ITO 27 (2)(5), MUMBAI V. PRIYA DWEDI, MUMBAI

ITA 6823/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2788 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH M WA J ALE
• Assessee Lawyers: RADHA HABLE
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 6823 /MUM/ 201 8 (ASSESSMENT YEAR 20 1 0 - 1 1 ) I.T.A. NO. 682 4 /MUM/2018 (ASSESSMENT YEAR 201 1 - 1 2 ) ITO - 27(2)(5) ROOM NO. 421 4 TH FLOOO R TOWER NO. 6 VASHI RAILWAY STATION, VASHI NAVI MUMBAI - 400703. V S . SMT. PRIYA DWEDI M/S. SHRINATH CORPORATION 104, SAFAL GANGA CHAMBUR EAST MUMBAI - 400 074. PAN : AJJPD5080D ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. RADHA HABLE DEPARTMENT BY SHR I SOMNATH M. WAJALE DATE OF HEARING 08.01 . 20 20 DATE OF PRONOUNCEMENT 0 2 . 0 3 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS A G GRIEVED THAT THE LEARNED CIT - A HAS DELETED THE ADDITION BY SUSTAININ G ONLY 12.5% DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE RESPECTIVE ORDE RS PERTAINING TO A . Y . 2010 - 11 & 2011 - 12. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO MANUFACTURING OF PACKING MATERIALS. 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 HUNDRED PERCENT ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 3,04,032 IN A.Y. 2010 - 11 & RS. 2,09,926 IN A.Y. 2011 - 12. 3. UP ON ASSESS EE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON SMT. PRIYA DWEDI 2 THE FACTS OF THE CASE HE SUSTAINED 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES . 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . 5. W E 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 DECISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18.6.2014). IN THIS CASE THE HO NOURABLE 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 M ARKET 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 12.5 % 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. THE DECISION OF N K PROTEINS LTD. (250 ITR 22) REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY H ON BLE BOMBAY HIGH COURT IN THE CASE OF M HAJI ADAM& CO ITA NO 1004 OF 20016 DT 11/2/2019 . 6. IN THE RESULT THE S E AP PEAL S FILED BY THE REVENUE STAND DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2.3 . 20 20 . SD/ - SD/ - ( AMARJIT SINGH ) (SH A MIM YAHYA ) JUDICIAL ME MBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 0 3 / 20 20 COPY OF THE ORDER FORWARDED TO : SMT. PRIYA DWEDI 3 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORD ER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI