ITO 28(1)(5), NAVI MUMBAI V. SHRI. GEORGE KURUVILLAS IRUMALA , MUMBAI

ITA 721/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3776 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

ITA NO. 721/MUM/2020 ASSESSMENT YEAR: 2009 - 10 PAGE 1 OF 3 INCOME TAX APPELLATE TRIBUNAL MUMBAI G BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT) AND SAKTIJIT DEY (JUDICIAL MEMBER)] ITA NO. 721/MUM/2020 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER 28(1)(5) MUMBAI. .. APPELLANT VS. SHRI GEORGE KURUVILLA IRUMALA .....RESPONDENT PROP. GEO REMEDIES, PLOT NO. 11/13, SECTOR - 1, NERUL - 400706 [PAN: AACPI9173L] APPEARANCES: RAVINDER SINDH U FOR THE APPELLANT NONE FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : OCTOBER 11, 2021 DATE OF PRONOUNCEMENT : OCTOBER 11, 2021 O R D E R PER PRAMOD KUMAR, VP : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED THE CORRECTNESS OF THE ORDER DATED 19 TH NOVEMBER 2019, PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT U/S. 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2009 - 10. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE AS FOLLOWS: (1) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND M LAW, THE LD CIT (A) HAS ER RED IN DIRECTING THE A.O. TO RESTRICT THE DISALLOWANCE OF BOGUS PURCHASES TO 12.5% AS AGAINST 100% ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASE WITHOUT APPRECIATING THE FACT THAT THE PARTIES FROM WHOM THESE PURCHASES WERE MADE TO PRO VEN ACCOMMODATION ENTRY PROVIDERS, AS CONCLUDED BY SALES TAX AUTHORITIES PURSUANT TO THE INVESTIGATION CARRIED OUT BY THEM?. (2) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN NOT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF M/S. N.K PROTEINS LTD.. VS DCIT (769 OF 2017), WHEREIN THE HONBLE SUPREME COURT HAS CONFRONTED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES? ITA NO. 721/MUM/2020 ASSESSMENT YEAR: 2009 - 10 PAGE 2 OF 3 3. WE FIND THAT A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF ROLL ON HARDWARE INDIA PVT. LTD ., IN ITA NO. 1621/MUM/2018 ORDER DATED 05.11.2018, HAS IN SIMILAR FACTS AND CIRCUMSTANCES INTER ALIA, OBSERVED AS FOLLOWS: 4. IN SUPPORT OF HIS CASE LD. COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. CIT VS. T.R. KAPADIA IN TAX APPEAL NO.691 OF 2017. 5. IN THIS CASE THE HONBLE HIGH COURT HAS CONFIRMED THE DELETION OF DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHASE AS NECESSARY DOCUMENTARY EVIDENCE FOR THE PUR CHASE WERE ON RECORD. 6. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT IN ITS DECISION DATED. 04.05.2018 S.L.P. CIVIL DIARY NO.12670/2018. 7. UP ON CAREFUL CONSIDERATION, I FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HAVE BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. I 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 RATIONAL BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITI ON NO. 2860, ORDER DT. 18.06.2014. IN THIS CASE THE HONBLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER, IN THAT CASE ALL THE SUPPLIERS WERE GOVERNMENT AGENCY. IN THE PRESENT CASE T HE FACTS OF THE 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 EXPENSES OF THE EXCHEQUER. IN SUCH SITUATION IN MY CO NSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. HOWEVER, IN THIS REGARD LD. COUNSEL OF THE ASSESSE HAS PRAYED THAT WHEN ONLY THE PROFITS EARNED BY THE ASSESSEE ON THESE BOGUS PURCHASE TRANSACTION IS TO BE TAXED THE GROSS PROFIT ALREADY SHOWN BY THE ASSESSEE AND OFFERED TO TAX SHOULD BE REDUCED FROM THE STANDARD 12.5% BEING DIRECTED TO BE DISALLOWED ON ACCOUNT OF BOGUS PURCHASE. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH. RESPECTFULLY FOLLOWING THE COORDINATE BENCH ORDER, WE CONFIRM ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, THIS APPEA L IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 11 TH DAY OF OCTOBER2021. S D / - S D / - SAKTIJIT DEY PRAMOD KUMAR ( JUDICIAL MEMBER ) (VICE PRESIDENT) MUMBAI, DATED THE 11 TH DAY OF OCTOBER 2021. ITA NO. 721/MUM/2020 ASSESSMENT YEAR: 2009 - 10 PAGE 3 OF 3 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT (A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI