INCOME TAX OFFICER 27(3)(1), MUMBAI V. M/S.RAJENDRA AUTO PARTS, MUMBAI

ITA 6675/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4744 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO . 6675 & 6676 / MUM . /2018 ( ASSESSMENT YEAR : 20 10 11 & 2009 10 ) INCOME TAX OFFICER WARD 27(3)(1), MUMBAI . APPELLANT V/S M/S. RAJENDRA AUTO PARTS SHOP NO.11, TRUCK TERMINAL STEEL COMPLEX, KALAMBOLI PANVEL 410 218 PAN AAEFR6729D . RESPONDENT REVENUE BY : SHRI R. BHOOPATHI ASSESSEE BY : SHRI SUBODH RATNAPARKHI DATE OF HEARING 10 . 12 .2019 DATE OF ORDER 05.02.2020 O R D E R TH E S E ARE APPEAL S BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED CIT(A) REDUCED THE ADDITION BY SUSTAINING ONLY 12.5% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE , VIDE RESPECTIVE ORDER DATED 19 TH SEPTEMBER 2018, PERTAINING TO THE ASSESSMENT YEAR 2009 10 AND 2010 11 . 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RES E L L ER IN AUTO PARTS. THE ASSESSMENT WAS RE OPENED UPON INFORMATION RECEIVED FROM SALES 2 M/S. RAJENDRA AUTO PARTS TAX DEPARTMENT THAT THE ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. 3. THE ASSESSING OFFICER IN TH IS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE IN A.Y. 2010 11 FOR AN AMOUNT O F ` 3,08,934, AND IN A.Y. 2009 10 FOR AN AMOUNT OF ` 1 3, 10 , 793. 2. 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. 3. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. I HAVE HEARD THE LEARNED COUNSEL FOR BOTH THE PARTIES AND PERUSED THE RECORDS. 4. 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. THIS PROPOSITION IS SUPPORTED FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN NIKUNJ E XIMP E NTERPRISES PVT. LTD. V/S ACIT , WRIT PETITION NO. 2860, ORDER D ATED 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 3 M/S. RAJENDRA AUTO PARTS DOUBTED. HOWEVER , FACTS OF THE PRESENT CASE INDICATE THAT THE ASSESSEE HAS MADE PURCHASES FR OM 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 CONSIDERED 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 LEARNED CIT(A). THE DECISION OF N.K. PROTEINS PVT. LTD. REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DIS TINGUISHED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT V/S MOHAMMAD HAJI ADAM & CO., ITA NO.1004 OF 2016, DATED 11 TH FEBRUARY 2019. 5. IN THE RESULT, BOTH THE APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2020 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 05.02.2020 4 M/S. RAJENDRA AUTO PARTS 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