Tribunal allows Revenue's appeal, sets aside penalty. Upholds CIT (A)'s decision on accounts.

The Tribunal allowed the Revenue's appeal for statistical purposes, setting aside the penalty under section 271(1)(c) pending further proceedings based on the quantum appeal decision. The Tribunal upheld the CIT (A)'s decision to reject books of accounts under section 145(3) and the unverifiability of purchases, restricting the addition to the average GP rate based on past history. The adjournment application was rejected, leading to an ex parte hearing where the assessee did not appear. The Tribunal's order dated 12.11.2015 was initially recalled on 11th January, 2017, with the final decision made on 26th December, 2017.

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Issues:
1. Rejection of adjournment application and hearing conducted ex parte.
2. Cancellation of penalty under section 271(1)(c) by CIT (A).
3. Recalling of Tribunal's order dated 12.11.2015.
4. Consideration of unverifiable purchases and rejection of books of accounts.

Issue 1: Rejection of adjournment application and hearing conducted ex parte:
The appeal by the revenue was directed against the order of ld. CIT (A)-2, Jaipur for the assessment year 2009-10. Despite an adjournment request by Shri Rohan Sogani from M/s. R. Sogani & Associates, Chartered Accountants, the Bench rejected the adjournment due to lack of authority letter and previous adjournment granted to the assessee. Consequently, the hearing proceeded ex parte as no one appeared on behalf of the assessee.

Issue 2: Cancellation of penalty under section 271(1)(c) by CIT (A):
The ld. CIT (A) had deleted the penalty of Rs. 26,00,000 imposed under section 271(1)(c) based on a Tribunal order dated 12.11.2015, which was subsequently recalled on 11th January, 2017. The Tribunal finally decided the quantum appeal on 26th December, 2017, restricting the addition to the average GP rate based on past history. The Tribunal upheld the CIT (A)'s decision, citing the rejection of books of accounts under section 145(3) and the unverifiability of purchases.

Issue 3: Recalling of Tribunal's order dated 12.11.2015:
The Tribunal's order dated 12.11.2015, which initially set aside the quantum appeal to the AO, was later recalled on 11th January, 2017, leading to the final decision on 26th December, 2017. The Tribunal's decision in the quantum appeal was based on the rejection of books of accounts and the assessment of income using the average GP rate of past years.

Issue 4: Consideration of unverifiable purchases and rejection of books of accounts:
The Tribunal considered the rejection of books of accounts under section 145(3) due to unverifiable purchases. The AO pointed out discrepancies in the closing stock valuation and unverifiable sales, leading to the rejection of books of accounts. The ld. CIT (A) upheld this decision based on a previous Tribunal ruling for the assessment year 2006-07. Consequently, the addition made by the authorities on unverifiable purchases was restricted to GP rate addition based on past history, and the penalty under section 271(1)(c) was set aside pending the outcome of the quantum set aside proceedings.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, setting aside the penalty under section 271(1)(c) pending further proceedings based on the quantum appeal decision.

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