USHA B. AGARWAL, NAVI MUMBAI V. ITO 28(3)(5), NAVI MUMBAI

ITA 7034/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9938 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 02-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Keywords: Bogus purchase
• Section: 69C

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.7034/MUM/2016 : ASST.YEAR 2009-2010 SMT.USHA B.AGARWAL PROP. M/S.PANKAJ STEEL CORPORATION 42-A, KAVERI, SECTOR 17, VASHI NAVI MUMBAI 400 705. PAN : AADPA7722N. / VS. THE INCOME TAX OFFICER WARD 28(3)(5) NAVI MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : --- NONE --- /RESPONDENT BY : SHRI V.JANARDHANAN / DATE OF HEARING : 27.06.2017 / DATE OF PRONOUNCEMENT : 01.09.2017 / O R D E R THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) WHEREIN 25% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.4,70,230. 2. IN THIS CASE ASSESSING OFFICER HAD MADE A DISALLOWANCE OF RS.18,80,918 BEING 100% OF THE BOGUS PURCHASE. UPON ASSESSEES APPEAL, LEARNED CIT(A) REDUCED IT TO 25%. 3. IN THIS REGARD, I MAY GAINFULLY REFER TO THE DECISION OF THE LEARNED CIT(A) AS UNDER:- 5.10 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS ASKED TO FILE SEVERAL DETAILS RELATED TO PURCHASES, IN RESPONSE TO THAT, THE APPELLANT'S REPRESENTATIVES HAD MADE ITA NO.7034/MUM/2016. SMT.USHA B.AGARWAL. 2 SEVERAL WRITTEN SUBMISSIONS END PRODUCED LEDGER ACCOUNTS, BANK STATEMENT, BUT FAILED TO PRODUCE DETAILS OF VEHICLES, OCTROI AND DELIVERY CHALLAN ETC. EVEN DURING APPELLATE PROCEEDINGS THE APPELLANT VIDE ORDER-SHEET ENTRY DATED 04.04.2016 & 26.04.2016 WAS ASKED TO PRODUCE ORIGINAL WEIGHTMENT SHIP FOR PURCHASES FROM THE SAID PARTY, TRANSPORTATION DOCUMENTS/LORRY RECORD, SALE BILLS AND STOCK REGISTER. BUT NO SUCH DOCUMENTS WERE SUBMITTED IN APPEAL. THE PAYMENT MADE TO THE PURCHASE PARTIES WERE WITHIN THE KNOWLEDGE OF THE APPELLANT. THEREFORE, THE BURDEN IS ON APPELLANT TO ESTABLISH THE SAID FACTS. HOWEVER, THE APPELLANT FAILED TO DISCHARGE THE BURDEN. AFTER MAKING INDEPENDENT ENQUIRIES, FINDING OF SALES TAX DEPARTMENT AND DETAILS SUBMITTED BY THE APPELLANT, THE AO HELD THAT THE APPELLANT HAD NOT PURCHASED GOODS FROM ALL THESE ABOVE PARTIES AND ONLY ACCOMMODATION BILLS WERE TAKEN IN ORDER TO INFLATE THE EXPENSES AND BRING DOWN THE PROFITABILITY THEREBY AVOIDING THE PAYMENT OF TAXES. HENCE, PURCHASES AMOUNTING TO RS.18,80,918/- WERE DISALLOWED U/S 69C OF THE ACT. 5.11. KEEPING IN MIND THE TOTALITY OF CIRCUMSTANCES AS DISCUSSED ABOVE AND THE FACT THAT AR OF APPELLANT HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO CORROBORATE HIS ARGUMENTS DURING APPELLATE PROCEEDINGS, IT IS ADEQUATE TO MEET THE ENDS OF JUSTICE, WHEN THE DISALLOWANCE HAS BEEN RESTRICTED TO 25 PERCENT OF THE BOGUS PURCHASES OF RS.18,80,918/- WHICH AMOUNTS TO RS. 4,70,230/-. APPELLANT GET RELIEF OF RS. 14,10,689/-. THE AO IS THEREFORE DIRECTED TO RESTRICT THE DISALLOWANCE AS ABOVE. 4. AGAINST THIS ORDER, ASSESSEE HAS FILED APPEAL BEFORE THE ITAT. 5. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE SINCE LAST TWO DATES. AN ADJOURNMENT PETITION HAS BEEN FILED BY THE ASSESSEE WHICH HAS BEEN REJECTED AS ISSUES OF BOGUS PURCHASES HAVE ALREADY BEEN DEALT WITH BY THE ITAT MUMBAI BENCHES IN A NUMBER OF OTHER CASES. ITA NO.7034/MUM/2016. SMT.USHA B.AGARWAL. 3 6. UPON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT OVERWHELMING EVIDENCE HAVE BEEN REFERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL MOVEMENT OF THE GOODS UNDER DISPUTE. IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO.240 OF 2003 IN THE CASE OF N.K.INDUSTRIES V. DCIT, ORDER DATED 20.06.2016, WHEREIN 100% OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.01.2017. I FIND THAT DISMISSAL OF A SPECIAL LEAVE PETITION BY A NON-SPEAKING ORDER DOES NOT MERGE THE ORDER OF HONBLE HIGH COURT WITH THAT OF HONBLE APEX COURT. 7. FURTHER I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES. 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 SELLING ON ACCOUNT OF NON-PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. THIS IS FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P SETH FOLLOWED BY THE ITAT MUMBAI BENCHES IN A NUMBER OF CASES. ITA NO.7034/MUM/2016. SMT.USHA B.AGARWAL. 4 8. ACCORDINGLY, I MODIFY THE ORDER OF LEARNED CIT(A) AND DIRECT THAT THE DISALLOWANCE BE LIMITED TO 12.5% OF THE BOGUS PURCHASE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 01 ST DAY OF SEPTEMBER, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 01 ST SEPTEMBER, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.