ITO 31(2)(5), MUMBAI V. P. RAMSUBRA MANIAN, MUMBAI

ITA 4047/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1801 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 4047 /MUM/ 201 8 (ASSESSMENT YEAR 20 11 - 12 ) ITO - 31(2)(5) ROOM NO. 106 C - 13, 1 ST FLOOR BKC, BANDRA(E) MUMBAI - 400 051. V S . SHRI P. RAMSUBRA MANIAN 318/320, SUNB EAM 25 - B, NEW CHARNI ROAD MUMBAI - 400 004. PAN : AFSPM2745R ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 10.6 . 201 9 DATE OF PRONOUNCEMENT 11 . 6 . 201 9 O R D E R THIS IS AN APPEAL BY THE R EVENUE WHEREIN THE REVENUE IS AG G RIEVED THAT THE LEARNED CIT - A HAS NOT SUSTAINED HUNDRED PERCENT DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. 2. THE ASSESSING OFFICER IN THIS CASE HAS MADE HUNDRED PERCENT ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 26,71,620/ - . 3 . UP ON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES . 4. AG AINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD THE LD DR. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE NOTICE . I HAVE CAREFULLY PERUSED THE RECORDS. I FIND THAT 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 CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE 2 JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ E X I MP E NT ERPRISES (IN WRIT PETITION 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 BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CASE INDICATE THA T ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXC HEQUER. IN SUCH SITUATION 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. THE DECISION OF N.K. PROTEINS REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALR EADY BEEN DISTIN GUISHED BY HON'BLE BOMBAY HC AS THE SAME IS RENDERED IN A DIFFERENT CONTEXT. 5. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED ORDER HAS BE EN PRONOUNCED IN THE COURT ON 11 . 6 . 201 9 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 11 / 6 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. D R, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI