ITO 17(1)(3), MUMBAI V. SHRI CHETAN BACHUBHAI DOSHI, MUMBAI

ITA 5135/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9655 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH (JM) & SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 5135 /MUM/ 201 8 (ASSESSMENT YEAR 20 10 - 11 ) ITO - 17(1)(3) ROOM NO. 116 1 ST FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. V S . SH RI CHETAN BACHUBHAI DOSHI ROOM NO. 4, RAVJI MANSION, 12/14, KAZI SAYEED STREET MUMBAI - 400 009. PAN : AACPD9994J ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 19 . 09 . 201 9 DATE OF PRONOUNCEMENT 0 3.12 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - THIS APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT LEARNED CIT(A) HAS SUSTAINED ONLY 8% AS AGAINST 12.5% DISALLOWANCE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 15.6.2018 PERTAINING TO AY 2010 - 11. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO BUSINESS OF TRADERS IN BALL BEARING AND HARDWARE. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DE ALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE 12.5% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 10,77,771/ - . 3. UPON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL C ASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 8% DISALLOWANCE OUT OF THE BOGUS PURCHASES. 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. WE FIND THAT IN SHRI CHETAN BACHUBHAI DOSHI 2 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 HO NOURABLE 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 H ONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES A RE 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 EXCHE QUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIR CUMSTANCES OF THE CASE THE 8 % DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCOR DINGLY , WE UPHOLD THE ORDER OF LEARNED CIT - A. 5 . IN THE R E SULT THIS APPEAL FILED BY THE R EVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 3.12 . 201 9 . SD/ - SD/ - ( MAHAVIR SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 3 / 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 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI