ITO - 30(3)(3), MUMBAI V. SHRI SHAILENDRA C SINGH, MUMBAI

ITA 3197/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6380 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2019
• 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. 3197/MUM/2019 (ASSESSMENT YEAR 2011-12 ) ITO-30(3)(3) ROOM NO. 535 5 TH FLOOR KAUTILYA BHAVAN BANDRA EAST MUMBAI-400 051. VS . SHRI SAILENDRA C. SINGH, HUF C/O. M/S. BHARAT K. PATEL & CO. 402, RISHIKESH APARTMENTS OPP. NL HIGH SCHOOL S.V. ROAD, MALAD WEST MUMBAI-400 064. PAN : AAEHS5200C (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 16.09.2020 DATE OF PRONOUNCEMENT 16.09.2020 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. 1,71,828/- DONE @ 100% BY ASSESSING OFFICER BY SU STAINING ONLY 12.5% VIDE ORDER DATED 12.3.2019 PERTAINING TO A.Y. 2011-12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO JOB WO RK AND ELECTROPLATING. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM S ALES 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 HAVE 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 SHRI SAILENDRA C. SINGH, HUF 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 SET TLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SATES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTI ONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETIT ION 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 S ALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THR OUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMEN T OF TAX AND OTHERS AT THE EXPENSES OF EXCHEQUER. IN SUCH SITUATION IN OUR CON SIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5 % DISA LLOWANCE OUT OF THE BOGUS PURCHASES 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) RELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M. HAZI ADAM & CO. (ITA NO. 1004 OF 2006 DATED 11.2.20 19). 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 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 ON 16.9.2020 IN THE COURSE OF VI RTUAL HEARING. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 16/09/2020 SHRI SAILENDRA C. SINGH, 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