INCOME TAX OFFICER WARD 27(2)(4), MUMBAI V. SHREE NAVINCHANDRA U. SANGHVI, MUMBAI

ITA 6817/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6662 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: RADHA HALBE
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 6817 /MUM/2018 : A.Y : 2010 - 11 INCOME TAX OFFICER - 27(2)(4), MUMBAI (APPELLANT) VS. SHRI NAVINCHANDRA U. SANGHVI 1A, 102, 1 ST FLOOR, A WING, PREM ASHISH, CHANDAN PARK COMPLEX, NAOROJI LANE, NR. COSMOS BANK, GHATKOPAR (W), MUMBAI 400 086. PAN : AAKPS5633D (RESPONDENT) APPELLANT BY : SHRI R. BHOOPATHI RESPONDENT BY : MS. RADHA HALBE DATE OF HEARING : 12/12/2019 DATE OF PRONOUNCEMENT : 04 / 0 2/20 20 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED CIT(A) HAS REDUCED THE ADDITION OF BOGUS PURCHASE BY SUSTAINING ONLY 12.5% DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE OR DER DATED 19.09.2018 PERTAINING TO ASSESSMENT YEAR 2010 - 11. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO MANUFACTURING OF GARMENT. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE 25% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.3,86,469/ - . 3. UPON ASSESSEES APPEAL , LEARNED CIT ( A ) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY , PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON 2 ITA NO. 681 7 /MUM/2018 SHRI NAVINCHANDRA U. SANGHVI THE FACTS OF THE CASE , HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES . AGAINST ABOVE ORDER , R EVENUE IS IN APPEAL BEFORE THE ITAT. 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. I T IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE , T HE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED BY H ONOURABLE J URISDICTIONAL HIGH COURT DECISION IN THE CASE OF NICKUNJ EXIMP ENTERPRISES (P.) LTD. VS ACIT (IN WRIT PETITION NO . 2860 OF 2012 , ORDER DATED 18.6.2014) . IN THIS CASE THE H ONOURABLE 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 CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT O F NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH A 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 LEARNED CIT ( A ) . 5. IN THE RESULT , THIS APPEAL FILED BY THE R EVENUE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 4 T H F E B R U A R Y , 20 2 0 . SD/ - (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI, DATE : 4 T H F E B R U A R Y , 20 2 0 *SSL* 3 ITA NO. 681 7 /MUM/2018 SHRI NAVINCHANDRA U. SANGHVI COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI