ITO - 21(3)(2), Mumbai V. Late Vikas Sudesh Nagdev, L/H Sudesh Girdharilal Nagdev (Father), Mumbai

ITA 2731/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2667 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: STAYAPRAKASH SINGH
• 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. 2731 /MUM/ 201 9 (ASSESSMENT YEAR 2011 - 12 ) ITO - 21(3)(2) ROOM NO. 203 2 ND FLOOR PIRMAL CHAMBERS LALBAUG, PAREL MUMBAI - 400 012. V S . LATE VIKAS SUDESH NAGDEV LEGA L HEIR - SHRI SUDESH GIRDHARILAL NAGDEV (FATHER) 1/11, MASALAWALA BUILDING MOGHAL LANE, MAHIM MUMBAI - 400 016. PAN : AFJPN8537K ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI STAYAPRAKASH SINGH DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 09 . 11 . 20 20 DATE OF PRONOUNCEMENT 23 .11 . 20 20 O R D E R THIS IS AN APPEAL 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 OF RS . 9,4 2,480/ - DONE @ 100 % B Y ASSESSING OFFICER BY SUSTAINING ONLY 12.5% FOR THE AY 2011 - 12 VIDE ORDER DATED 1.2.2019. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BUSINESS OF RETAILING OF READYMADE GARMENTS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FRO M SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE RS. 9,42,480/ - PURCHASES FROM BOGUS DEALERS, THE AO MADE 100% ADDITION OF THE BOGUS PURCHASE . 3. UPON ASSESSEE'S A PPEAL LEARNED CIT( A ) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIAN CE UPON SEVERAL CASE LAWS AND UP ON THE FACT S OF THE CASE HE SUSTAINED 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES . LATE VIKAS SUDESH NAGDEV LEGAL HEIR - SHRI SUDESH GIRDHARILAL NAGDEV (FATHER) 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. I FIND THAT IN THIS CA SE 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 HONO URABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP E NTERPRISES (IN WRIT PETITION 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 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 MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQU ER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIR CUMSTANCES 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. IN THE RES ULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES BY PLACING THE RESULT ON NOTICE BOARD ON 23.11.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMB AI ; DATED : 23 / 1 1 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI LATE VIKAS SUDESH NAGDEV LEGAL HEIR - SHRI SUDESH GIRDHARILAL NAGDEV (FATHER) 3 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRA R ) PS ITAT, MUMBAI