THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 1139/MUM/2019 (ASSESSMENT YEAR 2009-10 ) ITO-27(1)(4) ROOM NO. 409 4 TH FLOOR, TOWER NO. 6 VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI-400 703. VS . SHRI DILIP C. MEHTA B-1501, KANARA BUSINESS CENTRE LAXMI NAGAR GHATKOPAR EAST MUMBAI-400 075. PAN : AAAPM98078B (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI BRAJENDRA KUMAR DATE OF HEARING 27.10.2020 DATE OF PRONOUNCEMENT 27.10.2020 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SH ORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS. 7,02 0/- DONE @ 100% BY ASSESSING OFFICER BY SUSTAINING ONLY 12.5%. 2. THE ASSESSEE IN THIS CASE IS AND INDIVIDUAL. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE RS. 7,020/- PURCHASES FROM BOGUS DEALERS. THE ASSES SING OFFICER MADE 100% ADDITION OF THE BOGUS PURCHASES. 3. UPON THE ASSESSEES APPEAL LEARNED CIT(A) HAS NO TED THAT THE SALES HAVE NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPO N SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISAL LOWANCE OUT OF THE BOGUS PURCHASES 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. I FIND THAT IN SHRI DILIP C. MEHTA 2 THIS CASE THE SALES AND OTHER WORKING ARE NOT DOUBT ED, IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLO WANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POS SIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOU RABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRI SES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014). IN THIS CASE THE HONOUR ABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASE S THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON -PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SIT UATION IN MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT-A ME ETS THE END OF JUSTICE. ACCORDINGLY I UPHOLD THE ORDER OF LEARNED CIT-A. 5. THE DECISION OF N.K. PROTEINS LTD. (250 ITR 22) RELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M. HAZI ADAM & CO. (ITA NO. 1004 OF 2006 DATED 11.2.20 19). 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE S TANDS DISMISSED. 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HA S FILED A CROSS APPEAL OR CROSS OBJECTION AND THE SAME HAS REMAINED UNHEARD, EITHER PARTY MAY APPLY FOR RECALL OF THIS ORDER SO THAT THE APPEALS CAN BE HEARD TOGETHER. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S BY PLACING THE RESULT ON NOTICE BOARD ON 27.10.2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 27/10/2020 COPY OF THE ORDER FORWARDED TO : SHRI DILIP C. MEHTA 3 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI