6.
आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
Date 1. Draft dictated on 06-02-2019 Sr.PS 2. Draft placed before author 06-02-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *