- (1.) This appeal under Section 260A of the Income Tax Act, 1961 (for short, "IT Act") has been preferred by the appellant- revenue against the order of the Income Tax Appellate Tribunal, Jaipur Bench 'B'. Jaipur (for short, "ITAT") dated 30/01/2009 passed in ITA No.1005/JP-2007 by which the ITAT has partly allowed the appeal filed by the respondent-assessee against the order of the Commissioner of Income Tax (Appeals)-II, Jaipur (for short, the "ClT(A)". The relevant assessment year is the assessment year 2002-03.
(2.) The brief facts, as emerging on the fact of record, are that the respondent-assessee is carrying on business of handicrafts items, sarees, bed sheets and dresses and had declared a turnover of 21360375/- declaring gross profit of Rs. 7668375/- with the gross profit rate of 35.90% and with a net profit rate of 0.46%. A survey operation was carried out at the business premises of the respondent-assessee on 08/01/2002 under section 133A and consequent to that on account of unexplained investment and stock, the respondent-assessee surrendered an amount of Rs. 2688054/-. However, in so far as the issue relating to discrepancy, if any, during the course of survey is concerned, we are not concerned presently with the same.
(3.) The Assessing Officer (for short, 'AO') observed that the respondent-assessee has shown purchases to the extent of Rs. 3712314/-which is from unregistered dealers (for short, 'URD') and no whereabouts of such parties were submitted though the AO desired furnishing of complete names, addresses, PAN and confirmation etc. as also the mode of payment of such purchases. However, it is observed by the AO that the respondent-assessee did furnish names and addresses of such URD parties but failed to furnish their PAN and confirmations. The respondent-assessee failed to produce these parties for for verification of purchases made from them. Further, from the details furnished by the respondent-assessee, it was seen that the mode of payment of these URD parties was mainly in cash and furthermore, these purchases from URD parties have been found to be supported only by self made vouchers. The AO was of the prima-facie opinion that these purchases, being non-verifiable, therefore, there is scope for manipulation and accordingly,the trading results were rejected and after rejecting the trading results, the AO was of the opinion that since the URD purchases were not open to verification, therefore, he estimated the gross profit rate of 42% which resulted in trading addition of Rs. 1302912/-.;