PARMESHWARAN MANIAN, MUMBAI V. ITO 31(2)(5), MUMBAI

ITA 665/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0173 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Assessee Lawyers: HITESH M SHAH
• Keywords: Bogus purchase

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.665/MUM/2017 : ASST.YEAR 2010-2011 SHRI PARMESHWARAN R.S.MANIAN B(1), 318/320, SUNBEAM NEW CHARNI ROAD, OPERA HOUSE MUMBAI 400 004. PAN : AFSPM2745R. / VS. INCOME TAX OFFICER WARD 31(2)(5) MUMBAI ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI HITESH M. SHAH /RESPONDENT BY : SHRI V.JANARDHANAN / DATE OF HEARING : 03.07.2017 / DATE OF PRONOUNCEMENT : 04.09.2017 / O R D E R THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) WHEREIN 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.21,77,552 IS CONFIRMED. 2. IN THIS CASE THE ASSESSING OFFICER HAD MADE A DISALLOWANCE OF RS.21,77,552 BEING 100% OF THE BOGUS PURCHASE. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) CONFIRMED THE SAME. 3. AGAINST THIS ORDER, ASSESSEE HAS FILED APPEAL BEFORE THE ITAT. 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT OVERWHELMING EVIDENCE HAVE BEEN REFERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL MOVEMENT OF THE GOODS UNDER ITA NO.665/MUM/2017. SHRI PARMESHWARAN R.S.MANIAN. 2 DISPUTE. IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO. 240 OF 2003 IN THE CASE OF N K INDUSTRIES VS DY CIT, ORDER DATED 20.06.2016, WHEREIN HUNDRED PERCENT OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1.2017. 5. FURTHER, I FIND THAT DISMISSAL OF SLP BY THE SUPREME COURT BY A NON- SPEAKING ORDER DOES NOT MERGE THE ORDER OF HONBLE HIGH COURT WITH THAT OF HONBLE SUPREME COURT. 6. 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. 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 OF THE EXCHEQUER. IN SUCH SITUATION, IN MY 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 CASE OF SMIT P. SETH, FOLLOWED BY THE ITAT MUMBAI BENCHES IN A NUMBER OF CASES. ITA NO.665/MUM/2017. SHRI PARMESHWARAN R.S.MANIAN. 3 7. ACCORDINGLY, I MODIFY THE ORDER OF LEARNED CIT(A) AND DIRECT THAT THE DISALLOWANCE BE LIMITED TO 12.5% OF THE BOGUS PURCHASE. 8. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 04 TH DAY OF SEPTEMBER, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 04 TH SEPTEMBER, 2017. DEVDAS* / 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.