Euro Jewels , Jaipur vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 244/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2004-05

Assistant Commissioner cuke M/s Euro Jewels, of Income Tax, Vs. 2238, Halkiyon Ka Rasta, Johari Circle-2, Jaipur. Bazar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAFE 3220 C vihykFkhZ@Appellant izR;FkhZ@Respondent

izR;k{ksi.k@C.O. No. 32/JP/2012 (Arising out of vk;dj vihy la-@ITA No. 244/JP/2012) fu/kZkj.k o"kZ@Assessment Year : 2004-05

M/s Euro Jewels, cuke Assistant Commissioner of 2238, Halkiyon Ka Rasta, Vs. Income Tax, Johari Bazar, Jaipur. Circle-2, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAFE 3220 C izR;k{ksid@Objector izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri Sidharth Ranka (Adv)

lquokbZ dh rkjh[k@ Date of Hearing : 25/05/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25/05/2015 2 ITA 244/JP/2012 & CO 32/JP/2012_ ACIT Vs. Euro Jewels

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

The appeal by revenue and cross objection by assessee arise

from the order dated 19/12/2011 passed by the learned CIT (A)-III,

Jaipur for A.Y. 2004-05. The ground of revenue's appeal and grounds of

the assessee's C.O. are as under:-

Ground in Revenue's Appeal.

"Whether on the facts and in the circumstances of the case and in law the learned CIT(A) is justified in giving the relief of Rs. 16,66,543/- on account of trading addition to the assessee ignoring the decision of ITAT in the case of M/s Nand Kishore Meghraj."

Grounds in Assessee's C.O. "1. That on the facts and in the circumstances of the case, the results being fair and reasonable, the assessee having shown better Gross Profit Rate and better results, the ld Commissioner of Income Tax (Appeals) grossly erred in sustaining a lump sum trading addition of Rs. 50,000/- when no such estimation was required to be made by him. 1.1 That the ld. Commissioner of Income Tax (Appeals) having followed the decision of the Hon'ble Rajasthan High Court in the case of Gotan Lime Khanij Udyog (256 ITR

243), he having been satisfied that no addition U/s 143(3) as such cannot be made but still chose to sustain an addition of Rs. 50,000/- which is unjustified, bad in law, without evidence, contrary to the material on record and deserves to be deleted.

2. That the ld. Commissioner of Income Tax (Appeals) is correct and justified in deleting the Trading addition to the extent of Rs. 16,66,543/-."

3 ITA 244/JP/2012 & CO 32/JP/2012_ ACIT Vs. Euro Jewels

2. The ld. DR has filed additional ground, which is decided by the ld

CIT(A) and remained to be taken up on the memo of revenue's appeal.

It is requested that the grounds being legal and nature and omitted to

be taken in the memo of appeal goes to the root of the matter,

therefore, the same should be admitted.

3. Both the parties are heard on additional ground, same being

important and going to the root of the matter, we admit the following

additional ground as raised by the revenue:-

"Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) is justified in holding that A.O's action of invoking the provision of Sec. 145(3) is contrary to the provision of law without appreciating that assessee failed to discharge its onus to produce the sellers for verification of genuineness of purchases."

3. Ld. DR contends that issues are covered by ITAT order. The ld

counsel for the assessee at the outset conceded that the ITAT in the

case of Shri Anuj Kumar Varshney Vs. ITO & others gems and jewellery

cases in I.T.A. No. 187/JP/2012 & other ITAs order dated 22/10/2014

has disallowed 15% out of unverifiable/bogus purchases. However, it is

pleaded that there are distinct and separate facts in the assessee's 4 ITA 244/JP/2012 & CO 32/JP/2012_ ACIT Vs. Euro Jewels

present appeal. Consequently, the ratio of the judgment of Anuj Kumar

Varshney's case for calculating income from unverifiable purchases @

15% may not be applied on following reasons:

(i) There is no allegation by the department that the assessee

has endeavored to reduce its profits inasmuch as the assessee has

shown 11.77% G.P. in the return of income, which is better than the

past history of the assessee.

(ii) In respect of the ITAT's reliance on the judgment in the

case of Venus Gems by the Hon'ble Rajasthan High Court also it has

been held that no question of law arises out of the ITAT order however

a pertinent observation has been given that past history of trading

results is an acceptable indicator for making such estimate. Further

reliance is placed on the following case laws:-

(a) CIT Vs. Kiran Industries Pvt. Ltd (Gujarat High Court in Tax Appeal No. 449/2011 dated 12/09/2012)

(b) CIT Vs. Nangalia Fabrics Pvt. Ltd. (Guj) (TA 689/2010 dated 22/04/2013.

(c) DCIT Vs. Jitendrs S. Motani (ITAT Mumbai) ITA 3024-3028 dated 04/08/2009

5 ITA 244/JP/2012 & CO 32/JP/2012_ ACIT Vs. Euro Jewels

(d) Ganpatraj A. Sanghvi Vs. ACIT (ITAT Mumbai) ITA 2826/2013 dated 05/11/2014.

For supporting the assessee's case that in cases of past history and

comparable G.P. no additions in respect of unverifiable purchases may

be made. Further the written submissions are filed by the assessee.

Similarly, a chart in the case of assessee for A.Y. 2004-05 is filed to

indicate that the assessee has demonstrated fair G.P.

4. The ld DR, on the other hand, vehemently contends that the

Hon'ble ITAT in the case of Anuj Kumar Varshney (supra) has

elaborately dealt with each and every aspect of the notorious practice of

resorting to unverifiable purchases by the assessees in jewelers trade.

5. Though, the assessee himself has admitted non-maintenance of

stock register and inability to physically produce the vendors from

whom unverifiable purchases were made. The ld Assessing Officer

rejected the books of account.

6. The ld CIT(A) without assigning any cogent reason has upheld

the books of account without addressing to any of the deficiency in

books of accounts as pointed by the ld Assessing Officer. In view

thereof, the finding of upholding the books of account by ld CIT(A)

deserves to be reversed. It is pertinently mentioned that against the 6 ITA 244/JP/2012 & CO 32/JP/2012_ ACIT Vs. Euro Jewels

ITAT order in the case of Anuj Kumar Varshney (supra) both i.e.

assessees and revenue are in appeals before Hon'ble Rajasthan High

Court. Therefore, it is not the assessee alone who has grievance on the

ITAT order but the revenue is also on the same page. Therefore, in the

given facts and circumstances ITAT's order may be applied.

In the alternate the ld counsel contends that in other cases fixed

for hearing today i.e. ITA No. 798/JP/2011 Alka Jain Vs. ITO and ITA

No. 880/JP/2011 ACIT Vs. M/s JK Jewellers, International, the Bench

has already expressed its opinion to set aside the matter back to the file

of Assessing Officer to decide the disallowable amount in consonance

with the Hon'ble High court judgment in this behalf. The same course of

action may be followed in this case.

7. We have heard the rival contentions of both the parties and

perused the material available on record. In our considered view that

the ld CIT(A) has not brought on record any cogent reasons to overrule

the objections and deficiencies pointed by the ld Assessing Officer for

maintenance of books of account by the assessee. Consequently, we

are upholding the finding of ld Assessing Officer in rejecting the books

of account U/s 145(3) of the Act and reverse the judgment/order of the

ld CIT(A) upholding the books of account.

7 ITA 244/JP/2012 & CO 32/JP/2012_ ACIT Vs. Euro Jewels

Apropos merits, we find substance in the proposition of ld counsel

for the assessee as in the cases of Alka Jain Vs. ITO and ACIT Vs. M/s

JK Jewellers, International, (supra), by the order of the even date, we

have set aside the matter back to the file of Assessing Officer to decide

in consonance with Hon'ble Rajasthan High Court judgment in the case

of jewellery dealers i.e. Anuj Kumar Varshney & others (supra).

8. In the result, both the revenue's appeal and C.O. of the assessee

are allowed for statistical purposes only.

Order pronounced in the open court on 25/05/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 25th May, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- The A.C.I.T., Circle-2, Jaipur.

2. izR;FkhZ@ The Respondent- M/s Euro Jewels, Jaipur.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 244/JP/2012 & C.O. 32/JP/2012) vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar