ITO 25(1)(3), MUMBAI V. SUNIL N. MUTREJA, MUMBAI

ITA 6750/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6260 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 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: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P 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. 6750 /MUM/ 201 8 (ASSESSMENT YEAR 20 1 0 - 1 1 ) ITO - 25(1)(3) ROOM NO. 405 C - 10, PRATYKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA EAST MUMBAI - 400 051. V S . SHRI SUN IL N. MUTREJA A/3, MUTREJA PALACE MODEL TOWN CHS JVPD SCHEME, JUHU MUMBAI - 400 059. PAN : AAAHM2173G ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI P. BHOOPATHI DATE OF HEARING 11.12 . 201 9 DATE OF PRONOUNCEMENT 05.02. 20 20 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AG G RIEVED THAT THE LEARNED CIT - A HAS REDUCED THE ADDITION BY SUSTAININ G ONLY 25% DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 12.9.2018 PERTAINING TO A . Y . 2010 - 11. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BUSINESS OF BUILDING MATERIAL SUPPLIER. THE ASSESSMENT WAS REOP ENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE H UNDRED PERCENT ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 4,77,353/ - . 3. UP ON ASSESSEE'S APPEAL LEARNED CI T - A HAS NOTED THAT THE SALES HAVE NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON THE FACTS OF THE CASE H E SUSTAINED 25% DISALLOWANCE OUT OF THE BOGUS PURCHASES . SHRI SUNIL N. MUTREJA 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 LAW 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 DECISIO N IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (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 P RESENT 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 EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 25 % DISALLOWANCE OUT OF THE BOGUS 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) RE FERRED BY REVENUE HAS ALREADY BEEN DISTINGUISHED BY H ON BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& C O ITA NO 1004 OF 20016 DT . 11/2/2019 . 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 5.2.2020 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 6 / 2 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDEN T 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI SHRI SUNIL N. MUTREJA 3 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI