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TMI Blog2012 (7) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance effected @ 10% qua certain expenses, viz. on staff welfare, conveyance, telephone, repair and maintenance, general office expenses. The reason stated, which is the same for all the assessment years, is lack of proper supporting vouchers, being self-made, and without proper authentication - where a disallowance qua such expenses has been made earlier, or subject to examination under sec. 143(3) assessment there can be no review of the matter in sec. 153A proceedings - I.T.A Nos. 35 to 37JP/2012 - - - Dated:- 25-5-2012 - S/SHRI R.K. GUPTA, SANJAY ARORA, JJ. Assessee by Shri Manish Agarwal, CA-AR Revenue by Shri D.K. Meena, Jr. DR O R D E R Per Sanjay Arora, AM: These are the set of three Appeals by the Assessee, directed against the Order by the Commissioner of Income-tax (Appeals)-Central, Jaipur ( CIT (A) for short) dated 19-10-2011, dismissing the assessee's appeal for the assessment year (A.Y.) 2002-03 and 2003-04 and partly allowing the assessee's appeal for the A.Y. 2004-05 contesting its assessments u/s. 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) vide different orders dated 23-12-2009 for the assessment years (A.Ys.) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the fact that payments there-against were made by the cheques, and the bills issued carried the registration number, were considered by the AO as not genuine. The registration is issued on the basis of the application made and the documents submitted along with, and not on the basis of any spot verification by the registering authority. Registration, by itself, would not preclude a person from engaging in bogus transactions. As such, the fact of the payment being through the banking channel or purchases being from registered dealers, would not prove the purchases. The persons operating these paper concerns, no doubt, exist, but do not engage in any actual trade, and only issue accommodation bills for a charge. The books of accounts were rejected in view of not being correct and complete, and in view of the unverifiable purchases afore-referred, a G.P. Rate of 30% in its respect was estimated, i.e., qua unverifiable purchases, as upheld by the tribunal in the case of Ravi Haldia (in ITA Nos. 320-321/JP/2008 dated 31-07-2008). The assessee having already disclosed a G.P. rate of 18.62% in its relevant firm, M/s. Akash Gems, trading addition for the balance 11.38% on sales qua the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 145(3) of the Act for all the years, claiming, inter alia, that the alleged unverifiable purchases were backed by proper bills and, secondly, stock records were maintained to the extent feasible. Each and ever piece of stone has different characteristics and composition and, therefore, it was not possible to maintain the stock register quality-wise. Quantity-wise stock register in terms of weight is though kept. The Revenue s case stands duly reflected in the orders of the authorities below, which were relied upon. The Findings 5. We have heard the parties, and perused the material on record. 5.1 The addition (s) being agiated would thus need to be examined, firstly, from the stand point of the validity or otherwise of the invocation of sec. 145(3) of the Act and the concomitant rejection of assessee s book results, and then on the merits of the addition on quantum. The Revenue s action in invoking s. 145(3) is confirmed. This is principally for the reason that the assessee's books of accounts do not meet the test of deduction of true and correct profits there-from in the absence of proper stock records, only whereupon can they be considered as correct and comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition or production, and which again requires cost of bought out goods/raw material, i.e., not only would its characteristic and/or composition be required to be assessed for the purpose, but also its cost ascertained with reference to the acquisition cost, identifying the relevant purchase bills, and which do not bear any such details in respect of such characteristics or composition? 5.2 Now coming to the assessee's justification for non-maintaining the stock records, though it by itself the assessee not even admittedly maintaining any alternative method, howsoever gross it may be - cannot be a ground for not rejecting the books of accounts of the assessee as a reliable source for deducing true and correct profits, the relevant test being unsatisfied. We are again unable to agree with the assessee's claim of it being not possible to do so as every piece of stone has a different characteristic and composition. Does the assessee imply that there is no basis for valuing such goods? In fact, if so, that would be a serious, if not an intractable, impediment, in the creation of a market for such goods, which in fact is very much in place. Unless the quality of goods is reducibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case. We have deliberately not referred to other defects, i.e., of unverifiable purchases, inflicting the assessee's accounts. This is for the reason that such purchases, as would be apparent, are insignificant in relation to the volume of the turnover. As such, it cannot be said that the assessee s accounts are vitiated, and cannot be relied upon at all. The AO has the option and, rather, only needs to disallow the whole or part of such purchases, without disturbing the book results on the basis of the accounts. However, without doubt, the books of accounts having been confirmed for rejection in the present case, the said infirmity becomes an additional, relevant factor. In this regard, we may add that the onus to prove its purchase as genuine is on the assessee, and when year after year similar issues having come up in its case for the preceding as well as the succeeding years - of such suppliers suddenly disappearing, without antecedents, when called upon for production in the course of assessment proceedings, is clinching enough to nail the purchases as not genuine. The case law relied upon, though a subject matter of trite law, is more than adequate, and not met by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case for assessment year 2002-03, similarly computed, is thus upheld. The assessee gets part relief. We decide accordingly. 7. The next issue arising in these appeals is the disallowance effected @ 10% qua certain expenses, viz. on staff welfare, conveyance, telephone, repair and maintenance, general office expenses. The reason stated, which is the same for all the assessment years, is lack of proper supporting vouchers, being self-made, and without proper authentication. The same stood confirmed by the ld. CIT(A) on the same basis, referring to his earlier decision on the same issue for the preceding and the succeeding three years, vide his order dated 30-09-2011 in ITA No.341 to 343/09/10. Aggrieved, the assessee is in appeal before us. 8. We have heard the parties, and perused the material on record. The assessee s case is that no fresh material to impugn the disallowance has been found in search for the Revenue to have effected disallowance/s in assessment u/s. 153A of the Act. The assessee, in our view, having not been able to controvert the specific findings by the authorities below, which are a subsisting aspect of its assessment for different years, continuing fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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