ITO, WARD 3 (3), KALYAN V. KAMPURATH SIVA SANKAR DAS, MUMBAI

ITA 2017/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4860 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH WAJALE
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 2017/MUM/2019 (ASSESSMENT YEAR 2010-11 ) ITO WARD 3(3) 2 ND FLOOR RANI MANSION MURBAD ROAD, KALYAN WEST, MAHARASHTRA PINCODE : 421 301. VS . SHRI KAMPURATH SIVA SANKAR DAS 8, ARADHAN, BEHIND MODEL SCHOOL, PANDURANG WADI DOMBIVALI EAST PINCODE-421 201. PAN : ADFPD4123K (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI SOMNATH WAJALE DATE OF HEARING 07.10.2020 DATE OF PRONOUNCEMENT 07.10.2020 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)[IN SHORT CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS. 2,65,465/- D ONE BY ASSESSING OFFICER BY SUSTAINING ONLY 33%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO BUSINE SS OF TRADING IN ENGINEERING GOODS AND JOB WORK. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS, THE AO MADE 100% ADDITION OF THE BOG US PURCHASE. 3. UPON ASSESSEE'S APPEAL LEARNED CIT-A HAS NOTED T HAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEV ERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 33% DISALLOWANCE OUT OF THE BOGUS PURCHASES. SHRI KAMPURATH SIVA SANKAR DAS 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 SET TLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITH OUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTI ONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETIT ION NO 2860, ORDER DT. 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGU S WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDI CATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASE S 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 SIT UATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE DISALLOWANCE SUSTAINED BY LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDIN GLY I UPHOLD THE ORDER OF LEARNED CIT-A. 5. THE DECISION OF N.K. PROTEINS LTD. (250 ITR 22) RELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M. HAZI ADAM & COMPANY (ITA NO. 1004 OF 2006 DATED 11. 12.2019) 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE S TANDS DISMISSED. 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HA S FILED A CROSS APPEAL OR CROSS OBJECTION AND THE SAME HAS REMAINED UNHEARD, EITHER PARTY MAY APPLY FOR RECALL OF THIS ORDER SO THAT THE APPEALS CAN BE HEARD TOGETHER. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S ON 07.10.2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER SHRI KAMPURATH SIVA SANKAR DAS 3 MUMBAI; DATED : 07/10/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI