ITO 26(3)(2), MUMBAI V. SEHRULLAH KARAMDAR KHAN, MUMBAI

ITA 6745/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6258 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 6745/MUM/2018 (ASSESSMENT YEAR 2008 - 09) I.T.A. NO. 6746/MUM/2018 (ASSESSMENT YEAR 2010 - 11) I.T.A. NO. 6747 /MUM/ 201 8 (ASSESSMENT YEAR 20 11 - 1 2 ) ITO - 26( 3)(2) ROOM NO. 508 C - 11, BANDRA KURLA COMPLEX, BANDRA EAST MUMBAI - 400 051. V S . MR. SEHRULLAH KARAMDAR KHAN PROP. OF M/S. S TEEL STEEL TRADERS, 504, NEW DWARKA PURI, ABOVE MOOGAVEERA CO - OP. BANK, LBS MARG, KURLA - W MUMBAI - 400 070. PAN : AHMPK0007C ( APPELL ANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHR I R. BHOOPATHI DATE OF HEARING 11.12 . 201 9 DATE OF PRONOUNCEMENT 04. 2 . 20 20 O R D E R TH E S E ARE APPEA LS BY THE REVENUE WHEREIN THE REVENUE IS A G GRIEVED THAT THE LEARNED CIT - A HAS RE DUCED THE ADDITION OF BOGUS PURCHASES VIDE ORDERS DATED 21.6.2018 PERTAINING TO A.YS. 2008 - 09, 2010 - 11 & 2011 - 12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BUSINESS OF TRADING IN SS SHEETS AND SCRAP. THE ASSESSMENT WAS REOPENED UPON INFORMATION FR OM SALES T AX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE 12.5% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 1,36,841/ - FOR A.Y. 2008 - 09, RS. 11,40,438/ - FOR A.Y. 2010 - 11 AND RS. 12,7 9,340/ - FOR A.Y. 2011 - 12. 3. UPON ASSESSEE'S APPEAL S LEARNED CIT - A HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTE D. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND ON THE FACTS OF THE CASE HE DIRECTED THAT 12.5 % AS REDUCED BY GROSS PROFIT ALREADY DE CLARED SHOULD BE DISALLOWED ON BOGUS PURCHASES. MR. SEHRULLAH KARAMDAR KHAN PROP. OF M/S. STEEL STEEL TRADERS 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS . I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED L AW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE C ASE OF NIKUNJ E X I MP ENTERP RISES (IN WRIT PETITION NO 2860 , ORDER DT . 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF THE PRESENT CAS E 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 EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5 % DISALLOWANCE AS REDUCED BY GROSS PROFIT ALREADY DECLARED OUT OF THE BOG U S PURCHASES DONE BY THE LEARNED CIT - A MEETS THE END OF JUSTICE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT - A. 5. THE DECISION OF N . K . P ROTEINS LTD. (250 ITR 22) REFERRED BY REVENUE HAS ALREADY BEEN DISTINGUISHED BY H ON BLE BOMBAY HIGH COU RT IN THE CASE OF M HAJI ADAM& C O . ( ITA NO 1004 OF 20016 DT 11/2/2019 ). 6. IN THE RESULT TH E S E APPEAL S FILED BY THE REVENUE STAND DISMISSED . OR DER HAS BE EN PRONOUNCED IN THE COURT ON 4.2. 20 20 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 4 / 2 / 20 20 COPY OF THE ORDER FORWARD ED TO : 1. THE APPELLANT 2. THE RESPONDENT MR. SEHRULLAH KARAMDAR KHAN PROP. OF M/S. STEEL STEEL TRADERS 3 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI