SUMANGALA MACHINERY, THANE V. ITO WD 1(4), KALYAN

ITA 57/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0602 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: NEHA PARANJAPE
• Keywords: Bogus purchase; Non passing of speaking order

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER ITA NO. 57/MUM./2017 & 58/MUM./2017 (ASSESSMENT YEAR: 2009 - 10 & 2010 - 11 ) M/S. SUMANGALA MACHINERY, GALA NO. C3, SHREE COMPOUND, PLOT NO. 1280, CHOTANI COMPOUND, AGRA ROAD NARPOLI BHIWANDI, DIST: THANE 421 302 PAN:AARFS9163K . APPELLANT V/S ITO WD 1(4) KALYAN . RESPONDENT ASSESSEE BY : MS. NEHA PARANJAPE REVENUE BY : MR . SUMIT KUMAR DATE OF HEARING 01.06.2017 DATE OF ORDER - 01 .06 .2017 O R D E R PER: SHAMIM YAHYA THESE ARE THE APPEALS BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT - A WHEREIN HUNDRED PERCENT DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE HAS BEEN SUSTAINED AS UNDER: - ASSESSMENT YEAR AMOUNT (RS.) 2009 - 10 2166184.00 2010 - 11 2303197.00 ITA NO.57/MUM/2017 & 58/MUM/2017 M/S. SUMANGALA MACHINERY 2 2. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT IN T HIS CASE THE SALES HAVE NOT BEEN DOUBTED. THE A.O. HAS MADE THE DISALLOWANCE SOLELY BASED UPON INFO RMATION FROM SALES TAX DEPARTMENT. NO ENQUIRY WHATSOEVER HAS BEEN DONE BY THE A.O. THEREOF. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED HUNDRED P ERCENT DISALLOWANCE FOR BOGUS PURC HASE CANNOT BE DONE. THIS PROPOSITION IS SUPPORTED BY HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES. HOWEVER, THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHA SE THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVING ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SIMILAR SITUATION ON THE FACTS AND CIRCUMSTANCES OF THE CASE A DISALLOWANCE OF 12.5 % OF THE BOGUS PURCHASE HAS BEEN CONSIDE RED TO MEET THE END OF JUSTICE IN A NUMBER OF CASES AT THE MUMBAI TRIBUNAL. ACCORDINGLY I HOLD THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. LEARNED COUNSEL OF THE ASSESSEE HAS FAIRLY AGREED TO THIS PROPOSITION. 3. LEARNED DEPARTMENTAL REPRESENTAT IVE HAS PLACED RELIANCE UPON A H ONOURABLE GUJARAT HIGH COURT DECISION WHEREIN HUNDRED PERCENT DISALLOWANCE OF BOGUS PURCHASE HAS BEEN UPHELD. SPECIAL LEAVE PETITION AGAINST THIS ORDER HAS BEEN DISMISSED BY THE HONOURABLE ITA NO.57/MUM/2017 & 58/MUM/2017 M/S. SUMANGALA MACHINERY 3 AP EX COURT. I FIND THAT DISMISSAL OF SLP BY A NON SPEAKING ORDER BY THE HONOURABLE APEX COURT DOESN'T MERGE THE ORDER OF THE HONOURABLE HIGH COURT WITH THAT OF THE APEX COURT. MOREOVER SUCH DISALLOWANCES DEPEND UPON THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPOUNDED BY HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ E XIMP E NTERPRISES. ACCORDINGLY I DIRECT THAT THE DISALLOWANCE BE RESTRICTED IN THIS CASE TO 12.5% OF THE BOGUS PURCHASE. 4. IN THE RESULT THIS APPEAL S F ILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 .0 6 .2017 S D / - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 0 1 .06 .2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI