ITO 26 (1)(2), MUMBAI V. BASHIR AHMED USMAN ALI KHAN, MUMBAI

ITA 7099/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8349 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM / I .T.A. NO. 7099 / MUM/ 20 1 8 ( / ASSESSMENT YEAR: 2010 - 11 ) ITO 26(1) (2) BLDG. NO. C - 11, ROOM NO.706, 7 TH FLOOR, PRATYKSHAKA R BHAVAN, BKC, BANDRA (E), MUMBAI - 400070 . / VS. BASHIR AHMED USMAN ALI KHAN ZOHRA MANSION 7 - A , GR. FLOOR, ANA SAGAR MARG, CST ROAD, KURLA (W), MUMBAI - 400070 . ./ ./ PAN/GIR NO. : BAQPK 0502 E ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 18/ 0 2/ 20 20 / DATE OF PRONOUNCEMENT : 20 / 0 4 / 2020 / O R D E R PER SHAMIM YAHYA, AM: THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS DELETED PART OF THE ADDITION OF BOGUS PURCHASE BY SUSTAINING ONLY 10% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE , VIDE ORDER DATED 22.06.2018 PERTAINING TO A.Y . 2010 - 11. 2 . THE ASSESSEE IN THIS CASE IS ENGAGED INTO DEALING IN WOODS PRODUCT, PLYWOOD. 3. THE ASSESSMENT WAS REOPENED UPON INFORMATION FROM S ALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS . REVENUE BY : SHRI CHAITANYA ANJARIA ASSESSEE BY: NONE ITA. NO.7099 /M/2018 A.Y. 2010 - 11 2 4. THE AO IN THIS CASE HAS MADE 12.5% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 8,40,480/ - . 5. UP ON ASSESSEES APPEAL LD. CIT(A) HAS NOTED THAT THE SALES HAS NOT BEEN DOUBTED. ACCORDINGLY PLACING RELIANCE UPON SEVERAL CASE LAWS AND UP ON TH E FAC TS OF THE CASE HE SUSTAINED 10 % DISALLOW ANCE OUT OF THE BOGUS PURCHASES, AFTER GIVING CREDIT TO THE ASSESSEE FOR PROFIT ALREADY DECLARED. 6. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LD. DR AND PERUSED THE RECORDS. 7. I FI ND 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 S UPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOG US 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 OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPE NSE OF THE EXCHEQUER. IN SUCH SITUATION I N MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 10 % DISALLOWANCE OUT OF THE BOGUS ITA. NO.7099 /M/2018 A.Y. 2010 - 11 3 PURCHASES MEETS THE END OF JUSTICE. ACCORDINGLY, I UPHOLD THE ORDER OF LD. CIT(A). 8. THE DECISION OF N.K. PR OTEINS REFERRED BY REVENUE IN GROUNDS OF APPEAL HAS ALREADY BEEN DISTINGUISHED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF M. HAJI ADAM & CO. ITA. NO.1004 OF 2016 DATED 11.02.2019. I N THE RESULT , THIS APPEAL FILED BY THE REVENUE STAND DISMISSED . ORDER PRO NOUNCED IN THE OPEN COURT ON 20 /0 4 /2020 SD/ - ( SHAMIM YAHYA ) / ACCOUNTANT MEMBER MUMBAI; DATED : 20 / 04 / 2020 VIJAY PAL SINGH /SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI