RAGHAVENDRA P. JOSHI (PROP.M/S.JUPITER ENGINEERING WORKS), MUMBAI V. ITO-3(2), MUMBAI

ITA 4227/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3748 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) I.T.A. NO.4227/ MUM/2018 (ASSESSMENT YEAR: 2009 - 10) RAGHAVENDRA P. JOSHI (PROP. M/S. JUPITER ENGINEERING WORKS) GALA NO.5, PRAMILA INDUSTRIAL ESTATE, PLOT NO. 268, UPVAN, THANE 400606 / V. ITO 3(2) ROOM NO. 04, 3 WING, ASHAR IT PARK, 6 TH FLOOR, WAGLE INDL. ESTATE, THANE 400604 PAN : AAFFS6604P ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY: NONE REVENUE BY: SHRI. CHAITANYA ANJARIA / DATE OF HEARING : 10.06.2019 / DATE OF PRONOUNCEMENT : 30 .08.2019 / O R D E R PER SHAHMIM YAHYA, ACCOUNTANT MEMBER: THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LEARNED CIT A HAS ERRED IN SUSTAINING 10 0 % DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 7,27,940/ - . 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN BUSINESS OF ENGINEERING JOBS WORKS. THE INFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT THAT ASSESSEE HAS ENGAGED IN BOGUS PURCHASES. THE ASSESSMENT WAS ACCORDINGLY REOPENED. 3. THE ASSESSING O FFICER IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 7,27,940/ - . UPON ASSESSEES APPEAL LD. CIT(A) CONFIRMED THE SAME. RAGHAVENDRA P. JOSHI I.T.A. NO. 4227 /MUM/2018 2 4. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LD. DR AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 5. UP ON CAREFUL CONSIDERATION I FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCES HAVE BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED . NO DEFECT HAS BEEN POINTED IN ANY OTHER WORKING OF THE ASSESSEE. 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 AND CONSUMPTION . THIS PROPOSITION IS SUPPORTED FROM HONORABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ E XIMP ENTERP RISES (IN WRIT PETITION NO 2860 , ORDER DT 18.6.2014). IN THIS CASE THE HONORABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER IN THAT CASE ALL THE SUPPLIES WERE TO GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THAT ASSES SEE 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 MY CONSIDERED OPINION ON THE FACTS AND CIRCUMS TANCES OF THE CASE THE 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE . ACCORDINGLY, I DIRECT THAT DISALLOWANCE IS THIS CASE BE RESTRICTED TO 12.5% OF BOGUS PURCHASES. 7. IN THE RESULT ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER HAS BEEN PRONOUNCED IN THE COURT ON 30 .8.2019. SD/ - (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI, DATED: 30 .08.2019 RAGHAVENDRA P. JOSHI I.T.A. NO. 4227 /MUM/2018 3 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI