ITO 28 (3)(5), Mumbai V. M/S TRISHAR ENGINEERING & CHEMICAL CO., Mumbai

ITA 1328/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8511 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: HARDIK SHAH
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 1328/MUM/2019 (ASSESSMENT YEAR 2011-12 ) I.T.A. NO. 1329/MUM/2019 (ASSESSMENT YEAR 2010-11 ) I.T.A. NO. 1330/MUM/2019 (ASSESSMENT YEAR 2009-10 ) ITO-28(3)(5) ROOM NO. 323,3 RD FLOOR 6 TH TOWER VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI-400 703. VS . M/S. TRISTAR ENGINEERING & CHEMICAL COMPANY W41B, MIDC, RABALE NAVI MUMBAI-400 701. PAN : AAAFT1005G (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI HAR DIK SHAH DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 17.12.2020 DATE OF PRONOUNCEMENT 01.01.2021 O R D E R THESE ARE APPEALS 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 BY SUSTAINING ONLY 12.5% OF TH E DISALLOWANCE FOR BOGUS PURCHASES. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BU SINESS OF SUPPLIER OF INDUSTRIAL HEATING AND FILTRATION SYSTEMS. THE ASSE SSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER MADE ADDITION OF THE BOGUS PURCHASE AS UNDER :- ASSESSMENT YEAR AMOUNT RS. 2009 - 10 @ 25% 81,640 / - 2010-11 @ 35% 1,98,815/- 2011-12 @ 25% 95,510/- 3. UP ON ASSESSEE'S APPEAL LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEV ERAL CASE LAWS AND UP ON M/S. TRISTAR ENGINEERING & CHEMICAL COMPANY 2 THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWAN CE OUT OF THE BOGUS PURCHASES. 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD ID LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED T HE RECORD. I FIND THAT IN THIS CASE THE SALES OR ANY OTHER ASPECT OF THE WORK ING RESULTS HAVE NOT BEEN DOUBTED IT IS SETTLED LAW THAT WHEN SALES ARE NOT D OUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSIT ION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN TH E CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18 .6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT AL LOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBT ED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PU RCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GI VES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PU RCHASES DONE BY THE LEARNED CIT(A) MEETS THE END OF JUSTICE. ACCORDINGL Y 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 THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. M/S. TRISTAR ENGINEERING & CHEMICAL COMPANY 3 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HA S FILED CROSS APPEALS OR CROSS OBJECTIONS 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 RULES BY PLACING THE RESULT ON NOTICE BOARD ON 1.1.2021. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 1/1/2021 COPY OF THE ORDER FORWARDED TO : 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