ITO 19(2)(4), MUMBAI V. M/S NEELAM METAL INDUSTRIES, MUMBAI

ITA 3100/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6590 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase
• Section: 13

Judgement Text

4 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER ITA NO. 3100 / MUM . /20 1 9 ( ASSESSMENT YEAR : 20 12 13 ) ITA NO. 3101 /MUM./201 9 ( ASSESSMENT YEAR : 20 10 11 ) ITA NO. 3102 /MUM./201 9 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 19(2)(4), MUMBAI . APPELLANT V/S M/S. NEELAM METAL INDUSTRIES G 75, SARVODAYA NAGAR 1 ST PANJRAPOLE NAGAR MUMBAI 400 004 PAN AACFN9172G . RESPONDENT AS SESSEE BY : NONE REVENUE BY : SHRI AKHTAR H. ANSARI DATE OF HEARING 15 .0 9 . 2020 DATE OF ORDER 16.09.2020 O R D E R CAPTIONED APPEALS HAVE BEEN FILED BY THE REVENUE CHALLENGING THE ORDER S DATED 25 TH JANUARY 2019, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 3, MUMBAI, FOR THE ASSESSMENT YEAR 2009 10, 2010 11 AND 2012 13. 2. IN THESE APPEALS, THE REVENUE IS AGGRIEVED THAT THE LEARNED COMMISSIONER (APPEALS) HAS BY RESPECTIVE YEARS ORDER REDUCED THE ADDITION FOR BOGUS PURCHASE. 2 M/S. NEELAM METAL INDUSTRIES A SSESSMENT YEAR PURCHASES BY A.O. @ 25% 2009 10 ` 68,232 2010 11 ` 5,00,011 2012 13 ` 50,548 3. THE ASSESSEE IN THIS CASE IS ENGAGED IN THE BUSINESS OF MANUFACTURER OF STAINLESS STEEL UTENSILS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. T HE ASSESSING OFFICER MADE 25% ADDITION OF THE BOGUS PURCHASE . 4. UPON ASSESSEE'S 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 THE ABOVE ORDER , R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED . I T 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 COURTS DECISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN WRI T P ETITION NO . 2860, ORDER D A T ED 18 TH JUNE 2014). IN THIS CASE , THE HON'BLE JURISD ICTIONAL HIGH COURT HAS 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 PURCHASE FROM THE GREY MARKET. 3 M/S. NEELAM METAL INDUSTRIES MAKING PURCHASES THROUGH THE GREY M ARKET 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 , 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY TH E LEARNED CIT(A) MEETS THE END S OF JUSTICE. ACCORDINGLY , I UPHOLD THE ORDER OF THE LEARNED CIT(A) . 6. 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. 7. IN THE RESULT , THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 ON 16.09.2020 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 16.09.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI