ITO 28 (2)(5), MUMBAI V. RAMESH S. POOJARY, MUMBAI

ITA 2029/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4858 (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
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 2029 /MUM/ 201 9 (ASSESSMENT YEAR 2010 - 11 ) ITO 28(2)(5) MUMBAI V S . SHRI RAMESH S. POOJARY FLATNO. 16 - 1 - 1, BRIDGE VIEW CHS LTD., SECTOR - 10, AIROLI NAVI MUMBAI - 40 0 708. PAN : AFTPP8174N ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI S OM N A TH WAJALE DATE OF HEARING 07 . 10 . 20 20 DATE OF PRONOUNCEMENT 07 .10 . 20 20 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGG RIEVED THAT THE LEARNED C OMMISSIONER OF INCOME TAX [IN SHORT C IT ( A )] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS. 24,96,756/ - DONE BY AO BY SUSTAINING ONLY 12.5%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO MANUFACTURING OF CORRUGATED BOX MAKIN G MACHINERY AND SPARES AND JOB WORK. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS, THE ASSESSING OFFICER MADE 100 % ADDITION OF THE BOGUS PURCHASE. 3. UPON ASSESSEE'S APPEAL LEA RNED CIT - A HAS NOTED THAT THE SALE 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 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEF ORE 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 SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE 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 HONOU RABLE HIGH COURT HAS UPHELD HUNDRED PERCENT 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 MARK ET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE 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 DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY 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 HONBLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTING UISHED 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 STANDS DISMISSED. 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HAS FILED A CROSS APPEA L 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 RULES ON SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER 3 MUMBAI ; DATED : 07 / 1 0 / 20 20 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