ACIT-6(2)(2), MUMBAI V. M/S DOLPHIN MARINE ENTERPRISES P. LTD., MUMBAI

ITA 5190/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6867 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 5190/MUM/2019 : A.Y : 2010 - 11 ASSTT. COMMISSIONER OF INCOME TAX - 6(2)(2), MUMBAI. (APPELLANT) VS. M/S. DOLPHIN MARINE ENTERPRISES PRIVATE LTD., 275, STC BUILDING, REAY ROAD, MAZGAON, MUMBAI 400 010 . PAN : AAACD1804E (RESPONDENT) APPELLANT BY : SHRI BHARAT ANDHALE RESPONDENT BY : NONE DATE OF HEARING : 11 / 03 /202 1 DATE OF PRONOUNCEMENT : 1 1 /0 3 /2021 O R D E R PER SHAMIM YAHYA, AM : THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 12, MUMBAI (IN SHORT CIT(A)) HAS REDUCED THE ADDITION FOR BOGUS PURCHASES OF RS.2, 82,844 / - DONE @ 100% BY THE ASSESSING OFFICER BY SUSTAINING ONLY 12.5% FOR THE ASSESSMENT YEAR 2010 - 11 VIDE ORDER DATED 12.04.2019. 2. THE ASSESSEE IN THIS CASE IS ENGAGED IN REPAIRING AND MAINTAINING OF REFRIGERATION UNITS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM THE SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. 2 ITA NO. 5190/MUM/2019 M/S. DOLPHIN MARINE ENTERPRISES PVT. LTD. THE ASSESSING OFFICER MADE 100% ADDI TION OF THE BOGUS PURCHASES. UPON ASSESSEES APPEAL, LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCH ASES. 3. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 4. WE HAVE HEARD THE LEARNED DR AND PERUSED THE RECORD. WE FIND THAT IN THIS CASE THE SALES OR ANY OTHER ASPECT OF WORKING HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALE S ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASES CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NICKUNJ EX IMP ENTERPRISES (IN WRIT PETITION NO. 2860, ORDER DATED 18.06.2014). IN THIS CASE, THE HON'BLE HIGH 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 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 CIRCUMSTANCES OF THE CASE, THE 1 2.5 % DISALLOWANCE OUT OF BOGUS PURCHASES DONE BY THE LEARNED CIT(A) MEETS THE END OF JUSTICE. ACCORDINGLY, WE UPHOLD THE ORDER OF LEARNED CIT(A). 5. THE DECISION IN THE CASE OF N.K. PROTEINS RELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF ADAM H. KAZI . 3 ITA NO. 5190/MUM/2019 M/S. DOLPHIN MARINE ENTERPRISES PVT. LTD. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE STANDS DISMISSED. 7. BEFORE PARTING, WE MAY ADD THAT I F THE ASSESSEE HAS FILED A CROSS - APPEAL OR CROSS - OBJECTION, AND THE SAME HAS REMAINED UNHEARD, EITHER PARTY MAY APPLY FOR RECALL OF THIS ORDER SO THAT THE APPEALS CAN BE HEARD TOGETHER. ORDER PRONOUNCED UNDER RULE 34(4) OF ITAT RULES ON 1 1 T H MARCH, 202 1. SD/ - SD/ - (RAM LAL NEGI) JUDICIAL MEMBER ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI, DATE : 1 1 T H MARCH, 20 21 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, D BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI