ITO - 33(1), MUMBAI V. ASMA NIYAZ MANIHAR, MUMBAI

ITA 3500/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4390 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 3500/MUM/2019 (ASSESSMENT YEAR 2010-11 ) ITO 33(1) ROOM NO. 945 9 TH FLOOR, KAUTILYA BHAVAN, C-41 TO C-43 G-BLOCK, BKC, BANDRA EAST, MUMBAI-400 051. VS . ASMA NIYAZ MANIHAR A/41, DREMLAND CHS LTD., OPP. GOVERNMENT INDUSTRIAL ESTATE CHARKOP, KANDIVALI(W) MUMBAI-400 067. PAN : AJCPM4256D (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI JITENDRA KUMAR DATE OF HEARING 19.10.2020 DATE OF PRONOUNCEMENT 21.10.2020 O R D E R PER SHAMIM YAHYA (AM) :- THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [I N SHORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE DONE @ 25% BY AO BY SUSTAINING ONLY 12.5% THEREOF VIDE ORDER DATED 11.2.2019 PERTA INING TO A.Y. 2010-11. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO STEEL TRADING. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPART MENT THAT ASSESSEE HAS MADE PURCHASES RS. 96,34,149 FROM BOGUS DEALERS, TH E AO MADE 25% ADDITION OF THE BOGUS PURCHASE AFTER REDUCING 3.18% GROSS PR OFIT DECLARED BY THE ASSESSEE RESULTING IN DISALLOWANCE OF RS. 21,02,171 /-. 3. UPON ASSESSEE'S APPEAL LEARNED CIT-A HAS NOTED T HAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEV ERAL CASE LAWS AND UPON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWAN CE OUT OF THE BOGUS PURCHASES, AS REDUCED BY GROSS PROFIT ALREADY DECLA RED BY THE ASSESSEE OF 3.18%. THUS LEARNED CIT(A) SUSTAINED THE DISALLOWAN CE OF RS. 8,98,152/-. ASMA NIYAZ MANIHAR 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. AT THE OUTSET WE NOTE THAT IN THE GROUNDS OF APPEAL BY THE REVENUE, IT HAS NOT SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) HAV E ALSO GRANTED REDUCTION OF GROSS PROFIT ALREADY DECLARED BY ASSESSEE. TO THIS EXTENT THIS GROUND BY THE REVENUE ITSELF IS MISPLACED. BE AS IT MAY, WE FIND 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 D ONE. 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 D T. 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCEN T ALLOWANCE 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 PU RCHASES AS REDUCED BY GROSS PROFIT ALREADY DECLARED BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT-A. 5. IN THE RESULT THIS APPEAL FILED BY THE REVENUE S TANDS DISMISSED. 6. BEFORE PARTING WE MAY ADD THAT IF THE ASSESSEE H AS FILED A CROSS APPEAL OR CROSS OBJECTION AND THE SAME HAS REMAINED UNHEAR D, 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 21.10.2020. SD/- SD/- (RAMLAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 21/10/2020 ASMA NIYAZ MANIHAR 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