ITO 28 (2)(1), MUMBAI V. KASHINATH K. MAHAJAN, MUMBAI

ITA 2015/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8357 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 05-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: ISHWAR P RATHI; PRAMITA I RATHI
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 2015 /MUM/ 201 9 (ASSESSMENT YEAR 20 11 - 1 2 ) ITO - 28(2)(1) ROOM NO. 326 , 3 RD FLOOR TOWER NO. 6 , VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI 400 703. V S . SHRI KASHINATH K. MAHAJAN 1001, BUILDING - 4 AMRUT AANGAN , PARSIKNAGAR KALAW, THANE NAVI MUMBAI - 400 605. PAN : ADXPM9522H ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. PRAMITA I. RATHI & SHRI ISHWAR P. RATHI DEPARTMENT BY SHRI R. BHOOPATHI DATE OF HEARING 16.03 . 20 20 DATE OF PRONOUNCEMENT 20 . 0 4 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS A G GRIEVED THAT THE LEARNED CIT - A HAS DELETED THE ADDITION FOR BOGUS PURCHASES BY SUSTAINING ONLY 12.5% DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 31.1.2019 PERTAINING TO AY 2011 - 12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO BUSINESS OF MANUFACTURER OF JOB WORKS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM S ALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE HUNDRED PERCENT ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 8,50,342/ - . 3. UPON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES . SHRI KASHINATH K. MAHAJAN 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . W E 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 WIT HOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP E NTERP RISES (IN WRIT PETITION NO 2860 , ORDER DT . 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCE NT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS 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 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 PURCHASES DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT - A. 5. THE DECISION OF N K P ROTEINS LTD. (250 ITR 22) REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& CO ITA NO 1004 OF 20016 DT 11/2/2019 . 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 20.4 . 20 20 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 20 / 0 4 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT SHRI KASHINATH K. MAHAJAN 3 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT R EGISTRAR ) PS ITAT, MUMBAI