ITO WARD 28(1)(4), MUMBAI V. FIROZ MOINUDDIN SHAIKH, MUMBAI

ITA 5295/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9656 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: KISHOR RAJESHIRKE
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 5295 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) ITO WARD 28(1)(4) 3 RD FLOOR, R.NO. 330 TOWER NO. 6, VASHI RAILWAY STATION COMPLEX VASHI, NA VI MUMBAI. PIN : 400 703. V S . FIROZ MOINUDDIN SHAIKH PROP. M/S. MODERN SALES AND EQUIPMENTS & MODERN MEDICAL STORES SHOP NO. 1, PLOT NO. 211 HARBAN APARTMENT BEHIND NERUL PETROL PUMP NERUL, NAVI MUMBAI - 400706. PAN : ABAPS2352N ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI KISHOR RAJESHIRKE DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 1.10 . 201 9 DATE OF PRONOUNCEMENT 4.12 . 201 9 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AG G RIEVED THAT THE LEARNED CIT - A HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 15% OF RS. 2,40,524/ - AS AGAINST 100% ADDITION MADE BY THE ASSESSING OFFICER VIDE ORDER DATED 8.6.2018 PERTAINS TO A.Y. 2009 - 10. 2. THE ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINESS THA T OF TRADING IN ITEMS OF INDUSTRIAL USE IN THE NAME AND STYLE OF M/S. MODERN SALES AND EQUIPMENT AND ALSO M/S. MODERN MEDICAL STORES. 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 3. UP ON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AN D UP ON 2 THE FACTS OF THE CASE HE SUSTAINED 15% DI SALLOWANCE OUT OF THE BOGUS PURCHASES . 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . 5. WE FIND THAT IN THIS CASE THE SALES HAVE NOT B EEN 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 HONOURABLE JURISDICTIONAL H IGH COURT DECISION IN THE CASE OF N IKUNJ EXIMP E NTERPRISES (IN WRIT PETITION N O 2860 , ORDER DT . 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER T HE 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 I N OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES 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. 6. IN THE RESULT THIS APPEAL FILE D BY THE REVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 4.12 . 201 9 . SD/ - SD/ - (PAWAN SINGH) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 4 / 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. 3 BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI