DCIT RG 9(1)(2), MUMBAI V. ANA DESIGNS P.LTD, MUMBAI

ITA 6638/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9167 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Bogus purchase

Judgement Text

, E , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI SHAMIM YAHYA , AM & SHRI SANDEEP GOSAIN, JM ITA NO. 6638 /MUM/20 16 : ASST.YEARS 2009 - 2010 DY.COMMISSIONER OF INCOME - TAX RANGE 9(1)(2) MUMBAI. / VS. M/S.ANA DESIGNS PRIVATE LIMITED A - B,1 TAKSHILA APARTMENT MAHAKALI CAVES ROAD, ANDHERI (E) MUMBAI 400 093. PAN : AAAECA8160C. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI V.JUSTIN /RESPONDENT BY : --- NONE --- / DATE OF HEARING : 16.08.2017 / DATE OF PRONOUNCEMENT : 16.10.2017 / O R D E R PER SHAMIM YAHYA, AM THIS IS AN APPEAL BY THE REVENUE, WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED CIT(A) HAS SUSTAINED ONLY 12.5% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. 2. THE ASSESSING OFFICER IN THESE CASES HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.49,78,341 . UPON ASSESSEES APPEAL, LEARNED CIT(A) 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 . 3. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. ITA NO. 6638 /MUM/20 16 . M/S.ANA DESIGNS PRIVATE LIMITED . 2 4. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 5. WE 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. THIS PROPOSITION IS SUPPORTED FROM HONBLE 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 PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SELLING ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE O F THE EXCHEQUER. IN SUCH SITUATION, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE ENDS OF JUSTICE. THIS IS FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF SIMIT P. SHETH [(2013) 356 ITR 451 ], FOLLOWED BY THE ITAT MUMBAI BENCHES IN A NUMBER OF CASES. 6. ACCORDINGLY, WE CONFIRM THE ORDER OF LEARNED CIT(A) AND DIRECT THAT THE DISALLOWANCE BE LIMITED TO 12.5% OF THE BOGUS PURCHASE. 7. IN THE RESULT, TH ESE APPEALS FILED BY THE REVENUE STANDS DISMISSED . ORDER PRONOUNCED ON THIS 16 TH DAY OF OCTO BER, 2017. SD/ - S D / - ( SANDEEP GOSAIN ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 16.10. 2017 . DEVDAS* ITA NO. 6638 /MUM/20 16 . M/S.ANA DESIGNS PRIVATE LIMITED . 3 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.