9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 1578 - HC - Income TaxUnverified purchases - non production of books of accounts - Whether Tribunal was justified on one hand in confirming the finding of unverified purchases shown by the assessee and consequent rejection of books of accounts u/s.145(3) and on the other hand reducing the addition made by the Assessing Officer to merely Rs. 4, 00, 000/- only without giving any justification for the same? - HELD THAT - As one of the partner of the assessee firm was brother of the assessee and even he himself has not produced books of accounts before the Additional Commissioner which has been one of the finding arrived at by both the authorities below. We were inclined to remit the case back in view of the settled law of this Court however counsel for the assessee insisted us at behest of respondent to hear the appeals on merits and therefore we have heard both these appeals on merits. It is well settled that the Tribunal while considering the case and reversing the view taken by the CIT(A) has to justify the reasons for reversing the order of CIT(A). The CIT(A) while considering the case has relied upon the judgment of M/s Gem Paradise 2016 (11) TMI 1400 - RAJASTHAN HIGH COURT which has not been referred by the Tribunal. Apart from that in our considered opinion the decision of Gujarat High Court was rightly relied by the Assessing Officer and will apply in the facts of the case. We are of the considered opinion that the Tribunal has seriously committed an error in reversing the view taken by the CIT(A). No doubt the contention raised by Mr. Singhi counsel for the department that the view taken by the CIT(A) also requires to be modified but while framing the issues this court has framed only one issue. We are of the opinion that the view taken by the CIT(A) is required to be reversed but looking to our limitation we are going back to the order of CIT(A) and the order of the Tribunal is reversed and the view taken by the CIT(A) is confirmed. - Decided against assessee.
Issues Involved:
1. Justification of the Tribunal's decision to confirm unverified purchases while reducing the addition made by the Assessing Officer without giving any justification. Detailed Analysis: Appeal No. 673/2011: Issue: Justification of Tribunal's Decision on Unverified Purchases and Reduction of Addition The assessee, engaged in the business of jewellery and gemstones, could not prove the genuineness of purchases amounting to Rs. 6,97,48,643/-. The Assessing Officer (AO) rejected the books of accounts under Section 145(3) of the Income Tax Act, assessing unverifiable purchases at Rs. 1,74,37,160/-. The Tribunal modified this addition to Rs. 5,00,000/- without providing adequate justification. The High Court found that the Tribunal erred in reversing the CIT(A)'s order, which relied on the Gujarat High Court's judgment. The Tribunal's failure to justify the reduction was a significant error. Appeal No. 668/2011: Issue: Justification of Tribunal's Decision on Unverified Purchases and Reduction of Addition Similar to Appeal No. 673/2011, the assessee failed to verify purchases worth Rs. 4,22,34,219/-. The AO rejected the books of accounts and assessed unverifiable purchases at Rs. 1,05,58,554/-. The Tribunal reduced this to Rs. 4,00,000/- without proper justification. The High Court reiterated that the Tribunal's decision lacked adequate reasoning and upheld the CIT(A)'s reliance on the Gujarat High Court's judgment. Common Legal Precedents and Arguments: 1. CIT vs. M/s Gems Paradise: The Court noted the principle laid down in this case, which was also relied upon by the CIT(A). The Tribunal failed to consider this precedent adequately. 2. Gujarat High Court Judgments: The AO's reliance on judgments like Sanjay Oil Cake Ind. vs. CIT and Vijay Proteins Ltd. vs. CIT was deemed appropriate. These judgments supported the assessment of unverifiable purchases based on a percentage of bogus purchases. 3. Supreme Court and High Court Rulings: Various cases, including Municipal Corporation of Delhi vs. Gurnam Kaur and Saraswathi Oil Traders vs. CIT, were cited to emphasize the importance of factual verification and the binding nature of judicial precedents. 4. Tribunal's Role and Justification: The High Court emphasized that the Tribunal must provide clear reasons when reversing the CIT(A)'s order. The absence of such justification in the Tribunal's decision was a critical flaw. Conclusion: The High Court concluded that the Tribunal committed an error in reversing the CIT(A)'s order without adequate justification. The decision of the CIT(A), which relied on established legal precedents, was reinstated. The appeals were allowed in favor of the department, and a cost of Rs. 5,000/- was imposed on the assessee for each appeal, to be deposited with the Library of the Rajasthan High Court Bar Association.
|
