HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 377/2008 C I T Jaipur Appellant Versus Vivek Kala Respondent D.B. Income Tax Appeal No. 649/2008 C I T Jaipur Appellant Versus M/s Euro Jewels Respondent D.B. Income Tax Appeal No. 700/2008 C I T Jaipur Appellant Versus M/s Euro Jewels Respondent For Appellant(s) : Mr. Anuroop Singhi For Respondent(s) : Mr. Siddharth Ranka HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 11/05/2017 1. By way of these appeals, appellants have assailed judgment and order of Tribunal whereby Tribunal in appeal no.377/2008 allowed appeal of assessee and in appeal (2 of 5) [ITA-377/2008] no.649/2008 & 700/2008 dismissed appeals of department. 2. This court while admitting appeals framed following substantial questions of law:- Appeal No.377/2008 (i) Whether Tribunal was justified in holding purchases made from M/s Anmol Ratan of Rs.88,09,627/- as genuine ignoring categorical deposition of its proprietor Shri Om Prakash Ghiya, wherein he admitted that no goods were sold by him and only accommodation entries were given by him for which commission @ 40 paisa per 100 rupees was charged? (ii) Whether Tribunal was justified in holding purchases made from M/s Shruti Gems of Rs.67,91,059/- as genuine ignoring categorical deposition of its proprietor Sh. Umesh Kumar Sabu, wherein he admitted that no business was carried out by him? (iii) Whether on facts and circumstances of case, Hon ble Tribunal is right in reversing order of CIT(A), allowing deduction u/s 80HHC on income of Rs.1,28,14,980/- treated by A.O. under head Income from other sources/ thereby restricting GP @ 20% for 890HHC deduction premises and balance profit taxed under head income from other sources on account of bogus purchases from M/s. Amol Ratan and M/s. Shruti Gems? Appeal No.649/2008 (i) Whether on facts and circumstances of case, learned Tribunal was right and justified in holding that purchases made by assessee of Rs.64,13,778/- from Sahil Diamond Pvt. Ltd. and Rs.19,46,677/- from M/s. Manvi Exports were genuine and allowing benefit of 80HHC as claimed by assessee, without giving any finding at all and simply by replying upon its earlier order for assessment year 2002-03, which is also under challenge before Hon ble High Court? (ii) Whether on facts and circumstances of case, learned Tribunal was right and (3 of 5) [ITA-377/2008] justified in reversing order of CIT(A) to extent it confirmed addition of Rs.48,16,424/- made by applying gross profit rate @ 25% instead of 11.1% shown by assessee, when admittedly assessee failed to produce parties from whom said purchases were made and prove genuineness of purchases and one of parties admitted that no actual sale or purchase of goods had taken place and they were merely adjustment entries? (iii) Whether on facts and circumstances of case, learned Tribunal was right and justified in law in deleting additions u/s 69C on account of bogus purchases of Rs.83,60,455/- and addition on account of disallowance under proviso to Section 69C of Rs.83,60,455/- made by Assessing Officer? (iv) Whether on facts and circumstances of case, learned Tribunal was right and justified in not rejecting books of accounts when purchases recorded by assessee in those books were found to be bogus, moreso in view of judgment of Hon ble Apex Court in case of Kanchawala Gems? Appeal No.700/2008 (i) Whether on facts and circumstances of case, learned Tribunal was right and justified in holding that purchases made by assessee of Rs.64,13,778/- from Sahil Diamond Pvt. Ltd. and Rs.19,46,677/- from M/s. Manvi Exports were genuine and allowing benefit of 80HHC as claimed by assessee, without giving any finding at all and simply by replying upon its earlier order for assessment year 2002-03, which is also under challenge before Hon ble High Court? (ii) Whether on facts and circumstances of case, learned Tribunal was right and justified in confirming order of CIT(A) to extent it deleted addition of Rs.1,29,42,156/- made on account of bogus purchases, when admittedly assessee failed to produce parties from whom said purcahses were made and prove genuineness of purchases and one of parties admitted that no actual sale or purchase of goods had taken place and they were merely adjustment entries? (iii) Whether on facts and circumstances of case, learned Tribunal was justified in law in deleting additions u/s 69C on account of bogus (4 of 5) [ITA-377/2008] purchases of Rs.83,60,455/- and addition on account of disallowance under proviso to Section 69C of Rs.83,60,455/- made by Assessing Officer? (iv) Whether on facts and circumstances of case, Tribunal was right and justified in not rejecting books of accounts when purchases recorded by assessee in those books were found to be bogus, moreso in view of judgment of Hon ble Apex Court in case of Kanchawala Gems? 3. It is contended that issue is squarely covered by decision of this court in D.B. ITA No.201/2010 Commissioner of Income Tax Jaipur-I, vs. M/s Gems Paradise decided on 2.11.2016 wherein it has been held 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. 4. In view of above, matter remitted back to AO. It will be open for appellant to raise all contentions before AO. While considering matter AO will also heard on question of Section 80HHC benefit to be conferred between parties subject to all provisions of law. (5 of 5) [ITA-377/2008] 5. order of Tribunal is quashed. 6. appeals stand accordingly disposed of. copy of this order be placed in each file. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Brijesh 132 to 134. CIT, Jaipur v. Vivek Kala