ITO - 33(1)(4), MUMBAI V. DINESH GUPTA, MUMBAI

ITA 3601/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4585 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 25 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: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITESH PUROHIT
• Assessee 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.3601/MUM/2019 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER 33(1)(4) MUMBAI VS. DINESH GUPTA ROOM NO. 94B, 9 TH FLOOR, KAUTILYA BHAVAN, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 PAN/GIR NO. AEGPG 6882 C ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI HITESH PUROHIT RESPONDENT BY : SHRI JEETENDRA KUMAR 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 ASSESSEE WHEREIN THE REVEN UE IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-45, MU MBAI (LD.CIT(A) FOR SHORT) DATED 27.02.2019 HAS REDUCED THE ADDITION FOR BOGUS PURCH ASE OF RS.5,82,838/- DONE BY THE ASSESSING OFFICER @ 100% BY SUSTAINING ONLY 12.5%. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BU SINESS OF WIRES AND OTHER ELECTRIC FITTINGS. THE ASSESSMENT WAS REOPENED UPON INFORMAT ION FROM SALES TAX DEPARTMENT THAT THE ASSESSEE HAS MADE RS.5,82,838/- PURCHASES FROM BOGUS DEALERS. THE A.O. MADE 100% ADDITION OF THE BOGUS PURCHASE. 3. 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 100% DISALLOWANCE OUT OF THE BOGUS PURCHASES. 4. AGAINST ABOVE ORDER, THE REVENUE IS IN APPEAL BE FORE THE ITAT. 2 ITA NO. 3601/MUM/2019 ITO VS. DINESH GUPTA 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED LAW T HAT 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 HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF N IKUNJ 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 PRESENT CASE INDICATE THAT ASSESSEE HAS 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 EXP ENSE 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 PURCHASES DONE BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY, WE UPHOLD THE ORDER OF LEARNE D CIT-A. 6. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED 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