ARUN R. VICHARE, MUMBAI V. ITO 24(1)(1), MUMBAI

ITA 1176/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0172 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.1176/MUM/2017 : ASST.YEAR 2009-2010 SHRI ARUN R.VICHARE A-605, RAJ TOWER, ANAND NAGAR MAJASWADI LINK ROAD, JOGESHWARI(E) MUMBAI 400 060. PAN : ABYPV2635F. / VS. THE INCOME TAX OFFICER WARD 24(1)(1) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI SUNIL KADAM (LA NOT FILED) /RESPONDENT BY : SHRI B.SATYANARAYANA RAJU (SR.DR) / DATE OF HEARING : 16.05.2017 / DATE OF PRONOUNCEMENT : 03.07.2017 / O R D E R THIS IS AN APPEAL BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2009-2010, WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) WHEREIN 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.5,10,182 HAS BEEN CONFIRMED. 2. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. AN ADJOURNMENT PETITION HAS BEEN FILED ON BEHALF OF THE ASSESSEE. HOWEVER, THE ISSUE OF BOGUS PURCHASES HAS ALREADY BEEN DEALT WITH BY THE MUMBAI TRIBUNAL IN A NUMBER OF CASES, HENCE THE PETITION HAS BEEN REJECTED. 3. UPON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT OVERWHELMING EVIDENCES HAVE BEEN REFERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL ITA NO.1176/MUM/2017. SHRI ARUN R.VICHARE. 2 MOVEMENT OF THE GOODS UNDER DISPUTE. IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO 240 OF 2003 IN THE CASE OF N K INDUSTRIES VS DY CIT , ORDER DT 20/06.2016, WHEREIN 100% OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1. 2017 AS UNDER :- ''DELAY CONDONED. THE SPECIAL LEAVE PETITIONS ARE DISMISSED. PENDING APPLICATION(S) IF ANY STANDS DISPOSED OF ACCORDINGLY''. 4. I FIND THAT DISMISSAL OF SPECIAL LEAVE PETITION BY THE HONBLE APEX COURT BY A SIMPLE NON-SPEAKING ORDER DOES NOT MERGE ORDER OF THE HONBLE HIGH COURT WITH THAT OF THE HONBLE SUPREME COURT. FURTHERMORE, THE ADDITION/DISALLOWANCE FOR BOGUS PURCHASES DEPENDS UPON THE FACTS OF EACH CASE. 5. 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 DONE. THIS PROPOSITION FINDS SUPPORT FROM THE HONBLE GUJARAT HIGH COURT IN THE SAME COMBINED ORDER AS MENTIONED ABOVE IN CASE OF ITA NO 241 THEREIN. THIS PROPOSITION IS FURTHER SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIM ENTERPRISES. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASE THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMENT OF TAX AND OTHERS AT ITA NO.1176/MUM/2017. SHRI ARUN R.VICHARE. 3 THE EXPENSE OF THE EXCHEQUER. IN SIMILAR SITUATION ON THE FACTS AND CIRCUMSTANCES OF THE CASE A DISALLOWANCE OF 12. 5% OF THE BOGUS PURCHASE HAS BEEN CONSIDERED TO MEET THE END OF JUSTICE IN A NUMBER OF CASES AT THE MUMBAI TRIBUNAL FOLLOWING HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF SIMIT P.SETH. ACCORDINGLY I HOLD THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. 6. IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 03 RD DAY OF JULY, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 03 RD JULY, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.