MR.ASLAM USMAN KHAN, MUMBAI V. ITO WARD 17(1)(2), MUMBAI

ITA 4662/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0378 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 31-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 4662 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) MR. ASLAM USMAN KHAN 5 TH FLOOR, NOORANI MANZIL ROOM NO. 13, NAVROJI HILL ROAD NO. 2, MUMBAI - 400009. PAN : AAEPK086 3H V S . ITO WARD 17(1)(2) ROOM NO. 116 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 11 .7 . 201 9 DATE OF PRONOUNCEMENT 0 6.9 . 201 9 O R D E R TH IS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSES IS AG G RIEVED THAT THE LEARNED CIT - A HAS ERRED IN SUSTAINING DISALLOWANCE OF RS. 6,99,563/ - ON ACCOUNT OF BOGUS PURCHASES OF RS. 12,70,131/ - . 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN TH E BUSINESS OF MANUFACTURER OF PIPED GAS EQUIPMENTS. I NFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT THAT ASSES SEE HAS THAT IN BOGUS PURCHASES. THE ASSESSMENT WAS ACCORDINGLY REOPENED. THE ASSESSING OFFICER IN THIS CASE HAS MADE DISALLOWANCE OF RS. 2 6,99,563/ - ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 12,70,131/ - BEING PEAK INVESTMENT . 3. U PON ASSESSEES APPEAL ID CIT A CONFIRMED THE SAME . 4. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTAT IVE AND PE RUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTI CE. 2 5. U P ON CAREFUL CONSIDERATION I FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HA S 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. 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 SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN WRIT PETITION NO 2860,ORDER DT . 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT AL LOWANCE 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 ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHA SES 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 CIRCUMSTANCES OF THE CASE THE 12.5 % DISALLOWANCE OUT OF THE BOG US PURCHASES MEETS THE END OF JUSTICE . 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORD ER HAS BE EN PRONOUNCED IN THE COURT ON 6. 9 . 201 9 . SD/ - (SH A M IM YAHYA ) ACCOUNTANT MEMBER MU MBAI ; DATED : 6 / 9 / 20 1 9 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. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI