SHRI ROHINTON CYRUS MALESRA, MUMBAI V. INCOME TAX OFFICER 19(3)(1), MUMBAI

ITA 4752/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3364 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 06-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: ANIL GALA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM ITA NO. 4752 /MUM/ 2018 (ASSESSMENT YEAR: 2010 - 11 ) SHRI ROHINTON CYRUS MALESRA G - 1/11, 5 TH FLOOR, SHAPUR BAUG, V. P. ROAD, NEAR CONGRESS HOUSE, MUMBAI - 400 004 VS. INCOME TAX OFFICER 19(3)(1), MATRU MANDIR, TARDEO, MUMBAI - 400 037 PAN/GIR NO. AAGPM 5502 K ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI ANIL GALA RESPONDENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 05.09.2019 DATE OF PRONOUNCEMENT : 02.12. 2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LEARNED C1T - A HAS ERRED IN SUSTAINING 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 1 2 .07.2018 PERTAINING TO ASSESSMENT YEAR 2010 - 11. 2. B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN THIS CASE IS ENGAGED IN THE BUSINESS OF JOB WORK. 3. THE ASSESSMENT IN THIS CASE WAS REOPE NED U PON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE BOGUS PURCHASES. THE ASSESSEE SUBMITTED THE PURCHASE VOUCHERS AND THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL. HOWEVER THE SUPPLIERS WERE NOT PRODUCED BEFORE THE ASSESS ING OFFICER. SALES IN THIS CASE WERE NOT DOUBTED. 2 ITA NO.4752/MUM/2018 SHRI ROHINTON CYRUS MALESRA VS. ITO . 4. THE I NCOME T AX O FFICER IN THIS CASE HAS MADE 100 % ADDITION ON ACCOUNT OF BOGUS PURCHASE RESULTING IN DISALLOWANCE OF RS.2,44,784/ - . 5. UPON THE ASSESSEE S APPEAL, THE LD. CIT (A) CONFIRMED THE SAME . 6. AGAINST THE ABOVE ORDE R, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. WE HA VE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UP ON CAREFUL CONSIDERATION WE FIND THAT THE ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HAS BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. WE FIND THAT IN THIS CASE THE SALES OR OTHER WORKINGS HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CA NNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HON'BLE 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 C ASE THE HONBLE 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 . 8. IN THE PRESENT CASE , THE FACTS OF THE CASE INDICATE THAT ASS ESSEE 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. 3 ITA NO.4752/MUM/2018 SHRI ROHINTON CYRUS MALESRA VS. ITO . 9. IN OUR CONSIDERED OPINION, DISALLOWANCE @ 12.5% OF BOGUS PU RCHASE WOULD MEET THE END OF JUSTICE. WE DIRECT ACCORDINGLY. 10. I N THE RESULT , THE APPEAL STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 0 2 . 1 2 . 2 0 1 9 S D / - S D / - ( AMARJIT SINGH ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 0 2 . 1 2 . 2 0 1 9 ROSHANI , SR. PS 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 FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI