TUSHAR ENGINEERING INDUSTRIES, MUMBAI V. ITO 25(1)(5), MUMBAI

ITA 2748/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9923 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Assessee Lawyers: PIYUSH LADHA
• Keywords: Bogus purchase

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.2748/MUM/2017 : ASST.YEAR 2009-2010 M/S.TUSHAR ENGINEERING INDUSTRIES 602, FLYOVER APARTMENT NEAR TELLI GALLY, ANDHERI (EAST) MUMBAI 400 069. PAN : AABFT0541N. / VS. THE INCOME TAX OFFICER WARD 25(1)(5) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI PIYUSH LADHA /RESPONDENT BY : SHRI V.JANARDHANAN / DATE OF HEARING : 27.06.2017 / DATE OF PRONOUNCEMENT : 01.09.2017 / O R D E R THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) WHEREIN 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.7,01,341 HAS BEEN CONFIRMED. 2. IN THIS CASE, THE ASSESSING OFFICER HAD MADE A DISALLOWANCE OF RS.7,01,341 BEING 100% OF THE BOGUS PURCHASES. UPON ASSESSEES APPEAL, LEARNED CIT(A) CONFIRMED THE SAME. 3. AGAINST THIS ORDER, ASSESSEE HAS FILED APPEAL BEFORE THE ITAT. 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT OVERWHELMING EVIDENCES HAVE BEEN REFERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL MOVEMENT OF THE GOODS UNDER ITA NO.2748/MUM/2017. M/S.TUSHAR ENGINEERING INDUSTRIES. 2 DISPUTE. IN THIS REGARD FOLLOWING OBSERVATION OF THE ASSESSING OFFICER CAN BE GAINFULLY REFERRED. THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE FOLLOWING: I. WHEREABOUT OF THE PARTY II. PRODUCE THE PARTY BEFORE THE UNDERSIGNED III. LORRY RECEIPT, OCTROI RECEIPT, MODE OF TRANSPORTATION / TRANSPORT DETAILS ETC. THE ASSESSEE HAS NOT GIVEN ANY PROOF OF PHYSICAL RECEIPT OF GOODS FROM ABOVE PARTY. HENCE, ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THESE PARTIES. 5. IN THESE CIRCUMSTANCES, LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO.240 OF 2003 IN THE CASE OF N.K.INDUSTRIES V. DCIT, ORDER DATED 20.06.2016, WHEREIN 100% OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.01.2017. 6. HOWEVER, I FIND THAT DISMISSAL OF A SPECIAL LEAVE PETITION BY NON- SPEAKING ORDER DOES NOT MERGE THE ORDER OF THE HONBLE HIGH COURT WITH THE ORDER OF THE HONBLE APEX COURT. 7. I FURTHER FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE ITA NO.2748/MUM/2017. M/S.TUSHAR ENGINEERING INDUSTRIES. 3 PURCHASES FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SELLING 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 OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. THIS IS FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SETH FOLLOWED BY THE ITAT MUMBAI BENCHES IN A NUMBER OF CASES. 8. ACCORDINGLY, I MODIFY THE ORDER OF LEARNED CIT(A) AND DIRECT THAT THE DISALLOWANCE BE LIMITED TO 12.5% OF THE BOGUS PURCHASES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 01 ST DAY OF SEPTEMBER, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 01 ST SEPTEMBER, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.