ITO 27(1)(1), MUMBAI V. AJAY CHANDULAL SHAH , MUMBAI

ITA 4963/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9641 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• 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) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 4963 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) ITO - 27(1)(1) TOWER NO. 6 4 TH FLOOR VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI. V S . AJAY CHANDULAL SHAH M/S. J.K. ENTERPRISES 315/6975,OM GAYANTRI R.N. NARKAR MARG, PANT NAGAR, GHATKOPAR EAST MUMBAI - 400 077. PAN : AAFPS7157K ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 0 5 . 09 . 201 9 DATE OF PRONOUNCEMENT 02.12 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS A G GRIEVED THAT THE LEARNED CIT - A HAS DELETED THE ADDITION OF RS. 4,04,315/ - BY SUSTAINING ONLY 13.47% DI SALLOW A NC E ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED PERTAINING TO AY 2009 - 10. 2. THE ASSESSE E IN THIS CASE IS ENGAGED INTO WHOLESALE DEALING IN CARBOUYS AND DRUMS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICE R IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 4,67,253/ - . 3. UP ON ASSESSEE'S APPEAL LEARNE D CIT - A HAS NOTED THAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING R ELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 13.47% DISALLOWANCE OUT OF THE BOGUS PURCHASES AMOUNTING TO RS. 62,938/ - . AJAY CHANDULAL SHAH M/S. J.K. ENTERPRISES 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED T HE RECORDS . W E 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 EXIMP E NTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHAS ES SAID TO BE BOGUS WHEN 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 OT HERS AT THE EXPENSE OF THE EXCHEQUER IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS A ND CIRCUMSTANCES OF THE CASE 13.47% DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER O F LEARNED CIT - A. THE DECISION OF N K PROTEINS LTD. (250 TAXMAN 22) REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY H ON BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& C O . ( ITA NO 1004 OF 20016 DT 11/2/2019 ) . 5. IN THE RESULT T HIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2. 1 2 . 201 9 . SD/ - SD/ - ( AMARJIT SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DAT ED : 02 / 1 2 / 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 AJAY CHANDULAL SHAH M/S. J.K. ENTERPRISES 3 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI