ITO 17 (2)(1), MUMBAI V. SHRI. JAVED JABIRALI MODI, MUMBAI

ITA 7293/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4553 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBODH RATNAPARTHI
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

ITA NO. 7293 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 1 OF 3 INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT)] ITA NO. 7293/MUM/2019 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER 17(2)(1) MUMBAI. .. APPELLANT VS. SHRI JAVED JIBIRALI MODI .....RESPONDENT 128, GROUND FLOOR, BAPUKHOTE STREET, JAMIA MOHALLA, MUMBAI 400003 [PAN: AAMPM9602J] APPEARANCES: SUNIL DESHPANDE FOR THE APPELLANT SUBODH RATNAPARTHI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : MAY 13, 2021 DATE OF PRONOUNCEMENT : MAY 19, 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 28 TH OCTOBER 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 2011 - 12. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE AS FOLLOWS: 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING O FFICER TO RESTRICT THE ADDITION OF RS. 12,72,340 / - BEING 100% OF BOGUS PURCHASES OF RS. 12,72,340/ - TO THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE AFORESAID ADDITION TO THE TOTAL INCOME OF THE ASSESSEE WAS MADE BY AO ON THE BASIS OF INFORMATION RECE IVED FROM AN AUTHORITATIVE EXTERNAL SOURCE I.E. MAHARASHTRA SALES TAX DEPARTMENT THROUGH DGIT(LNV.), MUMBAI AND THEREFORE, THIS CASE FALLS UNDER EXCEPTION (E)TO PARA 10 OF CBDT CIRCULAR NO. 3/2018 DATED 11.07.2018 READ WITH AMENDMENT DATED 20.08.2018 TO PA RA 10 OF THE SAID CIRCULAR.' ITA NO. 7293 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 2 OF 3 3. I FIND THAT A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF ROLLON 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 DELE TION OF DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHASE AS NECESSARY DOCUMENTARY EVIDENCE FOR THE PURCHASE WERE ON RECORD. 6. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT IN ITS DECISION DATED. 04.05.201 8 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 I N 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 PETITION 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 THE FACTS OF THE CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS O N ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSES 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. 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% BE ING DIRECTED TO BE DISALLOWED ON ACCOUNT OF BOGUS PURCHASE. 4. I 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, I CONFIRM ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, THIS APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 19 TH DAY OF MAY 2021. S D / - PRAMOD KUMAR (VICE PRESIDENT) MUMBAI, DATED THE 19 TH DAY OF MAY 2021. ITA NO. 7293 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 3 OF 3 COPIES TO: (1) THE APPLICANT (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