DAMRARAM KHETARAMJI PRAJAPATI, MUMBAI V. ITO 19 (1)(4), MUMBAI

ITA 1417/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3175 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri Shamim Yahya (AM) I.T.A. No. 1417/Mum/2019 (A.Y. 2011-12) Damraram Khetaramji Prajapati M/s. Metal Sagar India Shop No. 18, 52-A, Thakarsi Mulsi Building, Nanu Bhai Desai Road, Girgaon Mumbai-400 004. PAN : AAFPP9268A Vs. ITO, Ward-19(1)(4) Matru Mandir Mumbai-400 007. (Appellant) (Respondent) Assessee by None Department by Ms. Usha Gaikwad Date of Hearing 25.04.2022 Date of Pronouncement 02.05.2022 O R D E R This is an appeal by the assessee wherein the assessee is aggrieved that the learned CIT(A) has sustained the addition for bogus purchase of Rs 2,22,385/- done by Assessing Officer by sustaining at 12.5 % for the AY 2011- 12 vide order dated 01.11.2018. 2. The assessee in this case is engaged into trading in ferrous and non- ferrous metal. The assessment was reopened upon information from sales tax department that assessee has made Rs. 17,79,080/- purchases from bogus entry operator. The AO made 12.5% addition of the bogus purchase. 3. Up on assessee's appeal learned CIT(A) has noted that the sales has not been doubted. Accordingly placing reliance upon several case laws and upon the facts of the case he sustained 12.5% disallowance out of the bogus purchases. Damraram Khetaramji Prajapati 2 4. Against above order revenue is in appeal before the ITAT. I have heard Learned Departmental Representative and perused the record. 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. The rationale being no sales is possible without actual purchases. This proposition is supported from Honourable Jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt 18.6.2014). In this case the Honourable High Court has held that hundred percent allowance for the purchases said to be bogus cannot be done, when sales are not doubted. However the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of nonpayment 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 purchases done by learned CIT(A) meets the end of justice. Accordingly I uphold the order of learned CIT(A). 5. In the result, appeal filed by the assessee stands dismissed. Order pronounced in the open court on 02.05.2022. Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : 02/05/2022 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai Damraram Khetaramji Prajapati 3 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai