DEENBANDHU G. TRIVEDI, MUMBAI V. INCOME TAX OFFICER 13(1)-3, MUMBAI

ITA 5031/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7939 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 5031/MUM/2017 ( / ASSESSMENT YEAR: 2010 - 11 ) DEENBANDHU G. TRIVEDI 61, SHERIFF DEVJI MARKET, CHAKLA STREET, MASJID BANDER, MUMBAI - 400 003 / VS. ITO - 13(1) - 3, AAYAKAR BHAWAN, CHURCHGATE, MUMBAI ./ ./ PAN/GIR NO. AAAPT 5916 E ( / AP PELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MEHUL SHAH / RESPONDENT BY : MS. N. HEMALATHA / DATE OF HEARING : 12.10.2017 / DATE OF PRONOUNCEMENT : 13.12 .2017 / O R D E R PER SHAMIM YAHYA , A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 28, MUMBAI DATED 04.5.2017, PERTAINING TO THE ASSESSMENT YEAR 2010 - 11.. 2. THE GROUND OF APPEAL READ AS U NDER: 2 ITA NO. 5031/MUM/2017 (A.Y. 2010 - 11) DEENBANDHU G. TRIVEDI VS. ITO 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING ACTION OF THE ASSESSING OFFICER IN DISALLOWING PURCHASES OF RS.15,27,250/ - WITHOUT APPRECIATING THAT THE CONCERNED PURCHA SE PARTIES MERELY MADE AN ERROR OF COMMISSION IN GIVING CONFIRMATIONS, BUT FOR WHICH THERE WAS NO EVIDENCE OR ANY MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER TO JUSTIFY THE ADDITION, MORE PARTICULARLY WHEN THE APPELLANT SUBMITTED ALL THE EVIDENCES TO JUSTIFY THE CLAIM OF PURCHASES. 3. IN THIS CASE, THE ASSESSING OFFICER NOTED THAT ON GOING THROUGH THE LIST OF SUPPLIERS FROM WHOM THE ASSESSEE HAD PURCHASED THE GOODS, NOTICES U/S. 133(6) OF THE I. T. ACT WERE ISSUED TO SOME OF THE PARTIES. IN PARTIC ULAR THREE PARTIES NAMELY SUHANA FABRICS, AHURA ENTERPRISES AND KUMKUM TEXTILES ALL CARRYING ON BUSINESS AT AND FROM BHIWANDI WERE SERVED WITH THE NOTICES U/S. 133(6) OF THE I. T. ACT AT THE BHIWANDI ADDRESSES GIVEN BY THE ASSESSEE. HOWEVER, IN EACH CASE C ONTAINING THE NOTICE AND BEARING THE ADDRESS OF THE SAID PARTIES HAS BEEN RETURNED UNDELIVERED. 4. LATER ON, SOME OF THE PARTIES GAVE REPLIES. THE ASSESSING OFFICER FOUND DISCREPANCIES IN THE SAME. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE PURCHAS ES ARE NOT GENUINE, HE CONCLUDED AS UNDER: SINCE THE PARTIES HAVE NOT CONFIRMED THE TRANSACTIONS OF PURCHASES OF THE GOODS FROM THEM BY THE ASSESSEE AND ON THE CONTRARY EACH OF THE PARTY HAS STATED THAT THEY HAVE PURCHASED GOODS FROM THE ASSESSEE, I AM UNA BLE TO ACCEPT THE GENUINENESS OF THE PURCHASES EFFECTED BY THE ASSESSEE FROM THIS PARTIES. AN AMOUNT OF RS.15,27,250/ - (RS.2,83,750 + 5,15,000 + 7,28,500) ADDED TO THE INCOME OF THE ASSESSEE. 5. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ADDITION. 3 ITA NO. 5031/MUM/2017 (A.Y. 2010 - 11) DEENBANDHU G. TRIVEDI VS. ITO 6. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. I FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRI SES (IN WRIT PETITION NO 2860 , ORDER DT . 18.6.2014) HAS EXPOUNDED THAT SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE IS NOT SUSTAINABLE. HOWEVER, THE FACTS OF THIS CASE IS LITTLE DIFFERENT INASMUCH AS SALES WERE NOT DOUBTED. HO WEVER, I FIND T HAT IN THE PRESENT CASE ALSO SALES ARE NOT DOUBTED. IN SUCH CIRCUMSTANCES, IT IS CLEAR THAT THE ASSESSEE IS ENGAGED INTO TRANSACTION FROM 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. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE , I HOLD THAT 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES WILL MEET THE END OF JUSTICE. I DIRECT ACCORDINGLY. 8. THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THIS PROPOSITION. 9. IN THE RESULT, TH IS APPEAL BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 13.12.2017 . . ./ ROSHANI , SR. PS 4 ITA NO. 5031/MUM/2017 (A.Y. 2010 - 11) DEENBANDHU G. TRIVEDI VS. ITO / COPY OF THE ORDER FORWAR DED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI