ITO 27 (1)(4), Mumbai V. M/S INKA ENGINEERS, Mumbai

ITA 1873/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1134 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMATHA MULLAMUDI
• Assessee Lawyers: NAMRATA K
• Keywords: Bogus purchase

Judgement Text

ITA NO. 1873/MUM/2019 ASSESSMENT YEAR: 2009 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAISMC - I BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT)] ITA NO. 1873/MUM/2019 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER 27 (1)(4) .APPELLANT MUMBAI VS M/S. INKA ENGINEERS ..........RESPONDENT UNIT NO. A 15A, GHANTKOPAR, INDUSTRIAL ESTATE, LBS MARG, GHATKOPAR (W), MUMBAI 400086 [PAN: AAAFI2286A] APPEARANCES BY SAMATHA MULLAMUDI FOR THE APPELLANT NAMRATA K. FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 18 TH , 2020 DATE OF PRONOUNCEMENT : OCTOBER 12 TH ,20 20 ORDER PER PRAMOD KUMAR, VP: BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 28 TH JANUARY 2019, PASSED BY THE LEARNED CIT(A) - 26 , MUMBAI FOR THE ASSESSMENT YEAR 2009 - 10. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE AS FOLLOWS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELE TING THE ADDITION OF RS.79,887/ - MADE BY THE ASSESSING OFFICER O N ACCOUNT OF BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO PRODUCE BILLS, VOUCHERS AND OTHER DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM AND WITHOUT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF N K PROTEIN LT D. WHEREIN IT IS HELD THAT ONCE IT IS PROVED THAT THE PURCHASES ARE BOGUS THEN ADDITION SHOULD BE MADE ON ENTIRE PURCHASES AND NOT ON PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. ITA NO. 1873/MUM/2019 ASSESSMENT YEAR: 2009 - 10 PAGE 2 OF 3 2} ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT( A) ERRED IN ESTIMATING THE PROFIT FROM HAWALA PURCHASE S BY DISALLOWING ONLY RS.11,413/ - , BEING 12.5% OF THE BOGUS PURCHASES AS EVEN THE BASIC ONUS OF PRODUCING DELIVERY CHALLANS, TRANSPORTATION DETAILS ETC. WERE NOT FULFILLED BY THE ASSESSEE. 3) THE APP ELLANT PRAYS THAT THE ORDER OF THE CIT(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 PURCHASE 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 CONSIDERATION, I FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFE RENCE 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 SETTLED 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 CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO. 2860, ORDER DT. 18.06.2014. IN THIS CASE THE HON BLE 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 PU RCHASE 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 EXPENSES 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 ONLY THE PROFITS EARNED BY THE ASSESSEE ON THESE BOGUS PURCHASE TRANSACTION IS TO BE TAXED THE GROSS PR OFIT 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 PURCHASE. 4. I SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINAT E BENCH. RESPECTFULLY FOLLOWING THE COORDINATE BENCH ORDER, I CONFIRM ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. ITA NO. 1873/MUM/2019 ASSESSMENT YEAR: 2009 - 10 PAGE 3 OF 3 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT 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