ITO - 27(1)(1), NAVI MUMBAI V. ANJAM CHANALAL GOEL, MUMBAI

ITA 4966/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9640 (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: 2011-2012
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: ANJAM GOEL
• 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. 4966 /MUM/ 201 8 (ASSESSMENT YEAR 20 11 - 12 ) ITO - 27(1)(1) TOWER NO. 6 4 TH FLOOR, R.NO. 406 VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI. V S . SHRI ANJAM CHANANLAL GOEL 114, RAIKAR CHAMBERS OPP. GOVANDI POST OFFICE N.G. ACHARYA MARG GOVANDI EAST, MUMBAI - 88. PAN : AAOPG4456G ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI ANJAM GOEL DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 05 . 09 . 201 9 DATE OF PRONOUNCEMENT 02 . 1 2 . 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. 17,45,185/ - BY SUSTAINING ONLY 12 .5 % DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 24.5.2018 PERTAINING TO A.Y. 2011 - 12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO DEALING IN SANITARY WARES AND TILES. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMEN T THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING O FFICER IN THIS CASE HAS MADE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING T O RS. 22,50,796/ - . 3. UPON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES . SHRI ANJAM CHANANLAL GOEL 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE IT AT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . W E F IND 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 NTERP RISES (IN WRIT PETITION NO 2860 ,ORDER DT 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOG US 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 OTHERS AT THE EXPEN SE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF 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 RESUL T, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 02 . 1 2 . 201 9 . SD/ - SD/ - ( AMARJIT SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 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 SHRI ANJAM CHANANLAL GOEL 3 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI