ITO, 19(3)(2), MUMBAI V. SAMARTHMAL D SANGHVI HUF, MUMBAI

ITA 3108/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6394 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 10-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 3108/MUM/2019 (ASSESSMENT YEAR 2010-11 ) ITO-19(3)(2) ROOM NO. 224 MATRU MANDIR TARDEO MUMBAI-400 007. VS . SAMARTHMAL D. SANGHAVI HUF ROOM NO. 108, 2 ND FLOOR TULSI BUILDING 178/180, KHETWADI BACK ROAD, MUMBAI-400 004. PAN :AAVPT4119Q (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 15.09.2020 DATE OF PRONOUNCEMENT 17.09.2020 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED CIT-A HAS REDUCED THE ADDITION FOR BOGU S PURCHASE OF RS. 9,44,093/- DONE @ 100% BY AO BY SUSTAINING ONLY 12. 5% VIDE ORDER DATED 14.3.2019 FOR A.Y. 2010-11. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO TRADIN G OF AUTO PARTS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS, THE AO MADE 100% ADDITION OF THE BOGUS PURCHASE. 3. UPON ASSESSEE'S APPEAL LEARNED CIT-A HAS NOTED T HAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEV ERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 12.5 % DISALLOWA NCE OUT OF THE BOGUS PURCHASES. SAMARTHMAL D. SANGHAVI HUF 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD ID DR 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 D OUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSIT ION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN TH E 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 AL LOWANCE 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 PU RCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GI VES 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 THE 12.5 % DISALLOWANCE OUT OF THE BOGUS P URCHASES DONE BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY I UPHOLD THE ORDER OF LEARNED CIT-A. 5. THE DECISION OF N.K. PROTEINS LTD. (250 ITR 22)R ELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HONBL BOMBAY HIGH COURT IN THE CASE OF M. HAJI ADAM & CO. (ITA NO. 1004 OF 2006 DATED 11.2.2019). 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISM ISSED 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HA S 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 RULE S ON 17.9.2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 17/09/2020 SAMARTHMAL D. SANGHAVI HUF 3 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI