M/S.AGARWAL PHARJMCHEM (INDIA) PRIVATE LIMITED, MUMBAI V. INCOME T AX OFFICER RANGE 12(1)(1), MUMBAI

ITA 6597/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7159 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO . 659 7 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) M/S. AGARWAL PHARCHEM INDIA PVT. LTD. A1, CORAL PARK, AAREY ROAD GOREGAON (E), MUMBAI 400 063 PAN AADCA1865H . APPELLANT V/S INCOME TAX OFFICER RANGE 12(1)(1), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI R. BHOOPATHI DATE OF HEARING 0 9 . 12 .2019 DATE OF ORDER 03.02.2020 O R D E R THIS IS AN APPEAL BY THE ASSESSEE, WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LEARNED CIT(A) HAS ERRED IN SUSTAINING 12.5% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE VIDE ORDER DATED 24 TH APRIL 2015, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS AND PHARMACEUTICAL DRUG ITEMS. INFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES IN RESPECT OF BOGUS 2 M/S. AGARWAL PHARCHEM INDIA PVT. LTD. PUR CHASE. THE ASSESSMENT WAS ACCORDINGLY RE OPENED. THE ASSESSING OFFICER IN THIS CASE HAS MADE 12.5% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO ` 7,54,502. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) CONFIRMED THE SAME. 3. AGAINST THE ABOVE ORDER, THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. THE NOTICE SENT TO THE ASSESSEE HAS RETURNED UN SERVED. 4. UPON CAREFUL CONSIDERATION, I FIND THAT THE ASSESSEE HAS PROVIDED THE DOCUMENT ARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HAVE BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE F OR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN NIKUNJ EXIMP ENTERPRISES PVT. LTD. V/S ACIT, WRIT PETITION NO.2 860, ORDER DATED 18 TH JUNE 2014. IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES 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 O F THE CASE INDICATE THAT THE 3 M/S. AGARWAL PHARCHEM INDIA PVT. LTD. ASSESSEE HAS MADE PURCHASES 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. IN SUCH SITUATION, IN MY CONSIDE RED 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 AUTHORITIES BELOW. 5. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2020 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 03.02.2020 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