ITO 28 (1)(5), Mumbai V. M/S HEAT-GEN-SERVICES, Mumbai

ITA 2157/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5050 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH WAJALE
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, M UMBAI BEFORE SHRI SHAMIM YAHYA, AM ITA NO. 2157/MUM/2019 (ASSESSMENT YEAR:2009-10) ITO-28(1)(5) ROOM NO. 325, 3 RD FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400 703 VS. M/S. HEAT GEN SERVICES W-369, MIDC RABALE INDUSTRIAL ESTATE, GHANSOLI, NAVI MUMBAI-400 701 PAN/GIR NO. AACFH 4015 J ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI SOMNATH WAJALE RESPONDENT BY : NONE DATE OF HEARING : 08.10.2020 DATE OF PRONOUNCEMENT : 08.10.2020 O R D E R PER SHAMIM YAHYA, A. M.: THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED CIT-A HAS REDUCED THE ADDITION FOR BOGUS PU RCHASE OF RS.18,50,963/- DONE @ 100% BY THE ASSESSING OFFICER (A.O. FOR SHORT) BY S USTAINING ONLY 12.5%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BU SINESS/MANUFACTURING OF ALL TYPES OF INDUSTRIAL FURNACES AND LABORATORY EQUIPMENTS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS MADE PURCHASES OF RS.18,50,963/- FROM BOGUS DEALERS. THE A.O. MADE 1 00% ADDITION OF THE BOGUS PURCHASE. 3. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) HAS N OTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON THE SEV ERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF TH E BOGUS PURCHASES. 2 ITA NO. 2157/MUM/2019 ITO VS. M/S. HEAT GEN SERVICES 4. AGAINST ABOVE ORDER, THE REVENUE IS IN APPEAL BE FORE THE ITAT. 5. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE DESPITE NOTICE SENT. HENCE, I PROCEED TO ADJUDICATE THE ISSUE BY HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCEN T DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POS SIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HON'BLE JURISDICTIONA L HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18.6.2014). IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLO WANCE 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. MA KING 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 MY CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OU T OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY , I UPHOLD THE ORDER OF LD. CIT(A). 6. THE DECISION OF N. K. PROTEINS RELIED BY THE REV ENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPL AINED AND DISTINGUISHED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& CO ITA NO 1004 OF 20016 DT 11/2/2019. 7. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 3 ITA NO. 2157/MUM/2019 ITO VS. M/S. HEAT GEN SERVICES 8. BEFORE PARTING, I MAY ADD THAT IF THE ASSESSEE H AS 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 INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD ON 08.10.20 20. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 08.10.2020 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI