ITO 33(3)(5), MUMBAI V. VIPUL K SHETH, MUMBAI

ITA 3006/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2491 (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
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3006/MUM/2019 : A.Y : 2010 - 11 INCOME TAX OFFICER 33(3)(5), MUMBAI. (APPELLANT) VS. VIPUL K. SHETH 4/C/74, RUSTOMJEE REGENCY, J.S. ROAD, DAHISAR (W), MUMBAI 400 068. PAN : AAGPS6278L (RESPONDENT) APPELLANT BY : MS. SMITA VERMA RESPONDENT BY : SHRI MRUNAL PAREKH 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) - 45 , MUMBAI (IN SHORT CIT(A)) HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS.8,93,651/ - DONE @ 100% BY ASSESSING OFFICER BY SUSTAI NING ONLY 12.5% FOR THE ASSESSMENT YEAR 2010 - 11 VIDE ORDER DATED 10.01.2019. 2. THE ASSESSEE IN THIS CASE IS ENGAGED IN TRADING OF CHEMICALS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES OF RS.8, 93,651/ - FROM BOGUS DEALERS. THE ASSESSING OFFICER MADE 100% ADDITION OF THE BOGUS PURCHASE. UPON ASSESSEES APPEAL, LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. 2 ITA NO. 3006/MUM/2019 VIPUL K. SHETH ACCORDINGLY, PLACING RELIANCE UPON SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES. 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 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. THIS PROPOSITION IS SUPPORTED FROM HON'BLE JURISDICTIONAL HIGH COURT DECISI ON 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 DOUBTED. HOWEVER, THE FACTS O F 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 SUCH SITUATION, IN OUR CONSI DERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE 12.5% 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. ORDER PRONOUNCED UNDER RULE 34(4) OF ITAT RULES 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. 3006/MUM/2019 VIPUL K. SHETH 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