ACIT-19(2), MUMBAI V. M/S.NAYON EXPORT, MUMBAI

ITA 6598/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7160 (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: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO . 6598 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 19(2), MUMBAI . APPELLANT V/S M/S. NAYO N EXPORT S 714, PAREKH MARKET J.S.S. ROAD, OPERA HOUSE MUMBAI 400 004 PAN AAAFN1173D . RESPONDENT REVENUE BY : SHRI R. BHOOPAT H I ASSESSEE BY : SHRI JITENDRA SINGH DATE OF HEARING 0 9 . 12 .2019 DATE OF ORDER 03.02.2020 O R D E R THIS IS AN APPEAL BY THE REVENUE, WHEREIN T H E REVENUE IS AGGRIEVED THAT THE LEARNED CIT(A) HAS RE DUCED THE ADDITION OF BOGUS PURCHASE BY SUSTAINING ONLY 12.5% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE , VIDE ORDER DATED 16 TH APRIL 2015, PERTAINING TO THE AS SESSMENT YEAR 2009 10 2. THE ASSESSEE IN THIS CASE IS ENGAGED IN MANUFACTURING IN TEXTILES, HANDLOOMS. THE ASSESSMENT WAS RE OPENED UPON INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS MADE PURCHASES 2 M/S. NAY O N EXPORTS FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO ` 5,61,277. 3. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY, PLACING RELIANCE UPON SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASE. 4. AGAINST TH E ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 2. I HAVE HEARD THE COUNSEL FOR BOTH THE PARTIES AND PERUSED THE RECORD. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT 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. 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.2860, 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, THE FACTS OF THE PRESENT CASE INDICATE THAT THE ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASS ESSEE SAVINGS ON ACCOUNT OF 3 M/S. NAY O N EXPORTS NON - PAYMENT OF TAX 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) MEE TS THE END OF JUSTICE. ACCORDINGLY, I UPHOLD THE ORDER OF THE LEARNED CIT(A). THE DECISION OF N.K. PROTEINS PVT. LTD. REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT V/S M OHAMMAD HAJI ADAM & CO., ITA NO.1004 OF 2016, DATED 11 TH FEBRUARY 2019. 3. IN THE RESULT, REVENUES 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