ITO - WD- 2(2), THANE V. SHRIRAM C. YADAV, BHAYANDER

ITA 5637/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7876 (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: 2011-2012
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: LAJORI OSWAL
• Keywords: Bogus purchase
• Section: 133(6); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI [ BEFORE SHRI SHAMIM YAHYA , HON'BLE A CCOUNTANT M EMBER AND SHRI PAWAN SINGH, HON'BLE JUDICIAL MEMBER ] I.T.A. NO. 5637/MUM/2018 ASSESSMENT YEAR: 2011 - 12 ITO WD - 2(2), THANE ............................... .. APPELLANT ROOM NO. 26, B WING, 6 TH FLOOR, ASHAR I.T. PARK, WAGLE INDUSTRIAL ESTATE, ROAD NO. 16Z, AMBIKA NAGAR, THANE 400 604. VS SHRIRAM C. YADAV . ........ .......................................... ........................................................ RESPONDENT 7, JAS INDUSTRIAL ESTATE, EVEREST INDUSTRIAL ESTATE, B.P. ROAD, GODDEV NAKE, BHAYANDER (E) 401 105. [PAN: A ALPY 4166 E ] C.O. NO. 200/MUM/2019 (ARISING OUT OF ITA NO. 5637/MUM/2018 ) ASSESSMENT YEAR: 2011 - 12 SHRIRAM C. YADAV. ........ ......................................................................................................APPELLANT 7, JAS INDUSTRIAL ESTATE, EVEREST INDUSTRIAL ESTATE, B. P. ROAD, GODDEV NAKE, BHAYANDER (E) 401 105. [PAN: AALPY 4166 E] VS ITO WD - 2(2), THANE ............................... .............................RESPONDENT ROOM NO. 26, B WING, 6 TH FLOOR, ASHAR I.T. PARK, WAGLE INDUSTRIAL ESTATE, ROAD NO. 16Z, AMBIKA NAGAR, THANE 400 604. APPEARANCES BY: SHRI AKHTAR H. ANSARI, DR APPEARING ON BEHALF OF THE REVENUE. SHRI NIMESH CHOTHANI & SHRI LAJORI OSWAL, AR APPEARING ON BEHALF OF THE ASSESSEE . DATE OF CONCLUDING THE HEARING : NOVEMBER 21, 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 16 , 2020 ORDER PER SHRI SHAMIM YAHYA , AM THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. CIT(APPEALS) 1 , DATED 20.07.2018 AND THE SAME IS BEING DISPOSED OF 2 I.T.A. NO. 5637/MUM/2018 & C.O. NO. 200/MUM/2019 ASSESSMENT YEAR: 2011 - 12 SHRIRAM C. YADAV ALONG WITH THE CROSS - OBJECTION FILED B Y THE ASSESSEE BEING C.O. NO. 200/MUM/2019 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF FOOD CHEMIC AL EQUIPMENTS AND DEVELOPING PAINTS MACHINERY. INFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT. THE ASSESSEE WAS BENEFICIARY OF ACCOMMODATION BILLS FOR BOGUS PURCHASES AND ASSESSMENT WAS REOPENED. AO MADE 100% DISALLOWANCE FOR THE BOGUS PURCHASES BY NOTING THAT NOTICES ISSUED U/S 133(6) WITH THE CONCERNED PARTIES WERE RECEIVED BACK UNSERVED AND FURTHER ON ACCOUNT OF FAILURE OF THE ASSESSEE TO PRODUCE THE PARTIES AND ALSO NOTING THAT THERE WAS ABSENCE OF OTHER EVIDENCES LIKE OCTROI BILLS, DELIVERY CHA LLEN, INWARD REGISTER, AO MADE 100% DISALLOWANCE. UPON ASSESSEES APPEAL, LD. CIT(A) ANALYSE D THE GROSS PROFIT FOR DIFFERENT YEA RS. H E HE LD THAT ASSESSEE HAD DECLARED GP @ 20.04% FOR A.Y. 2012 - 13 WHICH ACCORDING TO THE LD. CIT(A) WAS NON - HAWALA YEAR. IN TH IS YEAR, HE NOTED THAT ASSESSEE HAD DECLARED GP OF 13.49%. HENCE, HE COMPUTED THE DIFFERENTIAL AMOUNT OF RS. 5,04,303/ - FOR THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE. 3. AGAINST THE ORDER, THE REVENUE IS IN APPEAL BEFORE US AND ASSESSEE HAS FILED CROSS - OBJECTION. 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 3 I.T.A. NO. 5637/MUM/2018 & C.O. NO. 200/MUM/2019 ASSESSMENT YEAR: 2011 - 12 SHRIRAM C. YADAV THE 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 RATI ONALE BEING NO SALES 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 HONOURABL E HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASE SAID TO BE BOGUS WHEN SALES ARE NOT 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 PU RCHASE 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. 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, W E 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 REPRESENTATIVE ARE NOT APPLICABLE ON THE FACTS OF THE CASE AS WE HAVE ALREADY PLACED RE LIANCE UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AS REFERRED ABOVE. 4 I.T.A. NO. 5637/MUM/2018 & C.O. NO. 200/MUM/2019 ASSESSMENT YEAR: 2011 - 12 SHRIRAM C. YADAV 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS - OBJECTION 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 /0 1/2020 BISWAJIT , SR. PS COPY OF ORDER FORWARDED TO: 1. SHRIRAM C. YADAV, 7, JAS INDUSTRIAL ESTATE, EVEREST INDUSTRIAL ESTATE, B.P. ROAD, GODDEV NAKA, BHAYANDER (E) 401 105. 2. ITO, WARD 2(2), THANE. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, MUMBAI