ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(2), MUMBAI V. KARGWAL CONSTRUCTION PVT LTD., MUMBAI

ITA 2902/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7330 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: MITALI GO
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'H' BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 2902/MUM/2019 (ASSESSMENT YEAR: 2009-10) ACIT, CIRCLE - 6(3)(2) ROOM NO. 576, 5TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 VS. M/S. KARGWAL CONSTRUCTION P. LTD. B 102, RUNWA OMKAR ESQUAR ESAUARE, OFF. EASTER EXPRESS HIGH WAY, SION (EAST) MUMBAI 400022 PAN AADCK1418N APPELLANT RESPONDENT APPELLANT BY: SHRI R. BHOOPATHI RESPONDENT BY: MS. MITALI GOPANI DATE OF HEARING: 01.09.2020 DATE OF PRONOUNCEMENT: 01.09.2020 O R D E R PER SHAMIM YAHYA, AM THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED CIT(A) HAS REDUCED THE ADDITION OF ` 21,41,657/- BEING 100% MADE BY THE AO BY SUSTAINING ONLY 12.5% DISALLOWANC E ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 07.01.2019 PERTAI NING TO A.Y. 2009-10. 2. THE ASSESSEE IN THIS CASE IS ENGAGED IN THE BUSINES S OF JOB WORK AND CIVIL CONTRACTOR. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHAS ES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MAD E HUNDRED PERCENT ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO ` 21,41,657/-. EXCEPT FOR REPRODUCING ASSESSEES REPLY IN THE ASSESSMENT ORDER THE AO DID NOT DO ANYTHING. HE SIMPLY WROTE THAT THE ASSESSEES REPLI ES ARE NOT ACCEPTABLE. 3. UP ON ASSESSEES APPEAL LEARNED CIT(A) HAS NOTED TH AT THE SALES HAS NOT BEEN DOUBTED. HE ALSO NOTED THAT THE ASSESSEE H AS FURNISHED ALL THE IMPORTANT DOCUMENTS IN SUPPORT OF PURCHASE. ACCORDI NGLY, PLACING RELIANCE ITA NO. 2902/MUM/2019 M/S. KARGWAL CONSTRUCTION P. LTD. 2 UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE C ASE HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES. AGAINST AB OVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. 4. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE REC ORDS. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLO WANCE FOR BOGUS PURCHASE CANNOT BE DONE; THE RATIONALE BEING NO SAL ES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FRO M HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF N IKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DATED 18.06.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT AL LOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBT ED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARK ET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMENT OF TAX A ND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE 12.5% DISAL LOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT(A) MEETS TH E END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT(A). 5. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE N.K. PROTEINS LTD. DATED 16.01.2017 REFERRED BY REVENUE IN GROUND S OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY HON'BLE BOMBAY HIGH C OURT IN THE CASE OF M. HAJI ADAM & CO. IN ITA NO. 1004 OF 20016 DATED 1 1.02.2019. 6. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STA NDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST SEPTEMBER, 2020. SD/ - SD/ - (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 ST SEPTEMBER, 2020 ITA NO. 2902/MUM/2019 M/S. KARGWAL CONSTRUCTION P. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -12, MUMBAI 4. THE PR.CIT - 6, MUMBAI 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.