ITO, 28(3)(4), MUMBAI V. VIMAL BABULAL SHRIMAL, MUMBAI

ITA 1715/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1135 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 22-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEEPAK RAJE
• Keywords: Bogus purchase

Judgement Text

ITA NO. 1715/MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAISMC - I BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT)] ITA NO. 1715/MUM/2019 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER 28 (3)(4) .APPELLANT MUMBAI VS SHRI VIMAL BABULAL SHRIMAL ..........RESPONDENT PLOT NO. 16, JANTA MARKET, SECTOR - 23, TURBHE, NAVI MUMBAI 400705 [PAN: A NMPS6054M] APPEARANCES BY UODAL RAJ SINGH FOR THE APPELLANT DEEPAK RAJE FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 18 TH , 2020 DATE OF P RONOUNCEMENT : OCTOBER 12 TH , 2020 ORDER PER PRAMOD KUMAR, VP: BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 11 TH JANUARY 2019, PASSED BY THE LEARNED CIT(A) - 26 , MUMBAI FOR THE ASSESSMENT YEAR 2011 - 12. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE AS FOLLOWS: (1) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO RESTRICT THE ADDITION OF BOGUS PURCHASES TO 12.5% AS AGAINST 100% ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT PARTIES FROM WHOM THOSE PURCHASES WERE MADE PROVEN ACCOMMODATION ENTRY PROVIDERS AS CONCLUDED BY SALES TAX AUTHORITIES PURSUANT TO THE INVESTIGATION C ARRIED OUT BY THEM'? (2) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF N. K. ITA NO. 1715/MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 2 OF 3 PROTEINS LTD VS. DCIT (769 OF 2017), WHEREIN THE HON'BLE SUPREME COURT HAS CONFIRMED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES'? (3) THE APPELLANT PRAYS THAT THE ORDER OF LD.CLT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. I FIND THAT A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF ROLLON HARDWARE INDIA PVT. LTD., IN ITA NO. 1621/MUM/2018 ORDER DATED 05.11.2018 , HAS IN SIMILAR FACTS AND CIRCUMSTANCES INTER ALIA , OBSERVED AS FOLLOWS: 4. IN SUPPORT OF HIS CASE LD. COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. CIT VS. T.R. KAPADIA IN TAX APPEAL NO.691 OF 2017. 5. IN THIS CASE THE HONBLE HIGH COURT HAS CONFIRMED THE DELETION OF DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHA SE AS NECESSARY DOCUMENTARY EVIDENCE FOR THE PURCHASE WERE ON RECORD. 6. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT IN ITS DECISION DATED. 04.05.2018 S.L.P. CIVIL DIARY NO.12670/2018. 7. UP ON CAREFUL CON SIDERATION, I FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HAVE BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLE D LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONAL BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CA SE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO. 2860, ORDER DT. 18.06.2014. IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER, IN THAT CASE ALL THE SUPPLIERS WERE GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE S OF THE EXCHEQUER. IN SUCH SITUATION IN MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. HOWEVER, IN THIS REGARD LD. COUNSEL OF THE ASSESSE HAS PRAYED THAT WHEN ON LY THE PROFITS EARNED BY THE ASSESSEE ON THESE BOGUS PURCHASE TRANSACTION IS TO BE TAXED THE GROSS PROFIT ALREADY SHOWN BY THE ASSESSEE AND OFFERED TO TAX SHOULD BE REDUCED FROM THE STANDARD 12.5% BEING DIRECTED TO BE DISALLOWED ON ACCOUNT OF BOGUS PURCHAS E. 4. I SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THA N THE VIEW SO TAKEN BY THE COORDINATE BENCH. RESPECTFULLY FOLLOWING THE COORDINATE BENCH ORDER, I CONFIRM ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. ITA NO. 1715/MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 3 OF 3 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COU RT TODAY ON THE 12 TH DAY OF OCTOBER , 2020 SD/ - PRAMOD KUMAR (VICE PRESIDENT) MUMBAI, DATED THE 12 TH DAY OF OCTOBER , 2020 NISHANT VERMA SR.PS COPIES TO: (1) THE APPLICANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI