ITO -2(1), THANE V. SHRI UMAKANT A. CHOUDHARY, MUMBAI

ITA 58/MUM/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3245 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 58/MUM/2021 (ASSESSMENT YEAR 2009-10) ITO-2(1) ROOM NO. 25, B-WING 6 TH FLOOR, ASHAR IT PARK WAGLE INDUSTRIAL ESTATE THANE(WEST)-400 604. VS. SHRI UMAKANT A. CHOUDHARY 102, VASANT HEIGHTS 74, SHANTI PARK, MIRA ROAD EAST, THANE-401 107. PAN : AEYPC8009B ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 11.10.2021 DATE OF PRONOUNCEMENT 12.10.2021 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENU E IS AGGRIEVED THAT THE LEARNED CIT-A HAS REDUCED THE ADDITION FOR BOGU S PURCHASE OF RS. 1,532,647/- DONE @ 100% BY THE ASSESSING OFFICER BY SUSTAINING ONLY 12.5% FOR THE AY 2009-10 VIDE ORDER DATED21.2.2020. THUS DELETING RS. 13,41,066/-. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO TRADER IN BUILDING MATERIAL. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS, THE AO MADE 100% ADDITION OF THE BOGUS PURCHASE 3. UPON ASSESSEE'S APPEAL LEARNED CIT-A HAS NOTED T HAT THE SALE HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEV ERAL CASE LAWS AND UP ON THE FACTS OF THE CASE HE SUSTAINED 12.5 % DISALLOWA NCE OUT OF THE BOGUS PURCHASES 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD ID LEARNED DEPARTMENTAL REPRESENTAT IVE AND PERUSED THE RECORD. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED LAW SHRI UMAKANT A. CHOUDHARY 2 THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DI SALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SAL ES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FRO M HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENT ERPRISES (IN WRIT PETITION NO 2860, ORDER DATED 18.6.2014). IN THIS CASE THE H ONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRE SENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MA KING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOU NT 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 O F THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES DONE BY THE LEARNED CIT-A MEETS THE END OF JUSTICE. ACCORDINGLY I UPHOLD THE ORDER OF L EARNED CIT-A. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. 7. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HA S FILED A CROSS APPEAL OR CROSS OBJECTION AND THE SAME HAS REMAINED UNHEARD, EITHER PARTY MAY APPLY FOR RECALL OF THIS ORDER SO THAT THE APPEALS CAN BE HEARD TOGETHER. PRONOUNCED IN THE OPEN COURT ON 12.10.2021. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBE R MUMBAI; DATED : 12/10/2021 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