ITI-22(1)(2), Mumbai V. DEVANG PRAVIN TALSANIA, Mumbai

ITA 4102/MUM/2019

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 8669 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 12A; 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 4102 /MUM/ 201 9 (ASSESSMENT YEAR 2011 - 12 ) ITO - 22(1)(2) 313, 3 RD FLOOR PIRAMAL CHAMBERS LAL BAUG, PAREL MUMBAI - 400 012. V S . SHRI DEVANG PRAVIN TALSANIA A/3, SAN GAM FLAT NO. 12A 2 ND FLOOR, S.V. ROAD SANTACRUZ - WEST MUMBAI - 400 054. PAN : ACHPT2873P ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 08 . 12 . 20 20 DATE OF PRONOUNCEMENT 09 .1 2 . 20 20 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS A G GRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] HAS REDUCED THE ADDITION FOR BOGUS PURCHASE OF RS. 22,892/ - DONE @ 14.06% BY ASSESSING OFFICER BY SUSTAIN ING ONLY 12.5% FOR THE A . Y .2011 - 12 VIDE ORDER DATED 11.3.2019. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO BUSINESS OF TRADING OF FABRIC AND JOB WORK. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCH ASES FROM BOGUS DEALERS, THE ASSESSING OFFICER MADE 14.06% ADDITION OF THE BOGUS PURCHASE RESULTING IN DISALLOWANCE OF RS. 22,892/ - . 3. UPON ASSESSEE'S APPEAL LEARNED CIT ( A ) HAS NOTED THAT THE SALES HA VE 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 . SHRI DEVANG PRAVIN TALSANIA 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD L EARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. I FIND THA T IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED 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 ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORT ED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ E XIMP E NTERP RISES (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 WH EN 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 MARKET 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 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. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . 6. BEFORE PARTING I 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 T HE APPEALS CAN BE HEARD TOGETHER . ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES BY PLACING THE RESULT ON NOTICE BOARD ON 09.12.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 09 / 1 2 / 2 0 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT SHRI DEVANG PRAVIN TALSANIA 3 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUM BAI