ITO 17(2)(1), MUMBAI V. SMT. JAYASHREE DILIP SHAH, MUMBAI

ITA 3005/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2490 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: VANSHIKA AGARWAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3005/MUM/2019 : A.Y : 2010 - 11 INCOME TAX OFFICER 17(2)(1), MUMBAI. (APPELLANT) VS. SMT. JAYASHREE DILIP SHAH C/O DILIP PLASTICS, 5/20A, 5 TH FLOOR, GEETA BLDG., PANDITA RAMABAI ROAD, GAMDEVI, MUMBAI 400 007. PAN : ANTPS0367A (RESPONDENT) APPELLANT BY : MS. SMITA VERMA RESPONDENT BY : MS. VANSHIKA AGARWAL DATE OF HEARING : 09/11/2020 DATE OF PRONOUNCEMENT : 17 /11/2020 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 56 , MUMBAI (IN SHORT CIT(A)) HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS.1,94,373/ - DONE @ 12.5% BY ASSE SSING OFFICER BY SUSTAINING ONLY 10%. 2. THE ASSESSEES BUSINESS IS NOT DEALT WITH IN ASSESSING OFFICERS ORDER, BUT THE NATURE OF BUSINESS IS MENTIONED AS MANUFACTURER. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES OF RS. 15,54,983 / - FROM BOGUS DEALERS. THE ASSESSING OFFICER MADE 12 % ADDITION OF THE BOGUS PURCHASE. UPON ASSESSEES APPEAL, LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON SEVERAL CAS E LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 1 0 % DISALLOWANCE OUT OF THE BOGUS PURCHASES. 2 ITA NO. 3005/MUM/2019 SMT. JAYASHREE D. SHAH 3. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. I FIND THAT IN THIS CASE THE SALES HA VE 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 HON'BLE JURISDI CTIONAL HIGH COURT DECISION IN THE CASE OF NICKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO. 2860, 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 DOUBT ED. HOWEVER, THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM 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 SUC H SITUATION, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE 1 0 % DISALLOWANCE OUT OF BOGUS PURCHASES DONE BY THE LEARNED CIT(A) MEETS THE END OF JUSTICE. ACCORDINGLY, I UPHOLD THE ORDER OF LEARNED CIT(A). 4. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 5. 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 APPEALS CAN BE HEA RD TOGETHER. ORDER PRONOUNCED U N D E R R U L E 3 4 ( 4 ) O F I T A T R U L E S ON 1 7 T H NOVEMBER, 2020. SD/ - ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI, DATE : 1 7 T H NOVEMBER, 20 20 *SSL* 3 ITA NO. 3005/MUM/2019 SMT. JAYASHREE D. SHAH COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SM C BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI