ITO, 19(1)(1), Munbai V. Shri Ankit J. Jhaveri, Mumbai

ITA 2736/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2675 (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: 2009-2010
• Appeal Filed On: 02-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Gift
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 2736 /MUM/ 201 9 (ASSESSMENT YEAR 2009 - 10 ) ITO - 19(1)(1) ROOM NO. 223 2 ND FLOOR, MATRU MANDIR BUILDING TARDEO ROAD MUMBAI - 400 007. V S . SHRI ANKIT J. JHAVERI 2202 , CRESCENT HEIGHTS V.N. NAIK MARG MUMBAI - 400 036. PAN : AACPJ5461A ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SNEHAL SHAH 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 AGGRIEVED THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS. 6,77,245 / - DONE @ 15 % BY ASSESSING OFFICER BY SUSTAINING ONLY 12.5% FOR THE AY 20 09 - 1 0 VIDE ORDER DATED 1 9 .2.2019. 2. THE ASSESSEE I S A PROPRIETOR OF M/S. J.B. MANUFACTURING COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF DEALING IN GIFT, NOVELTIES AND WROUGHT IRON PRODUCTS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SAL ES TAX DEPARTM ENT THAT ASSESSEE HAS MADE RS. 45,14,967 / - PURCHASES FROM BOGUS DEALERS, THE AO MADE 15 % ADDITION OF THE BOGUS PURCHASE RESULTING IN DISALLOWANCE OF RS. 6,77,245/ - . 3. UPON ASSESSEE'S A PPEAL LEARNED CIT( A ) HAS NOTED THAT THE SALES HAS NOT BE EN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACT S OF THE CASE HE SUSTAINED 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES. SHRI ANKIT J. JHAVERI 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD BOTH THE PARTIES AND PERU SED 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. T HIS 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 HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PUR CHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER 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 OT HERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PU RCHASES DONE BY THE LEARNED CIT( A ) MEETS THE END OF JUSTICE. ACCORDINGLY I UPHOLD THE ORD ER OF LEARNED CIT( A ) . 5. IN THE RESULT, 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 MUMBAI ; 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 SHRI ANKIT J. JHAVERI 3 6. GUARD FILE. BY ORDER, //TRU E COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI