Principal Commissioner Of Income Tax-I, New Central Revenue Building Statue Circle, Jaipur Raj v. M/S Jadau Jewellers & Manufactures (P) Ltd., B

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 196 / 2017 Principal Commissioner of Income Tax-I, New Central Revenue Building Statue Circle, Jaipur Raj. ----Appellant Versus M/s Jadau Jewellers & Manufactures (P) Ltd., B-1, Trimurti Circle, Govinf Marg, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE INDERJEET SINGHJudgment 04/09/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby Tribunal hasdismissed the appeal of the department. 2.Counsel for the appellant has framed following substantialquestion of law:- “1. Whether on the facts and circumstances ofthe case and in law the decision of Hon'ble ITATwas perverse in restricting trading addition toonly Rs.9,52,599/- out of the total tradingaddition of the Rs.91,37,068/- made by the AOignoring the facts brought out by a qualifiedchartered Accountants in special Audit Reportwhich is based on very reasonable analysis of thefacts derived from the seized material andinformation provided by the assessee duringSpecial Audit process? 2. Whether on the facts and circumstances of thecase and in law the Hon'ble ITAT was justified inconfirming the order ld. CIT(A) deleting the disallowance of Rs.2,71,50,538/- made by theAO u/s 40A(3) of the IT Act, 1961 ignoring thefacts that addition u/s 40A(3) is entirely differentfrom trading results of the assessee and thisallowance has been made out of the transactionin the seized duplicate/parallel books of accountsand not out of the regular books of accounts? 3. Whether on the facts and circumstances of thecase, the finding of the Tribunal is perverse,contrary to the record and untenable in the eyeof law? 3.Counsel for the appellant has taken us to the order of AO aswell as CIT(A) and contended that the view taken by the AO isrequired to be restored. 3.1The first issue is now covered by the decision of this courtand tribunal has followed the same. 3.2In that view of the matter, the tribunal has not committedany error in deciding question no.1. 3.3Regarding question no.2, the issue is covered by the decisionof Punjab and Haryana High Court in CIT vs. Smt. Santosh Jain(2008) 296 ITR 324 P & H wherein it has been held as under:- We are of the view that when income of theassessee was computed by applying gross profitrate, there was no need to look into theprovisions of Section 40A(3) of the Act, asapplying the gross profit rate takes care ofexpenditure otherwise by way of cross chequealso. We are in agreement with the view taken bythe Allahabad High Court in Banwari LalBanshidhars case (supra) to the following effect: ...The question for consideration is when nodeduction was sought and allowed under Section40A(3), was there any need to go into Section40A(3) and rule 6DD(l). We see force in the viewtaken by the Appellate Tribunal that when theincome of the assessee was computed applying the gross profit rate and when no deduction wasallowed in regard to the purchases of theassessee, there was no need to look into theprovisions of Section 40A(3) and rule 6DD(J). Nodisallowance could have been made in view ofthe provisions of Section 40A(3), read with rule6DD(J) as no deduction was allowed to andclaimed by the assessee in respect of thepurchases. When the gross profit rate is applied,that would take care of everything and there wasno need for the assessing officer to makescrutiny of the amount incurred on the purchasesby the assessee. 3.4Similar view was taken by the same High Court in DeputyCommissioner of Income Tax (Central) vs. Gobind Ram (2015)229 Taxman 492 (P &H ). the gross profit rate and when no deduction wasallowed in regard to the purchases of theassessee, there was no need to look into theprovisions of Section 40A(3) and rule 6DD(J). Nodisallowance could have been made in view ofthe provisions of Section 40A(3), read with rule6DD(J) as no deduction was allowed to andclaimed by the assessee in respect of thepurchases. When the gross profit rate is applied,that would take care of everything and there wasno need for the assessing officer to makescrutiny of the amount incurred on the purchasesby the assessee. 3.4Similar view was taken by the same High Court in DeputyCommissioner of Income Tax (Central) vs. Gobind Ram (2015)229 Taxman 492 (P &H ). 3.5The third issue regarding perversity does not arise as there is no perversity in the judgment of the tribunal. 3.6No substantial question of law arises. 4.Hence, the appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Bmg/6.