ITO, 19(2)(14), MUMBAI V. MR. NARPATKUMAR DUDHMALJI CHANDAN, MUMBAI

ITA 3099/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6553 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: RAJESH CHAMRIA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 3099/MUM/2019 ( / ASSESSMENT YEARS : 2011-12 ITO 19(2)(14) 2 ND FLOOR, RM NO. 217, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 / VS. MR. NARPATKUMAR DUDHMALJI CHANDAN, 55B, KHETWADI MAIN ROAD, CP TANK, MUMBAI - 400004 ./ ./ PAN/GIR NO. : AAAPC6295M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AKHTAR H. ANSARI, DR / RESPONDENT BY : SHRI RAJESH CHAMRIA, AR / DATE OF HEARING 15/09/2020 !'# / DATE OF PRONOUNCEMENT 15/09 /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 LD. CIT(A) HAS REDUCED THE AD DITION FOR BOGUS PURCHASE OF RS. 6,83,280/- DONE @ 100% BY A.O BY SUSTAINING ONLY 12.5% ORDER DATED 28.02.2019 FOR A. Y 2011-12. ITA NO .3099/MUM/2019. MR. NARPATKUMAR DUDHMALJI, MUMBAI. - 2 - 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO TRADIN G OF FERROUS AND NON-FERROUS METALS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. TH E A.O MADE 100% ADDITION OF THE BOGUS PURCHASE. UPON ASSESSEES APPEAL LD. CIT(A) HAS NOTED THAT THE SAL ES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPO N SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCH ASES. 3. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RECORD. I FIND THAT IN THIS CASE THE SALES HAVE NO T BEEN DOUBTED IT IS SETTLED LAW THAT WHEN SALES ARE NOT D OUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CAN NOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FR OM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE C ASE OF NIKUNJ EXIP ENTERPRISES (IN WRIT PETITION NO. 2860, ORDER DATED 18.06.2014). IN THIS CASE THE HONBLE HIGH C OURT HAS ITA NO .3099/MUM/2019. MR. NARPATKUMAR DUDHMALJI, MUMBAI. - 3 - UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER, THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PU RCHASES FROM THE GREY MARKET. MAKING PURCHASE THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXC HEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OU T OF THE BOGUS PURCHASE DONE BY THE LD. CIT(A) MEETS THE END OF JUSTICE. ACCORDINGLY I UPHOLD THE ORDER OF LD. CIT (A). THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THE AB OVE. 5. THE DECISION OF NV PROTEINS RELIED BY THE REVENU E WAS DISMISSAL OF SLP BY THE HONBLE SUPREME COURT AND H AS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT VS. MD. HA JI ADAM & CO. IN ITA NO 1004 OF 2016, DATED 11.12.2019 . 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE S TANDS DISMISSED. 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HA S FILED A CROSS OBJECTION AND THE SAME HAS REMAINED UNHEARD , ITA NO .3099/MUM/2019. MR. NARPATKUMAR DUDHMALJI, MUMBAI. - 4 - EITHER PARTY MAY APPLY FOR RECALL OF THIS ORDER SO THAT THE APPEALS CAN BE HEARD TOGETHER. THIS ORDER PRONOUNCED IN VIRTUAL COURT ON 15 /09 /20 20 SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI, DATED 15/09/2020 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) $%, / ITAT, MUMBAI