ITO WD 1(2), MUMBAI V. MAHSUKHLAL U. DOSHI, MUMBAI

ITA 5412/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7432 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-09-2018
• 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 SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 5412 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) I.T.A. NO. 541 3 /MUM/2018 (ASSESSMENT YEAR 20 10 - 1 1 ) I.T.A. NO. 541 4 /MUM/2018 (ASSESSMENT YEAR 20 11 - 1 2 ) ITO WARD 1(2) ROOM NO. 24 B - WING, 6 TH FLOOR ASHAR IT PARK ROAD NO. 16Z WAGLE INDUSTRIAL ESTATE THANE (W) - 400 604. V S . SHRI MAHSUKHLAL U. DOSHI PROP. THE ASIAN ENGG. CO. PLOT NO. A/289 ROAD NO. 16Z WAGLE ESTATE THANE(W) - 400 604. PAN : AHEPD 5514B ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI VIPUL DOSHI DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 10 . 10 . 201 9 DATE OF PRONOUNCEMENT 06.01.2020 O R D E R PER SHAMIM YAHYA (AM) : - THESE ARE APPEALS BY THE REVENUE WHEREI N THE REVENUE IS A G GRIEVED THAT THE LEARNED CIT - A HAS DELETED THE ADDITION ACCOUNT OF BOGUS PURCHASES BY SUSTAINING ONLY 25% DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE COMMON ORDER DATED 2.7.2018 PERTAINING TO AY. 2009 - 10, 2010 - 11 & 2011 - 12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO BUSINESS OF JOB WORK AND SPARE PARTS. 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 AS UNDER : - A.Y. 2009 - 10 RS. 1,91,330/ - A.Y. 2010 - 11 RS. 12,93,896/ - A.Y. 2011 - 12 RS. 1,45,534/ - SHRI MAHSUKHLAL U. DOSHI 2 3. UPON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDIN GLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 25 % DISALLOWANCE 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 . W E F IND THAT IN 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 H ONOURABLE 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 B OGUS WHEN SALES ARE 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 EXP ENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 25 % DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CI T - A. 5. THE DECISION OF N . K . P ROTEINS LTD. (250 TAXMANN 22) REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY H ON BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& CO ITA NO 1004 OF 20016 DT . 11/2/2019 . 6. IN THE RESULT TH E S E APP E AL S FILED BY THE REVENUE STAND DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 06.01.2020 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 06 / 0 1 / 20 20 SHRI MAHSUKHLAL U. DOSHI 3 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