HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 189 / 2015 M/s. Sharma East India Hospitals & Medical Research Ltd. H-I Chitranjan Marg, C-Scheme, Jaipur through its Director Dr. Sh. Shailendra Sharma S/o late Sh. Ganpat Rao Sharma. ----Appellant Versus 1. Commissioner of Income Tax, Central Circle, N.C.R. Building, Statue Circle, C-Scheme, Jaipur. 2. Deputy Commissioner of Income Tax, Central Circle-I, NCRB, Statue Circle, Jaipur. ----Respondents Connected With D.B. Income Tax Appeal No. 190 / 2015 M/s. Sharma East India Hospitals & Medical Research Ltd. H-I Chitranjan Marg, C-Scheme, Jaipur through its Director Dr. Sh. Shailendra Sharma S/o late Sh. Ganpat Rao Sharma. ----Appellant Versus 1. Commissioner of Income Tax, Central Circle, N.C.R. Building, Statue Circle, C-Scheme, Jaipur. 2. Deputy Commissioner of Income Tax, Central Circle-I, NCRB, Statue Circle, Jaipur. ----Respondents For Appellant(s) : Mr. Naresh Gupta For Respondent(s) : Mr. Sameer Sharma with Mr. Gaurav Gaur for Mr. Anil Mehta HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 11/10/2017 (2 of 5) [ ITA-189/2015] 1. In both these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, appellant has assailed judgment and order of tribunal whereby tribunal has partly allowed appeal preferred by assessee. 3. This court while admitting appeals framed following substantial question of law:- Appeals No.189/2015 & 190/2015 admitted on 28.9.2016 (i) Whether in sustaining disallowance of 15% of purchases made from SKS, finding of Tribunal is erroneous and perverse in having relied alone on oral statement recorded during search operation over and above documentary evidence proving such purchases made after payment through banking channel having paid requisite VAT followed by delivery of goods? (ii) Whether Tribunal was justified in sustaining trading addition by disallowing 15% purchases made from SKS where books of accounts of appellant were not rejected u/s 145 of Income Tax Act, 1961? 4. facts of case are that assessee is public limited company running Hospital under name & style as Jaipur Hospital situated at Lalkothi, Tonk Road, Jaipur mainly in fields of orthopedic and cardiac care. Assessee had filed its return of income u/s 139(1) of Income Tax Act, 1961 respectively declaring total income of Rs.24,92,280/- & Rs.29,38,980/-, search operations u/s 132 of Income Tax Act, 1961 were carried out (3 of 5) [ ITA-189/2015] at business premises and also at residence of its directors and associate doctors. During course of search some loose papers and documents were found and seized from possession of directors and statements of directors and their family members were also recorded. Thereafter in response to notices u/s 153A, returns of income were filed by assessee on 24.7.2012 at same total income which was declared by assessee in its regular returns filed u/s 139(1) of Income Tax Act, 1961. assessments were completed u/s 143(3) r.w.s. 153A on 21.3.2014 at total income of Rs. 83,30,930/- for AY 10-11 and Rs.86,33,680/- for AY 11-12 by making additions in respect of bogus purchases and disallowance of interest alleged to be attributable to diversion of interest bearing funds. 5. We have heard counsel for parties. 6. Counsel for appellant has taken us to order of AO as well as CIT(A) and contended that view taken by AO on basis which CIT(A) has partly allowed appeal is required to be confirmed. 7. However, tribunal while considering matter observed as under:- 3.9 We have heard rival contentions and peruse material available on record. First we shall take up assessee s appeals which raise sole issue of addition on account of unverifiable purchase. Authorities below have relied on statements of MD, Accountant and prop. of SKS Shri Jayant Khandelwal. Statement of Shri Khandelwal was neither (4 of 5) [ ITA-189/2015] supplied nor cross examination was given to assessee, consequently statement of Shri Khandelwal may not be held as reliable evidence against assessee. However statements of MD and accountant have neither been retracted nor effectively controverted, consequently they remain valid piece of evidence in this behalf. Assessee has endeavored to demonstrate that copious cons umption of cotton gauge, bandages etc. has not been disputed; Books of accounts are properly maintained and not rejected by lower authorities. As compared to AY 2009-10 assessee s gross receipts, GP and NP % have gone up and at same time % consumption of cotton has gone down; this data also has not been disputed in any manner by revenue, assessee claims that no cotton was purchased from SKS in 2009-10. In this circumstance alternate plea is advanced that suitable estimate of disallowance be adopted instead of total disallowance. Reliance is placed on our consolidated order in case of Anuj Kumar Varshney and ors (supra); in this case addition qua unverifiable purchases of semi precious stones has been held to be at 15% of such unverifiable purchases. Looking at entirety of facts and circumstances i.e. books of accounts being not rejected & consumption of cotton having comparatively decreased, we are inclined to follow our judgment in case of Anuj Kumar Varshney (supra) and direct to restrict disallowance to 15% of purchases from SKS. Thus assessee s appeals are partly allowed. 8. Taking into account, we are of opinion that 15% disallowance restricted by tribunal is just and proper. No interference is called for. 9. Therefore, issue is required to be answered in favour of department against assessee. (5 of 5) [ ITA-189/2015] 10. We observe that on basis of this assessment order, no prosecution will be launched and if it is launched, it will be open for present appellant to take defence that he has succeeded before tribunal which has been confirmed by this court. 11. In that view of matter, if discharge application is preferred, same will be considered in accordance with law. 15% disallowance which has been restricted by tribunal is on basis of presumption, in that view of matter, case against present appellant is not beyond reasonable doubt. 12. appeals stand dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. Brijesh 60-61 Sharma East India Hospitals & Medical Research Ltd. v. Commissioner of Income-tax, Central Circle, Jaipur / Deputy Commissioner of Income-tax, Central Circle-I, Jaipur