ITO 28(1)(1), MUMBAI V. SHRI AHMED MOHMED VASTA, MUMBAI

ITA 3558/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4584 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, M UMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM ITA NO. 3558/MUM/2019 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER-28(1)(1) ROOM NO. 329, 3 RD FLOOR, 6 TH TOWER, VASHI RAILWAY STATION COMPLEX, VASI, NAVI MUMBAI-400 703 VS. SHRI AHMED MOHMED VASTA C-101, MILLENNIUM PARK, SECTOR-25, NERUL, NAVI MUMBAI-400 706 PAN/GIR NO. AAAPV 4065 E ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI JEETENDRA KUMAR RESPONDENT BY : NONE DATE OF HEARING : 20.10.2020 DATE OF PRONOUNCEMENT : 22.10.2020 O R D E R PER SHAMIM YAHYA, A. M.: THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-26, MU MBAI (LD.CIT(A) FOR SHORT) DATED 29.03.2019 HAS REDUCED THE ADDITION FOR BOGUS PURCH ASE OF RS.4,24,081/- DONE BY THE ASSESSING OFFICER @ 100% BY SUSTAINING ONLY 12.5%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BU SINESS AS M/S. ACCURATE ELECTRIC WORKS AND IS ENGAGED IN BUSINESS OF GOVERNMENT AND MUNICIPAL CONTRACTORS FOR FLOOD GATE SUPPLIERS AND SERVICES UNDER DISASTER MANAGEMENT SY STEM. 3. THE ASSESSMENT WAS REOPENED UPON INFORMATION FRO M SALES TAX DEPARTMENT THAT THE ASSESSEE HAS MADE RS.4,24,081/- PURCHASES FROM BOGU S DEALERS. THE A.O. MADE 100% ADDITION OF THE BOGUS PURCHASE. 4. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) HAS N OTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON THE SEV ERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF TH E BOGUS PURCHASES. 2 ITA NO. 3558/MUM/2019 ITO VS. SHRI AHMED MOHMED VASTA 5. AGAINST ABOVE ORDER, THE REVENUE IS IN APPEAL BE FORE THE ITAT. 6. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE DESPITE NOTICE SENT. HENCE, WE PROCEEDED TO ADJUDICATE THE ISSUE BY HEARING THE LD . DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN D OUBTED IT 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 AC TUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HON'BLE JURISDICTIONAL HIGH COURT DE CISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18. 6.2014). IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRE SENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASE S THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMENT OF T AX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION, IN MY CONSIDERED OPIN ION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PU RCHASES DONE BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY, WE UPHOLD TH E ORDER OF LEARNED CIT-A. 7. THE DECISION OF N. K. PROTEINS RELIED BY THE REV ENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPL AINED AND DISTINGUISHED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& CO ITA NO 1004 OF 20016 DT 11/2/2019. 8. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 3 ITA NO. 3558/MUM/2019 ITO VS. SHRI AHMED MOHMED VASTA 9. BEFORE PARTING, WE 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. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD ON 22.10.20 20 SD/- SD/- (RAM LAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 22.10.2020 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI