INCOME TAX OFFICER, 33(1)(3), MUMBAI V. CHINTAN GIRISH DOSHI, MUMBAI

ITA 3023/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2670 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 3023 /MUM/ 201 9 (ASSESSMENT YEAR 2011 - 12 ) ITO - 33(1)(3) ROOM NO. 948 9T FLOOR, KAUTILYA BHAVAN, G - BLOCK BKC, BANDRA EAST MUMBAI - 400 051. V S . CHINTAN GIRISH DOS HI B - 301, SHREE RAM APARTMENT, S.V. ROAD BEHIND MILAP CINEMA KANDIVALI WEST MUMBAI - 400 067. PAN : AGUPD8841J ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 09 . 11 . 20 20 DATE OF PRONOUNCEMENT 23 .11 . 20 20 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS. 3,60,715 / - DONE @ 2 5 % BY ASSESSING OFFIC ER BY SUSTAINING ONLY 12.5% FOR THE AY 20 11 - 1 2 VIDE ORDER DATED 1 0 . 1 .2019. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO MANUFACTURING OF INDUSTRIAL RUBBER PRODUCTS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTM ENT THAT ASSESSEE HAS M ADE RS. 14,42,862 / - PURCHASES FROM BOGUS DEALERS . THE AO MADE 2 5 % ADDITION OF THE BOGUS PURCHASE RESULTING IN DISALLOWANCE OF RS. 3,60,715/ - . 3. UPON ASSESSEE'S A PPEAL LEARNED CIT( A ) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIA NCE UPON SEVERAL CASE LAWS AND UP ON THE FACT S OF THE CASE HE SUSTAINED 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES. CHINTAN GIRISH DOSHI 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE 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 HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE 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 EXPENS E 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 PU RCHASES DONE BY THE LEARNED CIT( A ) MEETS THE END OF JUSTICE. ACCORDINGLY I UPHOLD THE ORDER OF LEARNED CIT( A ) . 5. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 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 HEARD TOGETHER. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES BY PLACING THE RESULT ON NOTICE BOARD ON 23.11.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 23 / 1 1 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CHINTAN GIRISH DOSHI 3 4. CIT 5. DR, ITAT, MUMBAI 6. G UARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI