ITO 21(1)(4), MUMBAI V. M/S HIDE IN, MUMBAI

ITA 3530/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4391 (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: 2011-2012
• Appeal Filed On: 23-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: HARI KISHAN
• Keywords: Bogus purchase; Gift

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 3530/MUM/2019 (ASSESSMENT YEAR 2011-12 ) ITO-21(1)(4) ROOM NO. 108 1 ST FLOOR PIRAMAL CHAMBERS PAREL MUMBAI-400 012. VS . M/S. HIDE IN 5, KALEKAR CHAWL KALA KILLA, DHARVI ROAD, DHARAVI MUMBAI-400 017. PAN : AAAFH6660B (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI HARI KISHAN DEPARTMENT BY SHRI JEETENDRA KUMAR DATE OF HEARING 20 . 10 . 20 20 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 LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SH ORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE BY RS. 7,39 ,938/- DONE AT THE RATE OF 25% BY THE ASSESSING OFFICER BY SUSTAINING ONLY 12 .5%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO TRADIN G IN LEATHER GOODS AND GIFT ARTICLES. THE ASSESSMENT WAS REOPENED UPON INF ORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE RS. 17,37,660/- P URCHASES FROM BOGUS DEALERS. THE AO MADE 25% ADDITION OF THE BOGUS PURC HASE RESULTING IN DISALLOWANCE OF RS. 957,146/-. 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 UP ON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWAN CE OUT OF THE BOGUS PURCHASES, THEN SUSTAINING ONLY RS. 739,938/- AS DI SALLOWANCE. M/S. HIDE IN 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND T HAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED LAW THAT WHEN S ALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CAN NOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH CO URT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUND RED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE N OT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HA S MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARK ET 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 OPIN ION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5 % DISALLOWANCE O UT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT-A. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S ON 21.10.2020. SD/- SD/- (RAMLAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI; DATED : 21/10/2020 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