Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 9501 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 27 day(s)
Appellant
Respondent
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
Judgement Text
THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 6792/MUM/2019 (ASSESSMENT YEAR 2009-10) I.T.A. NO. 6793/MUM/2019 (ASSESSMENT YEAR 2010-11) I.T.A. NO. 6794/MUM/2019 (ASSESSMENT YEAR 2011-12) ACIT-22(1) 322, 3 RD FLOOR PIRMAL CHAMBERS LAL BAUG, PAREL MUMBAI-400 012. VS. GAUTAM NARAIN WADHWANI C-2/11, SAMRUDDHI COOPERATIVE HOUSING SOCIETY, BABURAO PARULEKAR MARG, DADAR WEST MUMBAI-400 028. PAN : AAEPW4414C (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) :- THESE ARE APPEALS BY REVENUE AGAINST COMMON ORDER O F LD CIT(A) WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED C IT(A) HAS ERRED IN SUSTAINING ONLY 25% PERCENT DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 7.8.2019 PERTAINING TO THE ABOVE ASSESS MENT YEARS. 2. SINCE FACTS ARE IDENTICAL WE ARE REFERRING TO FA CTS AND FIGURES FROM ASSESSMENT YEAR 2009-10. 3. BRIEF FACTS ARE THAT THE ASSESSEE WAS PROPRIETOR OF M/S. SAGITTAIRE CARRYING ON ITS BUSINESS OF EXECUTION OF WORKS CONT RACT OF ALL TYPES OF CONTRACT LIKE CIVIL CONTRACT & OTHER FURNITURE CONTRACTS. RE TURN OF INCOME HAS BEEN FILED ON 17.09.2009 DECLARING TOTAL INCOME AT RS.13,51,26 0/-. THE AO RECEIVED INFORMATION FROM MAHARASHTRA SALES TAX DEPARTMENT R EGARDING FICTITIOUS PURCHASES MADE BY THE APPELLANT FROM M/S. DHARMESH TRADING CO, M/S. VINAY TRADING CO AND OM ENTERPRISES. HENCE, THE CASE WAS RE-OPENED. THE ASSESSEE GAUTAM NARAIN WADHWANI 2 FILED COPIES OF INVOICES, LEDGER AND BANK STATEMENT S SHOWING PAYMENTS THROUGH ACCOUNT PAYEE CHEQUES AND STATED THAT IT HAD PURCHA SED POLE MCB AND BRASS SPRING HINGES OF RS. 4,46,399/- FROM THE AFORESAID THREE PARTIES WHICH WAS USED IN ITS BUSINESS FOR WHICH PAYMENTS HAVE BEEN R ECEIVED BY CHEQUES. 4. ACCORDING TO THE AO, AS PER INFORMATION FROM THE MAHARASHTRA VAT DEPARTMENT THROUGH DGIT (INV.), THE AFORESAID PARTI ES ARE BOGUS SUPPLIERS AND MERELY PROVIDE BILLS TO THE ASSESSEE WITHOUT DELIVE RY OF GOODS. NO RESPONSE TO NOTICE ISSUED U/S. 133(6) WAS RECEIVED. THE ASSESSE E HAS NOT BEEN ABLE TO PROVE THE DIRECT CORRELATION BETWEEN PURCHASES AND CORRESPONDING SALES. ACCORDINGLY, THE AO BY RELYING ON SEVERAL JUDGEMENT S TREATED THESE PURCHASES AS BOGUS AND ADDED ENTIRE PURCHASES MADE FROM THESE PARTIES I.E. 4,46,399/- TO THE TOTAL INCOME OF THE ASSESSEE. 5. UPON ASSESSEES APPEAL LEARNED CIT(A) GRANTED PA RT RELIEF BY HOLDING AS UNDER : I HAVE CAREFULLY GONE THROUGH THE ABOVE SUBMISSIONS MADE BY THE APPELLANT AND THE FACTS MENTIONED IN THE ASSESSMENT ORDER. THE PU RCHASES CLAIMED FROM THE THREE SUPPLIERS HAVE BEEN CORRECTLY TREATED B Y THE AO AS NON- GENUINE IN VIEW OF FINDINGS OF THE SALES TAX DEPART MENT AND NO RESPONSE FROM THE PARTIES IN RESPONSE TO NOTICE U/S 133(6). AS A RESULT, THE RATE AND QUANTITY OF ACTUAL PURCHASE COULD NOT BE VERIFIED AS THE PARTIES UNDER CONSIDERATION HAVE ISSUED ONLY INVOICES. CONSIDERING THE TOTALITY OF FACTS, I AM OF THE VIEW TH AT ADDITION OF ENTIRE PURCHASE IS NOT JUSTIFIED UNLESS IT IS PROVED THAT THE P AYMENTS MADE BY THE APPELLANT WAS RETURNED IN CASH OR UNLESS IT IS PROVED THAT THE APPELLANT HAS NOT MADE ANY PURCHASE FROM ANY OTHER PARTY. IT IS FOU ND THAT THERE IS NO CONCLUSIVE EVIDENCE TO SAY ANY OF ABOVE. IN SUCH A S ITUATION, AS THE QUANTITY AND RATE OF PURCHASE COULD NOT BE VERIFIED DUE TO N ON-AVAILABILITY OF THE SUPPLIER, CERTAIN PERCENTAGE OF PURCHASE SHOULD ONLY BE DISALLOWED WHICH WILL BE EQUIVALENT TO ADDITIONAL PROFIT EARNED BY THE ASSES SEE ON ACCOUNT OF OBTAINING BILLS FROM HAWALA PARTY AND PURCHASING GOO DS FROM GREY MARKET. CONSIDERING THE TOTALITY OF FACTS, I FIND IT FAIR TO ES TIMATE ADDITIONAL PROFIT @ 25 % OF BOGUS PURCHASE WHICH NEEDS TO BE ADDED TO TOTAL INCOME OF THE APPELLANT. IN VIEW OF ABOVE, ADDITION OF RS. 1,11,6 007- BEING 25 % OF RS. 4,46,399/- IS SUSTAINED AND BALANCE ADDITION OF RS.3 ,34,799/- IS HEREBY DELETED. GAUTAM NARAIN WADHWANI 3 6. AGAINST ABOVE ORDER REVENUE IS IN APPEALS BEFORE THE ITAT. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUS ED THE RECORDS. 7. UPON CAREFUL CONSIDERATION WE FIND THAT ASSESSEE 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 OR OTHER ASPECTS OF ASSESSEE'S WORKING 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 PROPOSIT ION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN TH E CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DATED 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT AL LOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBT ED. HOWEVER IN THAT CASE ALL THE SUPPLIES WERE TO GOVERNMENT AGENCY. 8. IN THE PRESENT CASE THE FACTS OF THE CASE INDICA TE THAT 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 CIRCUMSTANCES IN OUR CONSIDERED OPINION THE DISALLOWNACE SUSTAINED BY LEARNED CIT(A) SERVES THE INTEREST OF JUSTICE. HENCE WE UPHOLD THE ORDER OF LEARNED CIT(A). THE DE CISION OF N.K. PROTEINS LTD.(250 ITR 22) REFERRED BY THE REVENUE IN THE GRO UNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED AND EXPLAINED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M. HAZI ADAM & CO. (ITA NO. 1004 OF 2006 DATED 11.2 .2019). 9. IN THE RESULT THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. 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 GAUTAM NARAIN WADHWANI 4 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
