JAI SAI TRADERS, THANE V. ITO WD 2(2), KALYAN

ITA 1123/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0360 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYANA RAJU SR
• Assessee Lawyers: NEHA PARANJAPE
• Keywords: Bogus purchase; Non passing of speaking order

Judgement Text

1 M/S JAI SAI TRADERS IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) ITA NO.1123/MUM /2017 ASSESSMENT YEAR 2009-10) M/S JAI SAI TRADERS 22, SAI DARSHAN SOCIETY, RKT COLLEGE ROAD, ULHASNAGAR 421 003 PAN : AADFJ9998D VS ITO, 11(2)(2), KALYAN APPELLANT RESPONDENT APPELLANT BY MS NEHA PARANJAPE RESPONDENT BY SHRI B SATYANARAYANA RAJU, SR AR DATE OF HEARING 17-05-2017 DATE OF PRONOUNCEMENT 07- 06-2017 O R D E R THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF CIT(A) DATED 15- 12-2016 AND PERTAINS TO AY 2009-10. 2. THE SOLITARY ISSUE PERTAINS TO DISALLOWANCE OF 25% BOGUS PURCHASES AMOUNTING TO RS.5,57,725. P URSUANT TO INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT THAT ASSESSEE HAD RECEIVED BOGUS PURCHAS E ENTRIES, THE AO DISALLOWED A SUM OF RS.22,30,899. UPON ASSESSEES APPEAL, LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 25%. AGAINST THIS ORDER, ASSESSEE IS IN APPEAL BEFORE ITAT. 3. UPON CAREFUL CONSIDERATION, I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE D ONE. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTI ONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIM ENTERPRISES. HO WEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PU RCHASE FROM THE GREY MARKET. MAKING PURCHASE THROUGH THE GREY MARKE T GIVES THE 2 M/S JAI SAI TRADERS ASSEESSEE SAVINGS ON ACCOUNT OF NON PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SIMILAR SITUATION ON T HE FACTS AND CIRCUMSTANCES OF THE CASE A DISALLOWANCE OF 12.5% O F THE BOGUS PURCHASE HAS BEEN CONSIDERED TO MEET THE END OF JUS TICE IN A NUMBER OF CASES AT THE MUMBAI TRIBUNAL. ACCORDINGLY I HOLD TH AT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGU S PURCHASE. LEARNED COUNSEL OF THE ASSESSEE HAS FAIRLY AGREED TO THIS P ROPOSITION. 4. LEARNED DEPARTMENTAL REPRESENTATIVE HAS PLACED RELI ANCE UPON A HONOURABLE GUJARAT HIGH COURT DECISION WHEREIN HUND RED PERCENT DISALLOWANCE OF BOGUS PURCHASE HAS BEEN UPHELD. SPE CIAL LEAVE PETITION AGAINST THIS ORDER HAS BEEN DISMISSED BY THE HONOUR ABLE APEX COURT. I FIND THAT DISMISSAL OF SLI D BY A NON SPEAKING ORDER BY THE HONOURABLE APEX COURT DOESN'T MERGE THE ORDER OF THE HONOURABL E HIGH COURT WITH THAT OF THE APEX COURT. MOREOVER SUCH DISALLOW ANCES DEPEND UPON THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPOUNDE D BY HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXI MP ENTERPRISES. ACCORDINGLY, I DIRECT THAT THE DISALLOWANCE BE REST RICTED IN THIS CASE TO 12.5% OF THE BOGUS PURCHASE. THE LD. COUNSEL OF TH E ASSESSEE FAIRLY AGREED TO THIS PROPOSITION. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-06-2017. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI, DT : 07 TH JUNE, 2017 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI