ITO 19 (2)(3), MUMBAI V. PREETI MANISH SHAH (LEGAL HEIR OF LATE MANISH Y.SHAH), MUMBAI

ITA 7037/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8346 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 7037 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) ITO - 19(2)(3) ROOM NO. 218, 2 ND FLOOR, MATRU MANDIR TARDEO, MUMBAI 400 007. V S . PREETI MANISH SHAH (LEGAL HEIR OF LATE MANISH Y. SHAH) A - 5, AHMED CHAMBERS 386, LAMINGTON ROAD MUMBAI - 400 007. PAN : AAFPS2227J ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA DEPARTMENT BY SHR I CHAITANYA ANJARIA DATE OF HEARING 17 .2 . 20 20 DATE OF PRONOUNCEMENT 20.4 . 20 20 O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AG G RIEVED THAT THE LEARNED CIT - A HAS DELETED PART OF THE ADDITION FOR BOGUS PURCHASE BY SUSTAINING ONLY 12.5% DISALLOW A NCE ON ACCOUNT OF BOGUS PURCHASES, VIDE ORDER DATED 28.9 .2018 PERTAINING TO A . Y . 2009 - 10. 2. THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE BUSINESS OF DEALING IN ELECTRONIC ITEMS. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASS ESSING OFFICER IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 11,65,809/ - . 3. UP ON ASSESSEE'S APPEAL LEARNED CIT - A HAS NOTED THAT THE SALES HA VE NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND U P ON THE FACTS OF THE CASE HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES . PREETI MANISH SHAH (LEGAL HEIR OF LATE MANISH Y. SHAH) 2 4. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOU BTED 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 COU RT DECISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN WRIT PETITION NO 2860, ORDER DT . 18.6.2014). IN THIS CASE THE HON HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS OF TH E PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING 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 SITUATION IN MY C O NSIDERE D 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 I UPHOLD THE ORDER OF LEARNED CIT - A. 5. THE DECISION OF N . K . P ROTEINS LTD. (250 ITR 22) REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY HON'BLE BOM BAY HIGH COURT IN THE CASE OF M. HAJI ADAM & C O . ( ITA NO 1004 OF 20016 DT . 11/2/2019 ). 6. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER HAS BE E N PRONOUNCED IN THE COURT ON 20.4 . 20 20 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 20 / 4 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI PREETI MANISH SHAH (LEGAL HEIR OF LATE MANISH Y. SHAH) 3 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI