TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 834
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....gross profit of Rs. 5,51,602/- on sales of Rs. 64,57,290/-giving G.P. rate of 8.54% in last year. The AO observed that the parties mentioned at page 2 of the assessment order have admitted before the authorities of Investigation Wing of Income Tax Department that they had no business activities of purchase and sales of precious or semi-precious stones or any related items and actually indulged in issuing bogus bills. The onus to prove the genuineness of purchase lies on the assessee. The assessee was asked to produce the parties but it failed to do so. The assessee cannot absolve from his onus of proving genuineness of purchases by simply suggesting the department to call these parties or make direct enquiry through inspector. The summons issued were either returned back with the postal remark "The addresses were not available on account of incomplete address or stated to have shifted from that place" or where summons have been served instead of attending before the undersigned, written submission alongwith copy of ITR, copy of bank account, copy of sale bills etc. have been filed by them. Accordingly, the AO after relying on the decision of Gujarat High Court in case of Sanjay Oil....
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....the extent of purchase of Rs. 2,72,69,607/-. Thus, purchases to the extent of 69.84% is linked to sales. Some of the purchases could not be linked to sales as they were mixed with other stock and thereafter sold. In any case where purchases are linked to sales, G.P. margin earned by the assessee is tabulated as under:- Name of party Amount of purchases Amount of sales Gross Profit G.P. Rate Royal Gems & Arts 26,03,913 27,52,191 1,48,278 5.39% Anupam Exports & Imports 67,10,763 70,41,725 3,30,962 4.70% Swapan Shree Jewels 28,85,953 30,49,980 1,64,027 5.38% Rishabh International 58,27,522 61,00,165 2,72,643 4.47% Shyam International 13,23,601 13,89,216 65,615 4.72% RidhiSidhi Jewellers 15,94,080 16,67,978 73,898 4.43% Resu Exports 63,23,775 66,41,990 3,18,215 4.79% Total 2,72,69,607 2,86,43,245 13,73,638 4.80% From the above, it can be noted that the G.P. rate from the alleged non verifiable purchases is 4.80% which is better than the overall G.P. rate of 4.38%. Hence, the purchases cannot be presumed to be inflated. 6. It was further submitted that the Ld. CIT(A) has confirmed the addition by disallowing 15% of alleged unverifiable....
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....icted by Ld. CIT(A) to Rs. 7,85,442/- by disallowing 15% of unverifiable purchases. The appeal filed by the department was dismissed by Hon'ble ITAT vide order dt. 13.05.2016. Thereafter, assessment was reopened u/s 148 which was quashed by the Hon'ble ITAT vide order dt. 18.09.2018 in ITA No.800/JP/18. 2011-12 Rs. 18,72,73,797/- Rs. 46,46,077/- 2.48% Accepted u/s 143(1). Thereafter in reassessment proceedings u/s 147 addition of Rs. 22,79,279/- was made by treating the purchases made from M/s Kothari Impex as nongenuine vide ex-parte order dt.03.12.2018. 2012-13 Rs. 7,51,43,437/- Rs. 17,05,291/- 2.27% Assessment was framed u/s 143(3) by making trading addition of Rs. 20,51,880/- by applying g.p. rate of 5%. The Hon'ble ITAT vide order dt. 17.11.2016 in ITA No.430/JP/16 restricted the trading addition by applying g.p. rate of 3.64% resulting into trading addition of Rs. 10,29,930/-. From the above table it can be noted that G.P. rate is fluctuating on year to year basis. It can't be constant. Even in AY 2012-13, Hon'ble ITAT considered the g.p. rate of 3.64% as reasonable. In these circumstances even if books of accounts are rejected, it should not necessarily lead to tr....
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.... As regards to the disallowance of 25% out of alleged unverifiable purchases received from as many as 12 parties, Here it is relevant to discuss assessee's case pertaining to AY 2008-09, wherein the AO after invoking provision of section 145(3), disallowed 25% of unverifiable purchases. Further, the CIT(A) upheld the AO's action of rejection of books of account and disallowance of 25% out of unverifiable purchases. The Hon'ble ITAT, Jaipur in appellant's own case in ITA No. 241/JP/2012 for A.Y. 2008-09 restricted the disallowance to the extent of 15% of unverifiable purchases. The relevant extract of the judicial pronouncements is reproduced as under:- "11.5 We have heard the rival contentions of both the parties and perused the material available on the record. The assessee has not challenged the rejection of book result as defects pointed out by the Assessing Officer are sufficient to reject the book result U/s 145(3) of the Act. The department had conducted survey and search in various cases as mentioned by the Assessing Officer as well as the learned CIT(A). On investigation, it is found that four parties were also indulged in providing accommodation bills.....
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.... assessment proceedings. The addition on account of unverifiable purchases were made in A.Y. 2006-07. Thus, past history of the assessee is not reliable and doctored. This finding is also got support from the recent decision of Hon'ble Rajasthan High Court in the case of Venus Arts & Gems order dated 20/8/2014 wherein it has been held that order passed by the ITAT for confirming G.P. after rejection of books of accounts on the basis of various discrepancies found by the Assessing Officer, there is no question of law involved in such profit estimates. Even the assessee may be 100% exporter which does not preclude the Assessing Officer from enquiring into the N.P. on unverifiable purchases is reasonable in this case. Accordingly, the assessee's appeal is partly allowed." Therefore, following the decision of Hon'ble ITAT, Jaipur in appellant's own case, the disallowance of 25% of total unverifiable purchases appears to be on higher side. Disallowance of 15% out of unverifiable purchases is reasonable in the present case. Held accordingly. The appellant gets partial relief on this ground. Thus, ground No. 1 and its parts are treated as partly allowed." 9. We have h....