HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 617 / 2009 C I T Jaipur ----Appellant Versus M/S Antiquariat ----Respondent Connected With D.B. Income Tax Appeal No. 221 / 2008 C I T Jaipur ----Appellant Versus M/S Antiquariat Deshra Khoti ----Respondent D.B. Income Tax Appeal No. 262 / 2008 C I T Jaipur ----Appellant Versus M/S Antiquariat Deshera Kothi ----Respondent D.B. Income Tax Appeal No. 149 / 2009 C I T Jaipur ----Appellant Versus M/S Antiquriate Deshera Kothi ----Respondent D.B. Income Tax Appeal No. 618 / 2009 C I T Jaipur ----Appellant Versus (2 of 7) [ ITA-617/2009] M/S Antiquariat ----Respondent D.B. Income Tax Appeal No. 188 / 2010 C I T Jaipur ----Appellant Versus M/S Antiquriat ----Respondent D.B. Income Tax Appeal No. 229 / 2011 C I T Jaipur ----Appellant Versus M/S Antiquriat ----Respondent For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Aditya Bohra for Mr. Gunjan Pathak HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 26/04/2017 1. By way of these appeals, appellant has assailed judgment and order of Tribunal whereby Tribunal has allowed appeal preferred by assessee and reversed view taken by AO. 2. This Court while admitting appeals has framed following questions of law:- (3 of 7) [ ITA-617/2009] In Appeal No.I 617/2009 (1) Whether on facts and circumstances of case, Tribunal was justified in allowing deduction u/s 80 HHC to assessee on counter sales of Rs. 12,09,16,675/- made to foreign tourists, ignoring specific provisions of Explanation (aa) to Section 80 HHC of Act, When assessee has failed to prove that goods have under gone custom clearance? (2) Whether Tribunal was justified in holding purchases of Rs. 2,05,14,654/- made by assessee from various parties as genuine ignoring fact that neither seller was produced for examination nor purchases was accepted by seller nor genuineness and creditworthiness of transaction and sellers was proved? In Appeal No.I 221/2008 (1) Whether ITAT was justified in treating purchases worth Rs. 98,08,108/- as genuine and reversing order of both lower authorities, when admittedly it was stated by one of parties that said party merely provided entries of sale and purchases and no actual delivery of goods was taken or given? In Appeal No. 262/2008 (i) Whether on facts and circumstances of case, ITAT was justified in allowing deduction u/s 80 HHC to assessee on counter sales of Rs. 8,59,10,298/- inspite of specific provisions of Explanation (aa) to Section 80 HHC of Act of 61? (ii) Whether on facts and circumstances of case, ITAT as well as CIT (A) was justified in allowing deduction u/s 80 HHC of Act of 61, When there is no finding to effect that goods were cleared at any of custom station? In Appeal No 149/2009 (i) Whether Tribunal was justified in entertaining appeal against order of CIT (A) (exhibit-2) and not dismissing same as having become infructuous, with regard to ground of bogus purchases of Rs. 9,29,981/- in view of fact that assessee itself admitted for addition of disallowed purchases of Rs. 9,29,981/- by filing application for modification of order of CIT (A) (Exhibit-2), which was allowed by CIT (A)? (ii) Whether Tribunal was justified in entertaining appeal against issues decided by CIT(A), which were not even existing in date when impugned order was passed by Tribunal, as assessee itself filed application before CIT (A) for rectification and (4 of 7) [ ITA-617/2009] same was allowed? (iii) Whether Tribunal was justified in holding purchases of Rs. 1,14,75,062/- made by assessee from various parties as genuine ignoring fact that neither seller was produced for examination nor purchases was accepted by seller nor genuineness and creditworthiness of transaction and seller was proved? (iv) Whether Tribunal was justified in holding that books of accounts of assessee were genuine and provisions of Section 145(3) are not applicable, ignoring fact that admittedly neither stock register was maintained by assessee nor closing stock was available? In Appeal No 618/09 Whether Tribunal was justified in deleting addition of Rs. 72,20,347/- by holding purchases as genuine and on other hand rejecting books of accounts and estimating addition of Rs. 2,00,000/- only without any rhyme or reason? In Appeal No 188/010 (1) whether Tribunal was justified in upholding order of CIT (A) wherein it has held that disallowed purchases of Rs. 929,981/- should be treated as income from business and not as income from other sources, ignoring fact that addition itself of Rs. 9,29,981/- sustained by CIT (A) was also challenged by assessee before Tribunal? (2) Whether Tribunal was justified in holding purchases made by assessee of Rs. 1,14,75,062/- as genuine ignoring fact that neither seller was produced for examination nor purchases was accepted by seller nor sales tax registration of seller was valid during relevant period and nor any sales were made by seller to assessee? In Appeal No 229/011 Whether on facts and circumstances of case, Tribunal was justified in allowing deduction u/s 80HHC to assessee on counter sales of Rs. 6,55,49,048/- made to foreign tourists, ignoring specific provisions of Explanation (aa) to Section 80 HHC of Act, when assessee has failed to prove goods have under gone custom clearance? 3. main issues which are raised in DBITA No. 188//2010 are with regard to counter sales or bogus purchase and all other (5 of 7) [ ITA-617/2009] issues which are admitted are consequential and connected to each other. 4. In that view of matter, if issue no. 1 and 2 are decided, they will govern all other consequential issues. It is stated that said issues are covered by decision of Supreme Court in Commissioner of Income Tax vs. Silver & Arts Palace reported in (2003) 259 ITR 684 wherein para 4 reads as under:- 4. There is no dispute between parties that transactions of counter sales effected by respondent involved customs clearance within meaning of Expln. (aa) to s. 80HHC(4A) of Act and further that sales where in convertible foreign exchange. In these circumstances, we are of view that Revenue having accepted and consistently followed position of law settled by Ram Babu s case (supra), particularly in case of assessee itself, there is no merit in this appeal. We, therefore, dismiss appeal without any order as to costs. 5. Another decision of this Court in case of Commissioner of Income Tax vs. Rajendra Kasliwal reported in (2004) 271 ITR 448 wherein para 3 reads as under:- 3. On other hand, learned counsel for assessee submits that issue is squarely covered by decision of apex court in case of CIT vs. Silver & Arts Palace (2003) 180 CTR (SC) 309 : (2003) 259 ITR 684 (SC) and decision of this Court in case of CIT vs. Jewels Emporium (DB. IT Ref No.9 of 1997, dt. 7th Jan., 2003). He also drew our attention to finding of CIT(A). In para 3.2, CIT(A) had stated that there is documentary evidence to effect that goods have been purchased against payment in foreign exchange. It is only after customs authorities clear goods so purchased that bona fide foreign tourists are able to carry away with them items purchased from India. (6 of 7) [ ITA-617/2009] Thus, goods sold by appelant to foreign tourists in shop counter involved clearance at customs stations. On such sale, benefit of s. 80HHC cannot be denied, only on ground that sales are effected in India. 6. Taking into consideration above, issue is covered in favour of assessee. 7. However, issue with regard to bogus purchase is covered by decision of this Court in DBITA 201/2010 (CIT vs. M/s Gems Paradise) decided on 2/11/2016 wherein para 3 & 4 reads as under:- 3. Considering law declared by Supreme Court in case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal (C) No.8956/2015 decided on 06.04.2015 whereby Supreme Court has dismissed SLP and confirmed order dated 09.12.2014 passed by Gujarat High Court and other decisions of High Court of Gujarat in case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2009) 316 ITR 274 (Guj) and N.K. Industries Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, parties are bound by principle of law pronounced in aforesaid three judgments. 4. We remit back case to Assessing Officer for deciding afresh on factual matrix. authority will accept law but transaction whether it is genuine or not will be verified by Assessing Officer on basis of aforesaid three judgments. issues are answered accordingly. appeal is accordingly disposed of. 8. Therefore, in view of above, where matter involves bogus purchase, same is remitted back to AO and in appeals issue is decided in favour of assessee. (7 of 7) [ ITA-617/2009] 9. All appeals stand disposed off accordingly. copy of this judgment be placed in each file. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/52-58 CIT, Jaipur v. Antiquariat