ITO 18(3)(5), Mumbai V. SHRI.VIPULKUMAR RATANLAL BAFNA, Mumbai

ITA 2169/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5051 (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: 2011-2012
• 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. 2169/MUM/2019 (ASSESSMENT YEAR:2011-12) ITO-18(3)(5) ROOM NO. 605, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400 021 VS. SHRI VIPULKUMAR RATANLAL BAFNA 52-A, SHOP NO. 10, MULJI THAKERSI BUILDING, ISLAMPURA STREET, NEAR ALANKAR CINEMA, MUMBAI-400 004 PAN/GIR NO. AIHPB 5085 D ( 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 COMMISSIONER OF INCOME TAX (APPEAL)-51, MUM BAI (CIT(A) FOR SHORT) DATED 28.01.2019 HAS REDUCED THE ADDITION FOR BOGUS PURC HASE OF RS.20,75,174/- DONE @ 12.5% BY THE ASSESSING OFFICER (A.O. FOR SHORT) BY SUSTAINING ONLY 6%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BU SINESS OF TRADING IN FERROUS AND NON-FERROUS METALS UNDER THE NAME OF M/S. INOX STEE L (INDIA) AS PROPRIETOR. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM THE S ALES TAX DEPARTMENT THAT THE ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE A.O. MADE 12.5% ADDITION OF THE BOGUS PURCHASE OF RS.1,66,01,395/-. 2 ITA NO. 2169/MUM/2019 ITO VS. SHRI VIPULKUMAR RATANLAL BAFNA 3. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) HAS N OTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON ITAT OR DER IN ASSESSEES OWN CASE FOR A.YS.2009-10 AND 2010-11, HE SUSTAINED 6% DISALLOWA NCE OUT OF THE BOGUS PURCHASES. 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 6% DISALLOWANCE OUT O F THE BOGUS PURCHASES DONE BY THE LEARNED CIT-A FOLLOWING THE ITAT ORDER FOR EARLIER YEARS IN ASSESSEES OWN CASE IS NOT BE INTERFERED WITH. ACCORDINGLY, I UPHOLD THE ORDER OF LD. CIT(A). 6. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 3 ITA NO. 2169/MUM/2019 ITO VS. SHRI VIPULKUMAR RATANLAL BAFNA 7. 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