M/S.DEVI TEXTILES, MUMBAI V. INCOME TAX OFFICER WARD 1(1), KALYAN

ITA 1511/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5219 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: AMBALAL JAIN
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM I.T.A. NO. 151 1 /MUM/2018 ( ASSESSMENT YEAR: 2011 - 12 ) M/S. DEVI TEXTILES 101, SHINGRE BUILDING, 1 ST FLOOR, KASAR ALI, BHIWANDI - 421 302 VS. INCOME TAX OFFICER WARD 1( 1), 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAK PADA, KALYAN (W) - 421 301 PAN/GIR NO. AAGFD 7591 P ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI AMBALAL JAIN RESPONDENT BY : SHRI S. K. BEPARI DATE OF HEARING : 1 6 .10.2018 DATE OF PRONOUNCEMENT : 16.10 .2018 O R D E R PER S HAMIM YAHYA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LEAR N ED COMMISSIONER OF INCOME TAX (APPEALS) , PUNE - 2 (LD.CIT(A) FOR SHORT) VIDE ORDER DATED 13.02.2018 HAS SUSTAINED 100 % DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE OF RS. 2,03,175/ - . 2. THE ASSESSING OFFICER (A.O. FOR SHORT) IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.2,03,175/ - , WHICH WAS CONFIRMED BY THE LD. CIT(A). 3. AGAINST THE AB OVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 2 ITA NO. 151 1 /MUM/2018 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED . I T IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DI SALLOWANCE FOR BOGUS PURCHAS E CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM THE HON'BLE 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 UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT THE ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROU GH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN S U CH SITUATION , IN MY C ONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASE S MEE TS THE END OF JUSTICE. ACCORDINGLY , I MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THAT THE DISALLOWANCE BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE OF RS.2,03,175/ - THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THIS PROPOSITION. 5. I N THE RESU LT , THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.10.2018 SD/ - (S HAMIM YAHYA) A CCOUNTANT MEMBER MUMBAI ; DATED : 16.10.2018 ROSHANI , SR. PS 3 ITA NO. 151 1 /MUM/2018 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. T HE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASST T. REGISTRAR) ITAT, MUMBAI