ITO 28(2)(5), Mumbai V. M/S RIDHHI SIDDHI INDUSTRIES , Mumbai

ITA 3725/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3587 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 3725/MUM/2019 (ASSESSMENT YEAR 2011-12 ) ITO 28(2)(5) MUMBAI. VS . M/S. RIDDHI SIDDHI INDUSTRIES PLOT NO. 48, SECTOR 1A CIDCO INDUSTRIAL AREA, AIROLI NAVI MUMBAI-400 708. PAN : AAJFR1970K ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI DHARAN GANDHI DEPARTMENT BY SHRI BRAJENDRA KUMAR DATE OF HEARING 26.10.2020 DATE OF PRONOUNCEMENT 27.10.2020 O R D E R 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 23,32,804/- @ 100% BY THE ASSESSING OFFICER BY SUSTAINING ONLY 12.5% VIDE ORD ER DATED 20.3.2019 FOR A.Y. 2011-12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BU SINESS OF MANUFACTURING OF STEEL METAL COMPONENTS. THE ASSESSMENT WAS REOPE NED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE RS . 23,32,804/- PURCHASES FROM BOGUS DEALERS. THE AO MADE 100% ADDITION OF TH E BOGUS PURCHASE. 3. UPON ASSESSEE'S APPEAL LEARNED CIT-A HAS NOTED T HAT THE SALES HAS 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. 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. I FIND THA T IN THIS CASE THE SALES OR M/S. RIDDHI SIDDHI INDUSTRIES 2 OTHER WORKING HAVE NOT BEEN DOUBTED IT IS SETTLED L AW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PUR CHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT AC TUAL 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 BOGU S WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDI CATE 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 TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SIT UATION IN MY 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 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. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S ON 27.10.2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 27/10/2020 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. M/S. RIDDHI SIDDHI INDUSTRIES 3 BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI