Anil Kumar Dangayach Huf v. Chief Commissioner Of Income Tax

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 128 / 2017 Anil Kumar Dangayach Huf ----Appellant Versus Chief Commissioner Of Income Tax ----Respondent _____________________________________________________ For Appellant(s) : Mr. S.L. Poddar _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 10/05/2017 1. 1.By way of this appeal, the appellant has assailed the judgmentand order of the tribunal whereby tribunal has dismissed the appealof the department as well as appeal preferred by the assessee. 2.Counsel for the appellant-assessee has framed the followingsubstantial questions of law:- “i) Whether on the facts and in the circumstances ofthe case and under the law the ld. ITAT was justifiedwhile confirming the addition of Rs.22,16,626/- @15% of the unverifiable purchases amounting toRs.1,47,77,507/- ignoring the results of theassessee in his own case during past A.Y. 2009-10 &2010-11 which were at 5.25% and 5.05%respectfully? ii) Whether the ld. ITAT was justified under law whilesustaining the findings of the ld. AO for rejecting thebooks of accounts of the assessee only on the soleground of non appearance of the vendors before himwhile the Assessee produced entire record pertainingto the purchases made by him and the same hasbeen reproduced by the ld. AO at page no.6 to 10 ofthe order of assessment and did not accept? iii) Whether the ITAT was justified under law whileaccepting the findings of ld. AO regarding treatmentof the purchases amounting Rs.1,47,77,507/- from 8 parties mentioned in para 3.3 of the order asnonexistent parties without showing the report ofthe inspector who made such report of theirnonexistence and the opportunity of cross examinewas also not provided? iv)Whether the ld. ITAT was justified under law tosustain the finding of the AO regarding making oftrading addition which was solely based upon thefact of cash withdrawal by the seller parties fromtheir bank account on clearing of the cheque?” 3.In our considered opinion, the judgment which has been reliedby the tribunal is confirmed by this court in D.B. Income Tax AppealNo.195/2004Commissioner of Income Tax-I, Jaipur Vs. M/s.Lunawat Gems Corporation, Jaipur decided on 2.11.2016 wherein ithas been held as under:- “3. Considering the law declared by the Supreme Courtin the case of Vijay Proteins Ltd. Vs. Commissioner ofIncome Tax, Special Leave to Appeal (C) No.8956/2015decided on 06.04.2015 whereby the Supreme Courthas dismissed the SLP and confirmed the order dated09.12.2014 passed by the Gujarat High Court and otherdecisions of the High Court of Gujarat in the case ofSanjay Oilcake Industries Vs. Commissioner of IncomeTax (2009) 316 ITR 274 (Guj) and N.K. Industries Ltd.Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on20.06.2016, the parties are bound by the principle oflaw pronounced in the aforesaid three judgments. 4. We remit back the case to the Assessing Officer fordeciding afresh on the factual matrix. The authority willaccept the law but the transaction whether it is genuineor not will be verified by the Assessing Officer on thebasis of the aforesaid three judgments.” 4.In that view of the matter, the view taken by the tribunal isjust and proper. Even otherwise in para no.19 while considering thecase on page no.52 more particularly para no.3 & 4 wherein CIT(A)observed as under:- “19. Disallowance @ 25% based on case laws not-applicable The learned Assessing Officer has further applied the ratioof the following case in disallowing 25% of the alleged unverifiable purchases- Sanjay Oil Cake Industries vs. CIT(2008) 10 DTR 153(Guj.) The ld. AO has placed on reliance on sanjay oil cakeindustries vs. CIT reported in (2008) 10 DTR (Guj.) 153.The facts of this case are not applicable in the assesseecase which is discussed as under:- 4.In that view of the matter, the view taken by the tribunal isjust and proper. Even otherwise in para no.19 while considering thecase on page no.52 more particularly para no.3 & 4 wherein CIT(A)observed as under:- “19. Disallowance @ 25% based on case laws not-applicable The learned Assessing Officer has further applied the ratioof the following case in disallowing 25% of the alleged unverifiable purchases- Sanjay Oil Cake Industries vs. CIT(2008) 10 DTR 153(Guj.) The ld. AO has placed on reliance on sanjay oil cakeindustries vs. CIT reported in (2008) 10 DTR (Guj.) 153.The facts of this case are not applicable in the assesseecase which is discussed as under:- 1.In the above case there was very clear finding of theAO and CIT(A) “that some of the alleged supplier who hadissued bills to the assessee was not genuine as they arenot traceable of and that the goods were received fromother parties”. 2.Further there was very clear finding and calculation ofthe CIT(A) which reproduced “the CIT(A) has gonethrough the purchase prices of the raw materialprevalent at the time and rightly case to the conclusionthat the disallowance to the extent of 25% was called for” The Hon’ble court held that ‘accordingly an addition at therate of 25% for extra price paid by the assessee thanover and above the prevalent price is fair andreasonable and we accordingly confirm the finding ofCIT(A). It is very much clear that in the above case there was clearfinding of CIT(A) who gave gone through the raw materialpurchase price prevalent at the time and calculated that25% price has been inflated. Whereas in the assesee’s case the 8 parties are inexistence and traceable. The assessee has provideddocumentary evidence in support of their existencewhich are on record. There is no finding of AO thatthe goods have been supplied from other parties. Furthered, there is no calculation or finding or comparisonwhich proves that the assessee has paid 25% extra priceover and above the prevalent price. In respect of allparties, confirmation of statement of account, sale taxregistration copy, PAN, copy of bill, are produced duringassessment proceedings. 3.Though the payment for purchase are shown to havebeen made by account payee cheques, the entire amounthave been withdrawn by bearer cheques and there is nontrace of identity of persons withdrawing the amounts fromthe bank accounts. Where as in assessee case, there is no such evidenceis available on assessment records. 4.The issue is whether the purchase price paid byassessee is reflected as receipts by the recipients. Theassessee has by state of evidence available of record,made is possible for the recipients not being traceable forthe purpose of inquiry as to whether the payment made bythe assessee have been actually received by the apparentsellers.” Even tribunal in para no.4.3 has observed as under:- “4.3We have heard the parties and perused thematerial available on record. In our view, Tribunal isbound by the judgment passed in the matter of AnujKumar Varshney in ITA No.187/JP/2012 wherein thistribunal has held as under:- Where as in assessee case, there is no such evidenceis available on assessment records. 4.The issue is whether the purchase price paid byassessee is reflected as receipts by the recipients. Theassessee has by state of evidence available of record,made is possible for the recipients not being traceable forthe purpose of inquiry as to whether the payment made bythe assessee have been actually received by the apparentsellers.” Even tribunal in para no.4.3 has observed as under:- “4.3We have heard the parties and perused thematerial available on record. In our view, Tribunal isbound by the judgment passed in the matter of AnujKumar Varshney in ITA No.187/JP/2012 wherein thistribunal has held as under:- “8.6We have heard the rival contentions of both theparties and perused the material available on the record.As discussed in above cases, the material available onrecord established that in Jaipur, a rampant practice is invogue to get and issue accommodation bills of purchasesto deflate the profit. The learned Assessing Officer madedisallowance @ 25% of such bogus purchases on thebasis of decision in the case of Sanjay Oil CakeIndustries and Vijay Protein Ltd. (supra). In our view the25% disallowance appears to be higher side, therefore,keeping in view of the facts of the assessee’s case aswell as other cases as discussed above, we feel that 15%disallowance out of bogus purchases is reasonable onunverifiable purchases and will meet the ends of justice.The rejection of books of account is justified. Theassessee gets relief partly.”We have already held that in case of unverifiablepurchases, the income is to be estimated @ 15% of theunverifiable amount. In the present case the unverifiableamount as noticed by the AO was Rs.1,47,77,507/-,therefore, by applying the ratio laid down by the Tribunalin ITA No.187/JP/2012, 15% of the bogus purchaseswhich remained unverifiable is disallowed. In that view of the matter, the appeal involves factual matrix and no substantial questions of law arises. The appeal as well as stay application stand dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Brijesh 152.