QUALITY ENGINEERING PRODUCTS, MUMBAI V. ASSISSTANT COMMISSIONER OF INCOME TAX CIRCLE-3, THANE

ITA 5271/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8563 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: R K MULCHANDANI
• Keywords: Bogus purchase

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA , AM ./ I.T.A. NO. 5271/MUM/2017 ( / ASSESSMENT Y EAR: 2010 - 11 ) QUALITY ENGINEERING PRODUCTS A/193, ROAD NO. 16A, WAGLE INDUSTRIAL ESTATE, THANE - 400 604 / VS. THE ASST. CIT, CIRCLE - 3, ASHAR IT PARK, 6 TH FLOOR, ROOM NO. 2, WAGLE INDUSTRIAL ESTATE, THANE - 400 604 ./ ./ PAN/GIR NO. AAAFQ 0642 C ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI R. K. MULCHANDANI / RESPONDENT BY : MS. N. HEMALATHA / DATE OF HEARING : 13.11.2017 / DATE OF PRONOUNCEMENT : 14.11 .2017 / O R D E R PER SHAMIM YAHYA , A. M.: T HIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WH EREIN 100% DISALLOWANCE ON ACCOUNT OF BOG US PURCHASE AMOUNTING TO RS. 4,24,975 / - IS CONFIRMED . 2. IN THIS CASE , THE ASSESSING OFFICER HAD MADE A DISALLOWANCE OF RS. 4 , 24 , 975 / - BEING 100% OF THE BOGUS PURCHASES. THE ASSESSING OFFICER BASED THE ADDITION ON THE 2 ITA NO. 5271/MUM/2017 (A.Y. 2010 - 11) QUALITY ENGINEERING PRODUCTS VS. THE ASST. CIT BASIS OF INFORMATION RECEIVED FROM THE S ALES T AX DEPARTMENT THAT ASSESSEE HAS RECEIVED HAWALA PURCHASES. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD NOT SUPPLIED RELEVANT EVIDENCE OF MOVEMENT OF GOODS PURCHASED. UPON ASSESSEES APPEAL LD CIT(A) CONF I RMED THE SAM E. 3. AGAINST THI S ORDER, THE ASSESSEE HAS FILED APPEAL BEFORE THE ITAT. 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . UPON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT EVIDENCE IN THE SHAPE OF INFORMATION FROM SALES T AX DEPARTMENT HAVE BEEN RE FERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL MOVEMENT OF THE GOODS UNDER DISPUTE. HOWEVER , I NOTE THAT THE ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT VERIFICATION OF HIS OWN. I FIND SALES HAV E NOT BEEN DOUBTED IN THIS CASE. IT IS SETTLED LAW FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ E XIMP E NTERPRISES THAT WHEN SALES ARE NOT DOUBTED , 100% DISALLOWANCE FOR PURCHASES CANNOT BE DONE. HOWEVER , I FIND THAT THE PRESENT CASE IS DIFF ERENT FROM THE ABOVE CASE AS IN THAT CASE BEFORE THE HONBLE HIGH COURT , THE SALES WERE MADE TO GOVERNMENT DEPARTMENT WHICH IS NOT THE CASE HERE. I FIND THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , A DISALLOWANCE OF 12.5% OF THE BOGUS PURCHASES WOULD S ERVE THE INTEREST OF JUSTICE. ACCORDINGLY , I MODIFY THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) A ND DIRECT THAT DISALLOWANCE IN THIS CASE SHOULD BE LIMITED TO 12.5% OF THE BOGUS PURCHASES. 3 ITA NO. 5271/MUM/2017 (A.Y. 2010 - 11) QUALITY ENGINEERING PRODUCTS VS. THE ASST. CIT 5. THE L EARNED COUNSEL OF THE ASSESSEE FAIRLY AGREED TO T HE ABOVE PROPOSITION. 6. IN THE RESULT , THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 14.11.2017 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED 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