ITO 14 (3)(3), MUMBAI V. M/S SHETH COAT & PRINTS PVT LTD., MUMBAI

ITA 6648/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4546 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUPESH RANE
• Keywords: Bogus purchase; Set aside
• Section: 143(3)

Judgement Text

ITA NO. 6648 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 1 OF 3 INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT)] ITA NO. 6648/MUM/2019 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER 14(3)(3) MUMBAI. .. APPELLANT VS. M/S. SHETH COAT & PRINTS PVT. LTD., .....RESPONDENT E - 14/203, SHIV PARVATI CHS LTD, SECTOR - 09, AIROLI, NAVI MUMBAI - 400078 [PAN: AAACS7323M ] APPEARANCES: SUNIL DESHPANDE FOR THE APPELLANT RUPESH RANE FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : MAY 13, 2021 DATE OF PRONOUNCEMENT : MAY 1 9 , 2021 O R D E R PER PRAMOD KUMAR, VP: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED THE CORRECTNESS OF THE ORDER DATED 04 TH SEPTEMBER 2019, PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT U/S. 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2010 - 11. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE AS FOLLOWS: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENAL TY IMPOSED IN RESPECT OF ADDITION ON ACCOUNT OF BOGUS PURCHASES, TO THE EXTENT OF 12.5% OF SUCH PURCHASES, IN SPITE OF THE FACT THAT THE ASSESSEE HAD NOT FURTHER CONTESTED THE QUANTUM ADDITION BEFORE APPELLATE AUTHORITIES WHICH AMOUNTED TO ACCEPTANCE OF FU RNISHING INACCURATE PARTICULARS OF INCOME. (2) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) - 22, MUMBAI ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO. 6648 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 2 OF 3 3. I FIND THAT A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF ROLLON HARDWARE INDIA PVT. LTD., IN ITA NO. 1621/MUM/2018 ORDER DATED 05.11.2018, HAS IN SIMILAR FACTS AND CIRCUMSTANCES INTER ALIA, OBSERVED AS FOLLOWS: 4. IN SUPPORT OF HIS CASE LD. COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF HONB LE GUJARAT HIGH COURT IN THE CASE OF PR. CIT VS. T.R. KAPADIA IN TAX APPEAL NO.691 OF 2017. 5. IN THIS CASE THE HONBLE HIGH COURT HAS CONFIRMED THE DELETION OF DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHASE AS NECESSARY DOCUMENTARY EVIDENCE FOR THE P URCHASE WERE ON RECORD. 6. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT IN ITS DECISION DATED. 04.05.2018 S.L.P. CIVIL DIARY NO.12670/2018. 7. UP ON CAREFUL CONSIDERATION, I FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY 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 DO UBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONAL BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES ( IN WRIT PETITION NO. 2860, ORDER DT. 18.06.2014. IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER, IN THAT CASE ALL THE SUPPLIERS WERE GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE 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 EXPENSES OF THE EXCHEQUER. IN SUCH SITU ATION IN MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. HOWEVER, IN THIS REGARD LD. COUNSEL OF THE ASSESSE HAS PRAYED THAT WHEN ONLY THE PROFITS EARNED BY THE ASS ESSEE ON THESE BOGUS PURCHASE TRANSACTION IS TO BE TAXED THE GROSS PROFIT ALREADY SHOWN BY THE ASSESSEE AND OFFERED TO TAX SHOULD BE REDUCED FROM THE STANDARD 12.5% BEING DIRECTED TO BE DISALLOWED ON ACCOUNT OF BOGUS PURCHASE. 4. I SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH. RESPECTFULLY FOLLOWING THE COORDINATE BENCH ORDER, I CONFIRM ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, THIS APPEAL IS DISMISSED. PRONOUNCED I N THE OPEN COURT TODAY ON THE 1 9 T H DAY OF MAY 2021. S D / - PRAMOD KUMAR (VICE PRESIDENT) MUMBAI, DATED THE 1 9 T H DAY OF MAY 2021. COPIES TO: (1) THE APPLICANT (2) THE RESPONDENT ITA NO. 6648 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 3 OF 3 (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI