ITO 22 (1)(4), MUMBAI V. JIGNESH H. RUPARELIA, MUMBAI

ITA 2278/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4895 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Keywords: Bogus purchase
• Section: 201; 13

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 2278 /MUM/ 201 9 (ASSESSMENT YEAR 2010 - 11 ) I.T.A. NO. 2277/MUM/2019 (ASSESSMENT YEAR 2011 - 12) ITO - 22(1)(4) MUMBAI V S . SHRI JIGNESH H. RUPARELIA 13, HRIVALLBH CHS J.K. MEHTA ROAD GREEN STREET SANTACRUZ WEST MUMBAI - 400 054. PAN : AAAPR9319M ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI KAILASH GAIKWAD DATE OF HEARING 13 . 10 . 20 20 DATE OF PRONOUNCEMENT 14 .10 . 20 20 O R D E R THE S E ARE APPEAL S BY THE REVENUE WHEREIN THE REVENUE IS A G GRIEVED THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE DONE @ 3 5% FOR A.Y. 2010 - 11 & 2 5% FOR A.Y. 2011 - 12 BY ASSESSING OFFI CER BY SUSTAINING ONLY 12.5 % . 2. THE ASSESSEE IS A PROPRIETOR OF M/S. VARSHA LABLES, WHICH IS ENGAGED IN THE BUSINESS OF STICKER MANUFACTURING. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES OF RS . 2,57,056/ - FOR A.Y. 2010 - 11 & RS. 21,28,774 FOR A.Y. 2011 - 12 FROM BOGUS DEALERS . T HE ASSESSING OFFICER MADE 3 5% AD D ITION OF THE BOGUS PURCHASE AMOUNTING TO RS. 89,970/ - FOR A.Y. 201 1 - 1 2 AND @ 25% FOR RS. 4,25,7 5 4/ - FOR A.Y. 201 0 - 1 1 . 3. AGAINST ABOVE OR DER REVENUE IS IN APPEAL S BEFORE THE ITAT. NONE APPEARED ON BEHALF OF THE ASSESSEE DURING THE COURSE OF VIRTUAL HEARING. I FIND SHRI JIGNESH H. RUPARELIA 2 THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWAN CE 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 E NTERPRISES (IN WRIT PETITION NO 2860, ORD ER DT . 18.6.2014). IN THIS CASE THE HONOURABLE 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 MARKE T. 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 % DISALLOWAN CE 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. 4. IN THE RESULT TH ESE APPEAL S FILED BY THE REVENUE STAND DISMISSED . 5. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HAS 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 RULES ON 14.10.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 14 / 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 SHRI JIGNESH H. RUPARELIA 3 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI