TaxTMI 
TaxTMI 
2014 (3) TMI 1132
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....s void ab inito. 2. In the facts and circumstances of the case, the ld CIT(A) has erred in upholding the action of ld. A.O. in rejecting the books of account u/s 145(3) of the Income-tax Act, 1961. 3. In the facts and circumstances of the case, the ld CIT(A) has erred in sustaining the trading addition of Rs. 32,40,627/- by applying the gross profit rate of 15%. 4. In the facts and circumstances of the case, the ld CIT(A) has erred in sustaining the addition of Rs. 18,26,339/- on account of alleged undisclosed profit of silver star. 5. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.'' The grounds raised by the Department in ITA No.461/JP/2013 reads as under:- ''1. On the facts and in the circumstances of the case, the ld CIT(A), Ajmer has erred in reducing the trading addition to Rs. 32,40,627/- as against addition of Rs. 60,94,433/- made by the A.O. and thus allowing relief of Rs. 28,53,806/- through the rejection of books of account u/s 145(3) has been confirmed by him. 2. On the facts and in the circumstances of the case, the ld CIT(A), Ajmer has erred in not appreciating the reasonableness of ....
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.... u/s 153A of the Act, the assessment was made and completed on 23-08-2011. The assessee company derives its income from business of manufacturing of jewellery and trading in gem stones. This company has four separate main units situated at different locations in Jaipur carrying on business from these four different locations in the city of Jaipur besides having other branches at Mumbai and other places across the country. The assessee maintains separate books of account for all these units. These separate units are treated as separate business divisions for the purpose of accounting. The four units at Jaipur are given four different names, like, Gem Unit, Silver Star Unit, Jewellery Division and Nizami Division. The Gem Unit operated from the Sardar Patel Marg, Jaipur is the Registered Office of the assessee-company whereas its Head Office is situated at Metro House (2nd Floor) in Mumbai which is also a separate division for the purpose of accounting. Mumbai Branch is being managed by the main Director namely Shri S.S. Gupta with the help of Shri Khushi Kumar Ameriya, the other director. The Jaipur branches are being managed under overall supervision and control of Shri Khushi Kuma....
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.... providers of this group. Shri Khushi Kumar Ameriya admitted in his statement that most of the turnover appearing in the books of Gem Units of M/s. Clarity Gold (P) Ltd. were bogus and have been arranged through brokers by paying commission to inflate the stock in trade and turnover of the company so that it can obtain higher credit limit from the bank. It was noticed that the assessee has been obtaining such bogus purchase bills from Vijay Group and Lalwani Group for the last 04 years i.e. from financial year 2005-06 onwards. Shri Khushi Kumar Ameriya admitted that the commission between 0.25% to 0.60% was being charged by the above bill providers for giving these purchase bills. He also enumerated the list of concerns of Lalwani Group and Vijay Group in whose names the bogus bills had been obtained. He also confirmed the modus operandi of issuing the bogus bills against commission by depositing cheque and thereafter deducting commission as stated above, withdrawing cash and paying back the cash to the beneficiaries. It was found that the assessee has also obtained such bogus purchase bills from other groups. While answering to Q.No.15, Shri Khushi Kumar Ameriya stated that 95% of....
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....in the table under the head % of premium. The commission is calculated on the basis of amount of bogus purchases. According to Summary-B, the Broker Sh. Anup Kalani had arranged bogus purchase amounting to Rs. 5,27,70,390/- in F.Y. 2006-07 and Rs. 6,28,89,135/- in F.Y. 2007-08. The commission was worked out @ 0.65% at Rs. 7,51,787/- of Rs. 113659525. Similarly, on S.No.2, Sh. Ram Shyam arranged the bogus purchases amounting to Rs. 16,88,54,539/- during F.Y. 2007-08. The deal of Sh. Ram Shyam was also arranged through Sh. Anup Kalani but since Sh. Ram Shyam did not get his brokerage, he came in direct touch with the assessee. On the basis of direct dealing with Sh. Ram Shyam, it was decided that the brokerage will be paid @ 0.40% because the remaining 0.25% was the share of Sh. Anup Kalani. On the basis of new rate, the assessee's liability towards Sh. Ram Shyam was determined at Rs. 6,75,412/- and cheques of different dates were given to Sh. Ram Shyam against that liability. However, the cheques were dishonored or instruction for stop payment was issued. All these cheques are still lying with the brokers and in several cases, notices u/s 138 of Negotiable Instruments have been rece....
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....ould be available in the computer of the same. The pen drive was impounded as annexure A-43 in the course of survey from premises of this unit at Tripolia bazaar, jaipur. The pen drive gives insight into the actual state of affairs and business transactions of the Unit. The natures of transactions appearing there is are as under. 14.1Undisclosed Sale: There are the sales which are actually affected in cash but find no mention in the regular books of accounts. These take place on Kacchi Parchi prepared by Sh. Pawan Khandelwal or Sh. Mahesh Khandelwal employees. The Kacchi Parchi is sent by them to the accountant Sh. Raghu Dutt Tiwari who enters them in the pen drive. The Kacchi Parchi is prepared item wise mentioning the details of jewellery items such as earings, necklace, bangles, etc. The price of each item, date and name of the party is also mentioned in the slip and it is in hand writing of Sh. Pawan Khandelwal or Sh. Mahesh Khandelwal./ The details of cash receipt are also recorded in the pen drive by Sh. Raghu Dutt Tiwari as communicated by Sh. Pawan Khandelwal & Sh. Mahesh Khandelwal. 14.2 Actual sales against which bill is partly issued: As mentioned above, the actual s....
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.... drive which contains complete particulars of such transactions. This account clearly proves beyond doubt the fact of obtaining bogus bills of purchases and making payment through cheques which were subsequently received back in cash after deduction of commission. The concerned persons have admitted this fact in their statements recorded u/s 132(4) of the IT Act. Year wise summary of this account is mentioned at pages 16 to 21 of the assessment order 14.5Fake Sales: These are the sales against which bill is issued but no goods are supplied. The payment received by cheque is paid back in cash by deducting the commission. The income from issuing fake sale bills is booked as "bill commission" receipt in the pen drive. Copy of bills account already reproduced above. 15 As stated earlier detailed examination on the issue, was made, of Shri Raghu Dutt Tiwari Accountant, maintaining and supervising the accounts. He was confronted with above evidences, specifically the entries in pen dreive and he admitted the modus operandi in detail. The relevant part of his statement in Hindi is mentioned at pages 21 to 26 of the assessment order 16. The above evidences are very crucial and are conc....
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....on next hearing. However, vide reply dated 5.8.2011 reproduced below in para 19, the A/R simply denied the statements of Shri Raghu datt Tiwari on the basis of an affidavit filed by him before the District magistrate while challenging the search proceedings. But the basis fact of undisclosed sales and profit of Silver Star unit remained undisputed. On verification of entries of data in pen drive and in regular accounts, the same are not found matching. As such the turnover and of the transactions maintained in pen drive are over and above regular accounts and the profit earned thereon is profit over and above regular profit disclosed. 18. In post search proceedings a detailed query letter was issued on 16.7.2009 for explaining the issues of bogus purchases in view of statements of Shri K K ameriya, bogus sales, discrepancies in silver star unit and submissions of silver star persons but assessee did not respond and opted not to comply the terms of the letter. The basic facts found during the search therefore remained uncontroversial. 19 During the course of present proceedings the assessee company was again required to explain its case on the various findings of search action and....
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.... valuation ranging from Rs. 1 per carat to more than Rs. 1.00 lac per carat. This has also caused our business an irreparable loss as we are at loss to reclassify the stones as they were kept in the lots originally. 2.5 It is also surprising to note that the valuers have managed to value over 14 Tonnes of various Raw-Materials kept in 89 bags in a short span of few hours, whereas it would take several man-days just to open them and keep them for weighment. The volume of finished goods (cut stones) was equally huge and one cannot possibly weigh even in a few hours when packets were to be opened, seen, weighted in weighment machine and again put back in packets, etc. etc. 2.6 It is clear that the total exercise undertaken by the paid personnel's of the department is as per dictated terms and in connivance and is a total farce and deserves to be ignored. 3. With regards to the alleged statements of Shri Khushi Kumar Ameriya, we wish to reiterate as was submitted before the ADIT, Jaipur II, that we have been provided computerized copies of the statements recorded of Shri Khushi Kumar Ameriya. It is requested to provide complete hand-written certified copy of the statements recorde....
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....e parties? That is not the intention of the income-tax Act and if that were the case then how one will conduct the business? If you as an official of the Income-tax Department do not own upto the parties to whom you have issued PAN then it is not the fault of the businessmen. Entire issue of bogus bill being raised by you time and again has instilled fear in the minds of the businessmen and in turn it is leading to collapse of the trade in the city of Jaipur. 4.2 Even the banker has to be satisfied when one opens a bank account, identity is obtained, complete particulars are obtained, all payments are by account payee cheques and this fact can be verified from both the banks by you. 4.3 The goods and the bills are procured from the registered sellers. All the goods purchased have been entered in the stock register maintained by the company. Entire payment towards the purchase of such goods has been made by way of an account payee cheque issued by the assessee to the concerned purchasers. The goods are subsequently sold as it is in the same shape, size and weight or after mixing it with other lots. Entire goods that are sold subsequent to purchase are supported by sales bills is....
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....no addition is required to be made as all sales are vouched, detailed, verifiable and mainly on credit and all purchases are vouched, detailed, verifiable and mainly on credit and all payments of purchases so made have been made by A/c payee cheques and all payments relating to sales have been received by the assessee by A/c Payee cheques. Further verification can be made from the Income Tax Assessments, Sales Tax Assessment and from Banks directly. In view of the above facts and circumstances and earlier letters, no addition is required to be made treating the purchases or/and sales as bogus/tainted in all the units. Further if you so rely on the statements of Shri K.K. Ameriya, Shri Raghu Dutt Tiwari or/and other persons then certainly the assessee has a right to cross-examine these persons as they have stated wrongly under coercion, under pressure and threatening given by the various officers during the course of the search. The statements were recorded when these, persons were not in a proper physical and mental state of mind. These are selfstatements and unless right to cross-examine is permitted, they cannot be relied upon by any stretch of imagination. They may state all....
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....oyees were man-handled, were not permitted to eat properly, meet family members, sleep properly & threatened. We again submit that it is merely a bold statement by them and deserves to be ignored or it has not evidentiary value. 20 Various submissions made by the A/R have been considered carefully and the same have been discussed below. It may be submitted that inspite of specific requirements, the assessee has not been able to produce the parties from whom it has purchased goods, specifically the parties referred by Shri K.K. Ameriya and Shri Raghu Datt Tiwari in their statements. On enquiry by the Inspector of the circle most of he parties were found non existing at the given addresses. As regards to the claim of concerned parties having valid PAN/TIN and payment/receipt through account payee cheques it may be submitted that even after having all these camouflage factors of genuineness, the parties were found to be issuing or obtaining fake sale/purchase bills. Mere payment through cheques does not make a transaction sacrosanct. The fact of payment through cheques is not denied but thereafter the return of the amount in cash, after deduction of commission is important which make....
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....r Mansion Shastri Nagar at page No.1 of Annexure A-3. This is a computer generated sheet giving details of monthwise sales of all the units of the company. Total sales during FY 2008-09 of all the units were of Rs. 1072033904 whereas the assessee has shown sales of Rs. 103628721 only in the audited accounts. Shri Khushi Kumar Ameriya had also admitted sales during F.Y. 2008-09 around Rs. 107 crores in his statements. Unit wise sales details were called for but the same are not tallying with the figures of the month wise sale details found on this page. The A/R was asked to explain the references and it was submitted that it may be on account of certain inter unit stock transfers which might have been considered as sales in the chart. He was asked to reconcile such stock transfer but reconciliation could not be done by him. Other argument of the A/R remained that the figures on this chart are for the purpose of giving sales details to bankers and it does not reflect the correct amount of sales. This argument is not supported with any documentary evidence. Moreover the figures mentioned in the chart are not in the nature of any documentary evidence. Moreover the figures mentioned in ....
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.... not produce stock register. Non maintenance of quantitative stock details definitely leads to conclusion of application of section 145(3) of the IT Act. It may further be seen that in jewelery unit, nizami unit and partly in Silver Star unit, the assessee is manufacturing gold and silver jewellery but no regular manufacturing records or consumption records are maintained so as to verify the consumption of raw material vis a vis production of finished goods. The assessee uses substantial quantity of other alloys such as copper, zinc, cadmium etc for manufacturing of jewellery but there are no records to verify the proportionate part of alloys and how the same was considered in valuation of the finished goods. As such not only the trading activities of gem unit are unverifiable but the trading and manufacturing activities of other units are also not subject to proper verification. During the course of search physical stock found was counted, quantified and valued in the presence of the managers and other persons of the assessee. Since the items of different quality and specification were found expert valuation was got done. From all the premises total stock found was of Rs. 14522483....
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....after search, if it was of the view that valuation made by the search party was faulty or incorrect. It may further be seen that assessee itself admits that there is vast difference in rate of items of one category and under such circumstances if assessee itself was not possible to quantify and value the goods, the figures of stock and sale/purchases in trading accounts are admittedly not subject to proper verification. Deficient stock found clearly proves that either fake purchase bills are introduced so as to increase the stock or the sales are reduced. The submission of Shri KK Ameriya again comes in to the picture that stock statements are inflated by way of showing bogus purchases, debtors and turnover. This fact is a conclusive proof of incorrectness of books of accounts and trading results of the company. 26 Other arguments dated 5.8.2011 and 9.8.2011 of the A/R quoted above regarding credence of statements of Shri K.K. Ameriya and Shri Raghu Datt Tiwari are also of no help to the Company. The arguments are only for the sake of arguments. It may be submitted that both the persons were trusted persons of main director of the company Shri SS Gupta. Shri K.K Ameriay is one of ....
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....les of these units are 100% correct and fool. He has not stated as to correctness of purchases of these units, manufacturing activities of and status of stock maintenance etc. At the cost of repetition the relevant question and is mentioned in Hindi at page 34& 35 of the assessment order . 27 In view of above detailed discussion it may be inferred that accounts of the company are not correct and complete within the meaning of section 145(3) of the IT Act and accordingly the account books and trading results of the assessee company are rejected. For this purpose support is driven from the judgment of Hon'ble Supreme Court in the case of Kachwala Gems reported in 288 ITR 10 (SC) having almost identical facts of bogus claim of purchases through fake purchase bills. There is as plethora of other judgment justifying application of section 145(3) of the IT Act under such circumstances. Some of them may be referred as under:- ITA No.4/JP/2009 dated 18.9.2009 for AY 2005-06 in the case of assessee itself, ACIT v/s Shrikishan Malpani 32 Taxworld 122 (ITAT, JPR) holding that alleged bogus purchases is a defect in the maintenance of books accounts and therefore, the books of accounts rejec....
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....O in AY 2005-06 that purchases from the said 10 parties were fake and therefore he applied GP rate of 13.28% after rejecting the accounts u/s 145(3) of the IT Act. The ld CIT(A) upheld the GP rate at 13%. Subsequently the ITAT has also confirmed the findings of rejection of accounts for the reasons of fake/bogus purchases but reduced the addition to lumpsum amount of Rs. 1 lac. 29. In AY 2006-07, while completing the assessment the AO found that purchases of Rs. 5.40 crores from various parties were not genuine and after applying the ratio of judgment of Hon'ble Gujarat High Court reported in 10 DTR 153(Guj) in the case of Sanjay Oil Cake Industries V/s CIT, he disallowed 25% of such bogus and non genuine purchases. In first appeal, the CIT (A) has upheld application of 145(3) but directed to apply GP rate of 8.5%. Department as well as the assessee are in appeal against the order of the CIT(A) before the ITAT. 30. It may also be a point of worth importance here that one of the sister concern of the assessee M/s. Gem Mart (India) P Ltd dealing almost in similar items and trade has disclosed GP rate of 14.91% in AY 2010-11 when it not made any adjustment through any unverifiable/b....
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.... 9887157 Assessed at Rs. 98,87,160. Tax and interest payable as per the provisions of the IT Act have been calculated as per separate calculation sheet which is part of this order. Demand notice u/s 156 of the IT Act has been issued accordingly. Penalty proceedings u/s 2711(c) of the IT Act have been separately initiated by issue of show cause notice of even date. Prior approval u/s 153D of I.T. Act , 1961 of the JCIT, Central Range, Jaipur has been obtained vide letter No. Jt.cit/CR/Jaipur/2011-12/867 dated 23-8-2011.'' 2.5 Similar computations of income have been made by the A.O. in other four assessment years namely 2006-07, 2007-08, 2008-09 and 2009-10 also. Against these additions the assessee preferred first appeal and for all the five years. He has passed a common order giving part relief to the assessee. Now, both the parties are aggrieved and have filed their respective appeals. There are 10 cross appeals filed for 5 years, in which exactly similar and identical issues are involved. 2.6 We have heard the rival submissions and have carefully perused the entire record. We would like to incorporate, in toto, the ld. CIT(A)'s order from para 6.4 (at page 15) to para para....
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.... not explain the issue of bogus purchases as required by letter dated 16.07.2009. The assessee has not been able to produce the parties from whom the goods were shown to have been purchased and as per enquiry by the inspector of the Circle most of the parties were found non existent at the given address. The bill commission account payment found during the search shows that after issue of cheques for the purchases, the amount was received back in cash. In case of Silver Star Unit, undisclosed sales, partly undisclosed sales, undisclosed purchases, bogus purchases and bogus sales have been pointed out by the A.O. which is evident from the Pen drive impounded Annexure A-3 and supported by Annexure A-45 showing the bill commission account. The assessee has not been able to reconcile the entries in the Pen drive from the regular accounts as noted by the A.O. at Para 17.1 and 17.2 of the assessment order. The A.O. has noted that the transactions and turnover mentioned in the Pen drive are over and above the regular accounts. These transactions regarding purchases and sales have not been reconciled by the appellant with the books of accounts. As per the audited balance sheet and prof....
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....There is no restriction to make the assessment u/s 153A of the I.T. Act after considering the above incriminating documents found during search. The A.O. has to determine the total income based on all the relevant material available on the record. Moreover, even in the regular assessment proceedings made u/s 143(3) A.Y. 2005-06 issue considered by Hon'ble ITAT was regarding bogus purchases from 10 parties only where the rejection of book results u/s 145(3) has been upheld as the assessee could not produce the above parties nor they were found at the given addresses and addition was reduced to lump sum of Rs. 1,00,000. In fact during assessment year 2006-07, the Hon'ble ITAT has upheld the addition of Rs. 60,13,071 on account of bogus purchases from 22 parties by upholding the G.P. rate of 8.5 % applied by the Ld. CIT(A). In the present case, it is apparent that there are various defects regarding the unaccounted purchases as well as unaccounted sales and stock found which have not been reconciled with the books of accounts as is apparent from the assessment order. So, present proceedings can not be treated similar to regular assessment proceedings in view of distinguish....
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....% 14.36% 10 .31% A. It has been mentioned by the A.O. that from above chart it is seen that G.P. of the assessee varies from 7.04% to 16.08%. In the regular assessment for A.Y. 2004-05 purchases from 10 parties were found to be bogus and during scrutiny G.P. rate of 13.28% was applied by the A.O. which was reduced to 13% by the Ld. C1T(A) and to lump sum addition of ?1, 00,000 was upheld by the IT AT, thereby giving G.P. of 12.79%. Similarly, in the A.Y. 2006-07 G.P. of 7.40% was shown by the assessee and Ld. CIT(A) upheld the G.P. to the extent of 8.5% which was confirmed by the Hon'ble ITAT by order dated 23/09/2011. In view of above, the assessee's main contention that G.P. rate of 12.79% was accepted by Hon'ble ITAT in A.Y. 2005-06 by upholding addition of Rs. 1 lac, it may be mentioned that the said addition was only on account of bogus purchase bills of 10 parties and not on account of various discrepancies pointed out by the A.O. during the present proceedings. Similarly in the case for A.Y. 2006-07 where G.P. rate of 8.5% was accepted, issue involved was only bogus purchases from 22 parties only. As such, the facts of the present case are distinguishable i....
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....sis. In this context the A.O. has pointed out following instances: i. From the chart above, it is noted that in A.Y. 2009-10, unaudited book results show G.P. rate of 14.36% in the case of the assessee which has been pointed out by the A.O. in the remand report. ii. It has been pointed out by the A.O. that sister concern of the assessee, M/s Gem Mart India Pvt. Ltd. dealing in similar items and trade has disclosed G.P. of 14.91% in A.Y. 2010-31 when it was not indulging in bogus purchases. Accordingly, keeping in view the G.P. results shown by the assessee in above cases and other factors noted above, it is held reasonable to uphold the application of G.P. rate at 15%, The above G.P. rate on a turnover of Rs. 14,26,90,358 will result in gross profit of Rs. 2,14,03,553 while assessee has declared G.P, of Rs. 1,81,62,927. Thus, the trading addition of Rs. 32,40,627 is sustained and balance amount is deleted. Out of above addition, the AO is directed to give the credit of the additions already made during the proceedings u/s 143(3) on account of G.P. and sustained during appellate proceedings in respect of A.Y. 2005-06 as the same income can not be taxed twice. 7.0 The 4th gro....
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.... drive. Only the brokerage expenses for arranging these bogus purchase are recorded in the pen drive under 'bill commission account' which is also supported by the Annexure A-45, Page 27 to 35 impounded from the business premises of the Silver Star Unit in which cheque issued and cash received back are also mentioned. The A.O. has given the year wise summary of such bogus purchase transactions from 31.03.2005 to 31.03.2009 at Page No. 16 to 21 of the assessment order. e. Fake sales: Income from fake sale bill is booked as bill commission receipt in Pen drive. Sh. R.D. Tiwari, accountant described in details the modus operandi regarding the maintenance of such account in the Pen drive which was agreed upon and confirmed by Sh. Pawan Khandelwal whose statements have been reproduced by the A.O. at page No. 21 to 26 of the assessment order. The A.O. has mentioned that actual transactions reflected in the pen drive are entirely different from those in the regular books of accounts. The purchases are made in cash from different parties but bills are received from different parties. The sales are made in cash to different parties but bills are issued to different parties. Th....
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....ment of the aforesaid persons are taken to be true even then the resultant income on account of such turnover would be nil. The commission paid for obtaining the bogus vouchers or purchase and the commission received on bogus sale vouchers is almost the same. The assessee did not gain anything. The only benefit was that on increase turnover better credit facility was available from the Bank. It is further submitted that the Learned Assessing Officer has not given the details that how these transaction were not matching with the regular books and how these have been considered as genuine and not of bogus purchase and sales. In view of this also the addition made by the Learned Assessing Officer of Rs. 18,26,339/- is most unjustified. " 7.3 A remand report was called from the A.O. regarding the submissions made by the appellant. Same is mentioned at page No. 22 of the CIT (A) order. 7.4 I have considered the contentions of the appellant as well as assessment order. It is seen that the various unaccounted sales of Silver Star Unit contained in the Pen drive were provided to the assessee on 10.06.2011 as per the panchnama for proceedings as per the remand report. The income based o....
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....ration, rejection of books of accounts u/s 145(3) and addition to the extent of application of G.P. rate of 15% is upheld. The above G.P. rate on a turnover of Rs. 54,66,42,847 will result in gross profit of Rs. 8,19,96,427 while assessee has declared G.P. of Rs. 4,04,52,067. Thus, the trading addition of Rs. 4,15,44,360 is sustained and balance amount is deleted. Out of above addition, the AO is directed to give the credit of the additions already made during the proceedings u/s 143(3) on account of G.P. and sustained during appellate proceedings in respect of A.Y. 2006-07 as the same income can not be taxed twice. 9.3 The 4lh ground as regarding addition on account of undisclosed profit of Silver Star Unit was involved in the A.Y. 2005-06 also where the addition on account of undisclosed income from the Silver Star Unit has been upheld. Similar being the facts during the year under consideration, the addition of Rs. 6,91,371 is upheld. 10.0 In the result, assessee's appeal is partly allowed. A.Y. 2007-08, Appeal No. 238/2011-2012 11.0 The various grounds of appeal are as under:- 1. That the order passed by the A.O. u/s 143(3) is void authorities below initio. 2. In th....
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....ion towards PF of Rs. 76,166 and ESI of Rs. 30,937 were not deposited within the time prescribed under the relevant law. Accordingly, the appellant pointed out that PF' of Rs. 73,843 was paid within the financial year which may be allowed u/s 43B of the I.T. Act. However, the A.O. disallowed both the above amounts totaling to Rs. 1,07,103 u/s 36(l)(va) of the I.T. Act. During appeal appellant has submitted as under: "The Ld. AO has disallowed the claim of the following payments - (i) Contribution towards PF Rs. 76,166/- (ii) Contribution towards ESIC Rs. 30,937/- The Id AO has disallowed the above payments as the same were not made in time allowed u/s 36(l)(va). The IdAO did not agree with the submission of the assessee that the payment of ? 73,843/- against PPF contribution was made within the financial year and the same required to be allowed u/s 43B. There is no delay in the payment of ESIC. We are enclosing audited copies of the statement forming part of audit report as annexure 'D' which reflect the details of payments of PPF and ESIC. The perusal of the statements discloses no delay in the payment of ESIC. The Id AO has also not given a details of delay in th....
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....ting the books of accounts u/s 145(3) of the Income Tax Act, 1961. " "3. In the facts and circumstances of the case the Assessing Officer has erred in applying a G.P. rate of 17% and thereby making trading addition of Rs. 7,15,57,073/-." "4. In the facts and circumstances of the case the Assessing Officer has erred in making addition of Rs. 31,69,281/- on account of alleged undisclosed profit of Silver Star." These grounds of appeal are decided as under 14.1 The issue raised in first ground of appeal has been decided in Appeal for A.Y.2005-06 and this ground of appeal has been dismissed. On the same reasoning this ground of appeal is dismissed here also. 14.2 The 2nd and 3rd grounds being regarding rejection of books of accounts u/s 145(3)and application of G.P. rate were involved in A.Y. 2005-06 where the rejection of the books of accounts u/s 145(3) has been upheld and application of G.P. rate of 15% has been sustained. Similar being the facts during the year under consideration, addition to, the extent of application of G.P. rate of 15% is upheld. The above G.P. rate on a turnover of Rs. 97,77,58,373 will result in gross profit of Rs. 14,66,63,755 while assessee has decla....
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....r Unit was involved in the A.Y. 2005-06 also where the addition on account of undisclosed income from the Silver Star Unit has been upheld. Similar being the facts during the year under consideration, the addition of ?23,19,672 is upheld. 17.0 In the result, assessee's appeal is partly allowed.'' 2.7 Before us, both the parties who are aggrieved by the order of the ld. CIT(A) have come in appeal and have reiterated their earlier arguments. The ld. AR filed the written submission in addition to his paper book. We extract and incorporate the assessee's written submission from page no 3 to page 20 as under: 'Assessee's Ground No. 1 :- That the order passed by the Learned Assessing Officer u/s 143(3)/ 153A is void abinitio. 1. No justification for action u/s 153A - In the case of the assessee search and seizure operation took place u/s 132(1) on 20.05.2009. As mentioned in the assessment order on page 2 the background of the search was that in Financial Year 2007-08 during the course of surveys conducted by the BCTT wing of the department it transpired that the assessee was obtaining large amount of purchase bills of jewellery from Vijay Group and Lalwani Group with....
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....e statement unless so authorized. More so he himself has retracted from his statement and as such no reliance could be placed on a statement recorded at the wee hours under threat and duress. In any case his cross examination was must. The Learned Assessing Officer is confused. Even in the case of an assessee individual if his statements are recorded the opportunity of cross examination is allowed in such a case also. So even if the Learned Assessing Officer treated Shri Ameria as director representing the company even then the opportunity of cross examination is a must. Therefore in the absence of cross examination of these persons the assessment proceeding stand vitiated. The assessee was not allowed a fair play. The principles of natural justice stand violated. It is settled principle of law that the Assessing Officer cannot utilized any material or document without affording any opportunity of cross examination to the assessee. Therefore also the assessment order needs to be quashed. Similarly the Learned Assessing Officer has utilized the information gathered from BCTT Wing during the course of surveys conducted by it without supplying the same to the assessee. The following c....
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....ed by him. On the facts and in the circumstances of the case, Learned CIT(A) Ajmer, has erred in not appreciating the reasonableness of GP rate of 17% adopted by the Assessing Officer based on the peculiar modus operandi of obtaining bogus purchases bills being adopted by the assessee, which has been confirmed by Shri Khushi Kumar Ameriya, one of the directors from whose custody lists of 271 parties indulged in issuing bogus sale bills to various concerns were found coupled with the fact that on the group concerns M/s Gupta Emerald Mines Pvt Ltd (GEMPL) doing same business has declared GP rate of 17.98% in Assessment Year 2009-10. Assessee's Ground No. 2 & 3:- I n the facts and Circumstances of the case the Learned CIT(A) has erred in upheld the action of the Learned Assessing Officer in rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961. In the facts and Circumstances of the case the Learned CIT(A) has erred in sustaining the trading addition of Rs. 32,40,627/- by applying GP rate of 15%. The Learned Assessing Officer has estimated the GP rate of the assessee at 17% against declared GP rate on the basis of GP rate declared by the one of the assessee gr....
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....extent the order framed by the Learned Assessing Officer is vitiated and trading additions made are illegal, unlawful and unjustified. Notwithstanding this submission the addition is challenged on the following ground also. 2. BCTT survey results not provided to the assessee - In the assessment order the Learned Assessing Officer has referred to surveys conducted by BCTT wing of the department in Financial Year 2007-08 it is mentioned in the assessment order that during the course of surveys it was gathered that assessee was obtaining bogus bills and Vijay Group and Lalwani Group. Before completing assessment the Assessing Officer has not provided either the results of surveys or the statement of Shri Anil Kumar Lalwani and Others so that assessee could furnish his defense. Hence when the material used by the Assessing Officer was not provided to be assessee, the assessment proceedings become bad in law. 3. In turnover of bogus purchase and sales the margin is Nil - In the entire assessment order the main thrust of the Learned Assessing Officer is on the issue of bogus voucher of purchase and sale. In this regard statements of Shri K.K. Ameria, Shri Raghu Dutt Tiwari and Sh....
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.... Year 2005-06 the issue of bogus purchases cropped up and the Learned Assessing Officer has applied GP rate of 13.28% as against GP rate of 12.72% disclosed by the assessee. This GP rate was subsequently reduced by the Learned CIT(A) to 13%. The Hon'ble ITAT later on sustained addition only of Rs. 1,00,000/- against a turnover of Rs. 14,26,09,000/- meaning thereby the GP rate was increased only by 0.07%. In other words as against GP rate disclosed 12.72% GP rate applied was 12.79%. The above facts the GP rate for the Assessment Year 2005-06 virtually stood accepted by the Hon'ble ITAT despite rejection of books of accounts. In these circumstances no addition was warranted during the year under consideration also. The same issue could not be reconsidered by the Learned Assessing Officer in the absence of any additional evidence. 5. History of the case is the best guidance - Since the Assessment Year 2005-06 already stood completed u/s 143(3) and issue of GP rate on account of bogus purchase vouchers stood finally decided by the Hon'ble ITAT the Learned Assessing Officer was not within his powers to the reconsider and re-decide the issue. The order of the Hon'ble ITAT does not ....
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....cts are different as highlighted table below - Sr.No. Facts of M/s Gupta Emerald Mines Private Limited Fact of M/s Clarity Gold Private Limited and other cases of the group 1. The GP rate disclosed for Assessment Year 2009-10 of 17.98% is an exception, no such GP rate was disclosed in earlier years. The GP rate in earlier years in Assessment Year 2007-08 & 2008-09 is of 4.39% and 4.66%. During the Assessment Year 2009-10 higher GP rate was a result of abnormal increase in the price of tanzanite which is not a comparable feature with other cases. In this case and other cases of the group there is no business of tanzanite, hence the GP rate of 17% was not applicable. 2. The particular example taken by the department for Assessment Year 2009-10 is not comparable with the other group cases because M/s Gupta Emerald Mines Private Limited has declared losses in earlier years and GP rate of 4.39% and 4.66% has been declared in Assessment Year 2007-08 & 2008-09 respectively when the business activities were very normal. This establishes that the abnormal GP rate in Assessment Year 2009-10 was only due to sudden and unexpected abnormal price hike of tanzanite. In the case of M/s Cl....
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....ese the determination of income from Silver Star is without any justification. The assessee has already challenged that all the addition made on the basis of statement of all the three persons including Shri Raghu Dutt Tiwari as no cross examination was allowed. In view of this the entire exercise by the Learned Assessing Officer is without any basis. The most surprising thing is that the Learned Assessing Officer has choose the beneficial part of the statement in favour of revenue and the other part of the statement was not considered by the department. The statement regarding profits of Silver Star Unit is discussed in para 17 on page 26 of the assessment order. The Learned Assessing Officer did not given any consideration to the statement of Shri Raghu Dutt Tiwari Accountant of the assessee. In reply to question no. 14 Shri Raghu Dutt Tiawari has stated his reply which is reproduced on page no. 22 of the assessment order. Therefore when the profit of actual business is available and the declared profit is equal to actual profit no addition should be made separately on this account or set off of declared profit should be given. The assessee has been consistently arguing that eve....
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....ons and going through the records, we have found that the impugned issue regarding gold jewellery stands covered by the decision of the Tribunal rendered in assessee's own case ( in ITA No. 04/JP/2009 dated 18-09-2009) on identical facts and the copy of this order is enclosed at pages 272 to 276 of the assessee's paper book. We have gone through this Tribunal order dated 18-09-2009 (supra) and we are convinced that the facts of this case are exactly identical to the facts in the present appeal. The Tribunal has taken the following view in its order. "4. Considering the above submissions, we find substance in the contention of the Ld. A/R to this extent that after furnishing all the necessary information and details about the transaction and the above named parties supported with documents like purchase bills issued by them, their registration with Sales Tax Department and PANs issued to them besides this fact that the payment against the purchases has been made to them through account payee cheques, the assessee had tried to establish the genuineness of the claimed transactions as it could have been expected from a prudent purchaser. Had the assessee been able to produce ....