INCOME TAX OFFICER 8(3)(1), MUMBAI V. THE WESTERN INDIA GENUINE GHEE & CO.P.LTD, MUMBAI

ITA 6595/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7175 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: MAYANK CHAUHAN
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO . 6595 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 8(3)(1), MUMBAI . APPELLANT V/S THE WESTERN INDIA GENUINE GHEE & CO. LTD. , 118, P. HIRJI GOVINDJI COMPOUND, Y.J. ROAD SEWREE (W), MUMBAI 400 015 PAN AAACT3195J . RESPONDENT REVENUE BY : SHRI R. BHOOPAT H I ASSESSEE BY : SHRI MAYANK CHAUHAN DATE OF HEARING 0 9 . 12 .2019 DATE OF ORDER 04.02.2020 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED CIT - A HAS REDUCED THE ADDITION OF BOGUS PURCHASE BY SUSTAINING ONLY 12.5 % DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE, VIDE ORDER DATED 24 TH JULY 2018, PERTAINING TO THE ASSESSME NT YEAR 2009 10. 2. THE ASSESSEE IN THIS CASE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF LUBRICANT OILS, BRAKE FLUIDS, COOLANTS AND IS THE TRADER OF GREASES, ETC. THE ASSESSMENT WAS RE OPENED UPON INFORMATION FROM 2 THE WESTERN INDIA GENUINE GHEE & CO. LTD. SALES TAX DEPARTMENT THAT ASSESSEE HAS M ADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO ` 6.24 LAKH. 3. UPON ASSESSEE'S APPEAL, THE LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLAC ING RELIANCE UPON SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES. 4. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE COUNSEL OF BOTH THE PARTIES AND PERUSED THE RECORDS. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED . I T IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS P ROPOSITION IS SUPPORTED FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN NIKUNJ E XIMP E NTERPRISES PVT. LTD. V/S ACIT , WRIT PETITION NO. 2860, ORDER D ATED 18 TH JUNE 2014, . IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD 100% ALLOWANCE FOR THE PUR CHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER , THE FACTS OF THE PRESENT CASE INDICATE THAT THE ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES 3 THE WESTERN INDIA GENUINE GHEE & CO. LTD. THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF T AX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION , IN MY CONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , 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 THE LEARNED CIT(A) . 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.2020 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 04.02.2020 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 . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI