ACIT 22 (1), MUMBAI V. AUMEX INTERNATIONAL , MUMBAI

ITA 6790/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9502 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANOOP
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 6790/MUM/2019 (ASSESSMENT YEAR 2009-10) ACIT-22(1) 322, 3 RD FLOOR PIRMAL CHAMBERS LAL BAUG, PAREL MUMBAI-400 012. VS. AUMEX INTERNATIONAL 24, ADHYARU INDUSTRIAL ESTATE SUN MILL COMPOUND LOWER PAREL MUMBAI-400 013. PAN : AAIFA9726B (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI ANOOP DATE OF HEARING 19.05.2021 DATE OF PRONOUNCEMENT 01.07.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS IS AN APPEAL BY THE REVENUE WHEREIN THE ASSESS EE IS AGGRIEVED THAT THE LEARNED CIT-A HAS ERRED IN SUSTAINING ONLY 25% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES VIDE ORDER DATED 19.8.2019. 2. BRIEF FACTS ARE THAT THE ASSESSEE E-FILED RETURN OF INCOME ON 27/09/2009 DECLARING TOTAL INCOME AT RS.30,94,459/-. SUBSEQUEN TLY IN THE INSTANT CASE, INFORMATION WAS RECEIVED FROM SALES TAX/VAT DEPARTM ENT THAT ASSESSEE HAD MADE FICTITIOUS PURCHASES OF THE PLASTIC BAGS OF RS . 58.761/- FROM THE M/S. BALAJI TRADING. THE ASSESSEE HAS CLAIMED THAT THE P LASTIC BAGS WERE PURCHASED FROM THE ABOVE PARTY AND IT WAS USED IN THIS BUSINE SS AND THE PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE. COPY OF INVOICE, LEDGER AND BANK STATEMENT WAS FILED. FURTHER, NOTICES U/S. 133(6) W AS ISSUED TO M/S. BALAJI TRADING, CALLING FOR CERTAIN DETAILS. HOWEVER, NO R ESPONSE FROM M/S. BALAJI TRADING WAS RECEIVED. HENCE, THE AO CONSIDERED THE TRANSACTIONS IN RESPECT OF AUMEX INTERNATIONAL 2 PURCHASES WERE NOT GENUINE, AND ADDED RS.58,761/- B EING 100% OF THE PURCHASES MADE. 3. UPON ASSESSEES APPEAL LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO 25%. 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. 5. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION WE FIND THAT AS SESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFE RENCE HAS BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SE TTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITH OUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTI ONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETIT ION NO 2860, ORDER DATED 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGU S WHEN SALES ARE NOT DOUBTED. HOWEVER IN THAT CASE ALL THE SUPPLIES WERE TO GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THA T ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THR OUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMEN T OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN MY C ONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE DISALLOWANC E OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. HENCE WE UPHOLD THE ORDER OF LEARNED CIT(A). THE DECISION OF N.K. PROTEINS LTD.(250 ITR 22) REFERRED BY THE REVENUE IN THE GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUI SHED AND EXPLAINED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M. HAZI AD AM & CO. (ITA NO. 1004 OF 2006 DATED 11.2.2019). 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE S TANDS DISMISSED AUMEX INTERNATIONAL 3 PRONOUNCED IN THE OPEN COURT ON 1.7.2021. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 01/07/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI