ACIT 28(1), MUMBAI V. MR. JAISINGH PATEL (PROP SEPARATION ENGINEERS (INDIA)), NAVI MUMBAI

ITA 2996/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3495 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Peak credit
• Section: 48

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SRI SHAMIM YAHYA , ACCOUNTANT MEMBER ./ ITA NO. 2996 / MUM/ 2019 ( / ASSESSMENT YEARS 2009 - 10 ) THE ASST. COMMISSIONER OF INCOME - TAX, WARD 28(1) ROOM NO.306, 3 RD FLOOR, 6 TH TOWER, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI - 400 703 / VS. MR. JAISINGH PATEL [PROP. SEPARA TION ENGINEERS (INDIA)] C6/6, 2:1, SECTOR - 03, CBD BELAPUR, NAVI MUMBAI - 400604 ( / APPELLANT) ( / RESPONDENT) . / PAN NO. AASPP 4871 E / APPELLANT BY : SHRI SMITA VERMA, DR / RESPONDENT BY : NONE / DATE OF HEARING : 09.11. 2020 / DATE OF PRONOUNCEMENT : 12 .11. 2020 / O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED COMM ISSIONER OF INCOME TAX [APPEALS (IN SHORT THE CIT(A) ] HAS REDUCED THE ADDITION FOR BOGUS PURCHASES OF PAGE | 2 ITA NO. 2996/MUM/2019 MR. JAISINGH PATEL; AY 09 - 10 4 , 36 , 010 / - DONE ON PEAK CREDIT BASIS BY ASSESSING OFFICER BY SUSTAINING ONLY 12.5%. THE ASSESSEE IN THIS CASE IS ENGAGED INTO BUSINESS OF MANUFACTURING OF SCREENING MACHINE. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALE TAX DEPARTMENT THAT ASSESSEE HAS MADE 21,24,977/ - PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER MADE ADDITION OF THE BOGUS PURCHASES AMOUNTING TO 4,36,010/ - ON PEAK CREDIT BASIS . UPON ASSESSEES APPEAL THE LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES. AGAINST ABOVE O RDER REVENUE IS IN APPEAL BEFORE THE ITAT. 2. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. I FIND THAT IN THIS CASE THE SALES OR ANY OTHER ASPECT OF ASSESSEE LOOKING, HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES AR E 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 HONBLE JURISDICTIONAL HIG H COURT DECISION IN THE CASE OF NICKUNJ EXIMP ENT ERPRISES (P.) LTD. VS. ACIT [2014] 48 TAXMANN.COM 20 (BOMBAY) IN WRIT PETITION NO. 2860 OF 2012 VIDE ORDER DATED 18.06.2014. IN THIS CASE THE HON'BLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUB TED. HOWEVER, THE FACTS OF THE PRESENT CASE INDICATE THAT PAGE | 3 ITA NO. 2996/MUM/2019 MR. JAISINGH PATEL; AY 09 - 10 ASSESSEE HAS MADE PURCHASES 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 EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASE DONE BY THE LEARNED CIT(A) MEETS THE END OF THE JUSTICE. ACCORDINGLY, I UPHOLD THE ORDER OF THE LEARNED CIT(A). 3. THE DECISI ON OF NK PROTEINS LTD. RELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF ADAM H KAZI . THE APPEAL OF REVENUE IS DISMISSED. 4. 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 APPEAL CAN BE HEARD TOGETHER. 5. IN THE R ESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 . 11 . 2020 SD/ - ( / SHAMIM YAHYA ) ( / ACCOUNTANT MEMBER ) , / MUMBAI, DATED: 12 . 11 .2020 , . / SUDIP SARKAR, SR.PS PAGE | 4 ITA NO. 2996/MUM/2019 MR. JAISINGH PATEL; AY 09 - 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (ASSTT. REGISTRAR) , / ITAT, MUMBAI