ITO - 27(1)(3), MUMBAI V. CHERUVELLIL KURIAN NINAN, MUMBAI

ITA 4967/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9639 (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. 4967 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) ITO - 27(1)(3) TOWER NO. 6 4 TH FLOOR, R.NO. 409 VASHI RAILWAY STATION VASHI, NAVI MUMBAI. V S . SHRI CHERUVELLIL KURIAN NINAN PROP. SAIMEX INDUSTRIES GALA NO. 1, OPP. DARGAH MAULANA CHAWL, LBS MARG GHATKOPAR WEST MUMBAI - 400 086. PAN : AACPN3447L ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE 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 AG G RIEVED THAT THE LEARNED CIT - A HAS DELETED THE ADDITION OF RS. 8,41,303/ - BY SUSTAINING ONLY 12.5 % DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 3.5.2018 PERTAINING TO A . Y . 2009 - 10. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO ENGINEERING WORKS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE HUNDRED PERCENT ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 10,00,425/ - . 3. UPON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALES HAS NOT BE EN DOUBTED. ACCORDIN GLY 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 CHERUVELLIL KURIAN NINAN PROP. SAIMEX INDUSTRIES 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUS ED THE RECORDS . NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 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 RATIONA LE 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 HI GH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES 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 OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIR CUMSTANCES 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 . P ROTEINS 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 HAJ I ADAM& CO ITA NO 1004 OF 20016 DT 11/2/2019 . 5. IN THE RESULT 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 ) JUDICI AL 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 SHRI CHERUVELLIL KURIAN NINAN PROP. SAIMEX INDUSTRIES 3 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY OR DER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI