ACIT - 27 (3)(2), MUMBAI V. SAMEER V. JUTHANI, MUMBAI

ITA 6819/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6666 (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: 2009-2010
• Appeal Filed On: 30-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO S . 6818 & 6819 /MUM/2018 : A.Y S : 2010 - 11 & 2009 - 10 INCOME TAX OFFICER - 27(3)(2), MUMBAI (APPELLANT) VS. SHRI SAMEER V. JUTHANI 3, SATYAM INDUSTRIAL ESTATE, OFF. B.K.S.D. MARG, GOVANDI STATION ROAD, GOVANDI (E), MUMBAI - 88. PAN : AAAPJ8632K (RESPONDENT) APPELLANT BY : SHRI R. BHOOPATHI RESPONDENT BY : SHRI BHUPENDRA SHAH DATE OF HEARING : 12/12/2019 DATE OF PRONOUNCEMENT : 04 / 0 2/20 20 O R D E R TH E S E ARE APPEAL S 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 ORDER S DATED 05 .09 .2018 PERTAINING TO ASSESSMENT YEAR S 2009 - 10 AND 2010 - 11. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO ASSEMBL ING OF ENGINEERING GOODS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEA LERS. THE ASSESSING OFFICER IN THIS CASE HAS MADE 25% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 7,83,834/ - AND RS.6,02,263/ - IN ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY . 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. 6818/MUM/2018 SHRI SAMEER V. JUTHANI THE FACTS OF THE CASE , HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES . AGAINST ABOVE ORDER S , 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. MAKIN G 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 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 S OF LEARNED CIT ( A ) . 5. IN THE RESULT , BOTH THE APPEAL S FILED BY THE R EVENUE STAND 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. 6818/MUM/2018 SHRI SAMEER V. JUTHANI 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