ITO 27(1)(4), MUMBAI V. DEEPAK R. JOSHI, MUMBAI

ITA 5624/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9103 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM ITA NO. 562 4 / MUM/ 2018 (ASSESSMENT YEAR: 20 09 - 10 ) ITO - 27(1)(4) TOWER NO. 6, 4 TH FLOOR, ROOM NO. 409, VASHI RAILWAY STATION, COMPLEX, VASHI, NAVI MUMBAI VS. M/S. DEEPAK R. JOSHI 211/12, SATYAM BLDG. OPP. ODEON TALKIES, GHATKOPAR (E), MUMBAI - 400 075 PAN/GIR NO. AAAPJ 6071 G ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI AKHTAR H. ANSARI RESPONDENT BY : NONE DATE OF HEARING : 20.11.2019 DATE OF PRONOUNCEMENT : 07.01.2020 O R D E R PER SHAMIM YAHYA, A. M.: THIS IS AN APPEAL BY THE R EVENUE WHEREIN THE R EVENUE IS AGGRIEVED THAT THE LEARNED CIT - A HAS DELETED THE ADDITION OF RS.1 1,26,000/ - BY SUSTAINING ONLY 12 .5 % DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 11.06.2018 PERTAINING TO ASSESSMENT YEAR 20 09 - 10. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO TRADING IN IRON AND STEEL ITEMS. 3. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX D EPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE HUNDRED PERCENT ADDITIONS ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.1 2 , 86 , 857 / - . 2 ITA NO. 5624/MUM/2018 M/S. DEEPAK R. JOSHI 4. UPON ASSESSEE'S 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 PURCHASES 5. AGAINST THE ABOVE ORDER , THE R EVENUE IS IN APPEAL BEFORE THE ITAT. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) AND PERUSED THE RECORDS . W E FIND 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 HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18.6.2014). IN THIS CASE THE HON'BLE H IGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCES 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 THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIV ES 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 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARN ED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT - A. 7. THE DECISION OF M/S NK PROTEINS LTD. VS. DCIT ( NO. 769 OF 2017 DATED 16 .01.2017 (SC) REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& CO ITA NO 1004 OF 20016 DT 11/2/2019 . 3 ITA NO. 5624/MUM/2018 M/S. DEEPAK R. JOSHI 8. IN THE RESULT , THIS APPEAL FILED BY THE R EVENUE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 . 0 1 . 2 0 2 0 S D / - S D / - ( PAWAN SINGH ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 0 7 . 0 1 . 2 0 2 0 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 FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI