AMBERNATH POLYTEX P.LTD, AMBERNATH V. ITO WD 1(1), KALYAN

ITA 4152/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8159 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 147; 148; 144

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 4152/MUM/2017 ( / ASSESSMENT YEAR: 2009 - 10 ) AMBARNATH POLYTEX PRIVATE LIMITED PLOT NO. 115, CHIKHOLI, MIDC, AMBARNATH - 421 505 / VS. ITO, WARD 1(1), 2 ND FLOOR, RANI MANSION, KALYAN - 421 301 ./ ./ PAN/GIR NO. AAFCA 6185 L ( / APPEL LANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MEHUL SHAH / RESPONDENT BY : SHRI N. HEMALATHA / DATE OF HEARING : 09.10.2017 / DATE OF PRONOUNCEMENT : 12.12 .2017 / O R D E R PER SHAMIM YAHYA , A. M.: THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS SUSTAINED 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. 2. THE A SSESSING O FFICER IN THIS C ASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.2,70,400/ - . 2 ITA NO. 4152/MUM/2017 (A.Y. 2009 - 10) AMBARNATH POLYTEX PRIVATE LIMITED VS. ITO 3. B RIEF FACTS OF THE CASE ARE THAT IN THIS CASE THE RETURN OF INCOME, DECLARING TOTAL INCOME AS NIL, WAS FILED ON 18. 09 . 2009 AND THE SAME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, INFORMATION FROM THE SALES TAX DEPARTMENT WAS RECEIVED THAT THE ASSESSEE HAD BOOKED THE BOGUS PURCHASES, THEREFORE, THE CASE OF THE ASSESSEE WAS RE - OPENED BY THE ASSESSING OFFICER , AFTER RECORDING NECESSARY REASONS/SATISFACTION AND THE N OTICE U/S 148 OF THE ACT WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS PROCESSING OF DYES & CHEMICALS. IN COMPLIANCE, THE NECESSARY DETAILS WERE FILED, STILL THE RE - ASSESSMENT ORDER WAS PASSED U/S 144 R.W.S. 147 OF THE ACT, ON 11.03.2014, AT TOTAL INCOME OF RS.10,739/ - , AFTER MAKING THE DISALLOWANCE OF RS 2,70,400/ - , ON ACCOUNT OF UNSUBSTANTIATED / BOGUS PURCHASES . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COULD NOT PRODUCE THE CREDIBLE DOCUMENTS SUCH AS TRANSPORTATION BILLS, DELIVERY CHALLAN S, GOODS RECEIPT NOTE, OCTROI RECEIPTS, ETC., THEREFORE, TREATED THE ENTIRE PURCHASES, FROM ABOVE REFERRED PARTIES, AS BOGUS AND ADDED RS.2,70,400/ - TO THE INCOME OF THE ASSESSEE. 4. UP ON ASSESSEE'S APPEAL , THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ASSESSING OFFICERS ORDER. 5. AGAINST THE ABOVE ORDER , THE ASSESSEE I S IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT IN THIS CASE THE SALES HAVE NO T BEEN DOUBTED , IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS 3 ITA NO. 4152/MUM/2017 (A.Y. 2009 - 10) AMBARNATH POLYTEX PRIVATE LIMITED VS. ITO POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM THE HON'BLE JURISDICTIONAL HIGH CO URT DE CISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN WRIT PETITION NO 2860 ,ORDER DT 18.6.2014). IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. THE FACT OF THAT CAN CAUSE A L ITTLE DIFFERENT INASMUCH AS ALL SALES WERE TO GOVERNMENT DEPARTMENT. 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 I N CIRCUMSTANCES OF THE CASE , 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. ACCORDINGLY , I DIRECT THAT DISA LLOWANCE BE LIMITED TO 12.5% OF BOGUS PURCHASE. THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THIS PROPOSITION. 7. IN THE RESULT , THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.12.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 12.12.2017 . . ./ ROSHANI , SR. PS 4 ITA NO. 4152/MUM/2017 (A.Y. 2009 - 10) AMBARNATH POLYTEX PRIVATE LIMITED VS. ITO / 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 F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI