ITO ,WD- 3(3), KALYAN V. KUMARY C. WARRIER, DOMBIVALI

ITA 5634/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7879 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase; Accommodation entries
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI [BEFORE S HRI SHAMIM YAHYA , HONBLE ACCOUNTANT MEMBER & SHRI PAWAN SINGH , HONBLE JUDICIAL MEMBER ] I.T.A. NO. 4981 & 4982 / MUM / 2018 ASSESSMENT YEAR: 201 0 - 11 KUMARY C WARRIER ... ........ .. . .. .. .. ....................................................... ....... .......... APPELLANT FLAT NO. 1102, SILVER HEIGHTS, CHS, S.N. ROAD, TAMBE NAGAR, MULUND (W), MUMBAI 400 080. [PAN: AACPW 1763 G ] VS. ITO WARD 3 (3), KALYAN . ...... .. . . .... .............. ........................ RESPONDENT MUMBAI. I.T.A. NO. 5634 & 5635 /MUM/2018 ASSESSMENT YEAR: 201 1 - 12 ITO WARD 3(3), KALYAN.........................................................APPELLANT MUMBAI. VS. KUMARY C WARRIER.............. .. .. ............................................................ .......... RESPONDENT FLAT NO. 11 02, SILVER HEIGHTS, CHS, S.N. ROAD, TAMBE NAGAR, MULUND (W), MUMBAI 400 080. [PAN: AACPW 1763 G] APPEARANCES BY: NONE APPEARED ON BEHALF OF THE ASSESSEE. SHRI AKHTAR H ANSARI, DR APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 21 , 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 16 , 2020 ORDER PER SHRI SHAMIM YAHYA , A M THESE ARE CROSS - APPEALS BY THE ASSESSEE AND REVENUE ARISING OUT OF COMMON ORDER OF LD. CIT(A) FOR A. Y. 2010 - 11 AND 2011 - 12 RESPECTIV ELY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF ENGINEERING GOODS. PURSUANT TO INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE IS ONE OF 2 I.T.A. NOS. 4981 & 4982/MUM/2018 AND I.T.A. NOS. 5634 & 5635/MUM/2018 ASSESSMENT YEAR: 2010 - 11 & 2011 - 12 KUMARY C. WARRIER THE BENEFICIARIES OF ACCOMMODATION ENTRIES FOR OBTAINING BOGU S PURCHASE BILLS, A SSESSMENT WAS REOPENED. AO MADE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 19,11,624/ - AND RS. 19,57,455/ - RESPECTIVELY. LD. CIT(A) PROCEED TO HOLD FOR A.Y. 2009 - 10 IS A NON - HAWALA YEAR AND GP OF THE SAME IS TO BE ADOPTE D WHICH WAS 21.61%. SINCE ASSESSEE WAS DISCLOSED 11.34% FOR AY 20 10 - 11 AND 11.33% FOR AY 2011 - 12, T HE LD. CIT(A) GRANTED PROPORTIONATE RELIEF, HE CONCLUDED AS UNDER: ACCORDINGLY THE DISALLOWANCE TO THE EXTENT OF QUANTUM OF SUPPRESSED GPS I.E. RS. 5,13,461/ - AND RS. 10,19,001/ - OUT OF TOTAL DISALLOWANCES OF RS. 19,11,624/ - AND RS. 19,57,455/ - , IN AY 2010 - 11 & 2011 - 12, ARE HEREBY SUSTAINED AND BALANCE AMOUNTS OF RS. 13,98,163/ - (19,11,624 5,13,461) AND RS. 9,38,454/ - (19,57,455 10,19,001), RESPEC TIVELY, ARE DELETED. 3 . AGAINST THE ORDER, THE APPEALS ARE BEFORE US. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORDS. 4 . WE FIND THAT THE ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HAVE BEEN DRAWN DUE TO T HE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. WE 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 SALE S IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860 ORDER DTD. 18.06.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UP HELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASE SAID TO BE BOGUS WHEN SALES ARE NOT 3 I.T.A. NOS. 4981 & 4982/MUM/2018 AND I.T.A. NOS. 5634 & 5635/MUM/2018 ASSESSMENT YEAR: 2010 - 11 & 2011 - 12 KUMARY C. WARRIER DOUBTED. HOWEVER, IN THAT CASE ALL THE SUPPLIES WERE TO GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GRE Y 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. 5. IN THIS CASE, WE FIND THAT ASSESSEE HAS ALREADY DISCLOSED MORE THAN 10% AT GROSS PROFIT. IN OUR CONSIDERED OPINION, DISALLO WANCE @ 5% OF BOGUS PURCHASE, WI LL SERVE THE INTEREST OF JUSTICE . ACCORDINGLY, WE MODIFY THE ORDER OF LD. CIT(A) AND DIRECT THAT DISALLOWANCE SHOULD BE DONE @ 5% OF BOGUS PURCHASES. THE DECISION RELIED UPON BY THE LEARNED DEPARTMENTAL REPR ESENTATIVE ARE NOT APPLICABLE ON THE FACTS OF THE CASE AS WE HAVE ALREADY PLACED RELIANCE UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AS REFERRED ABOVE. 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED AND APPEAL BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2020 . SD/ - SD/ - ( PAWAN SINGH ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 /01/2020 BISWAJIT, SR. PS 4 I.T.A. NOS. 4981 & 4982/MUM/2018 AND I.T.A. NOS. 5634 & 5635/MUM/2018 ASSESSMENT YEAR: 2010 - 11 & 2011 - 12 KUMARY C. WARRIER C OPY OF THE ORDER FORWARDED TO: 1. KUMARY C. WARRIER, FLAT NO. 1102, SILVER HEIGHTS CHS, S.N. ROAD, TAMBE NAGAR, MULUND (W), MUMBAI 400 080. 2. ITO - 3(3), KALYAN . 3. CIT(A) - 4. CIT - , 5. CIT(DR), MUMBAI BENCHES, MUMBAI . TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES