SANKET CHAMPAKLAL SALIYA, THANE V. ITO WD 3(3), THANE

ITA 730/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0126 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Keywords: Bogus purchase

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NOS.729 & 730/MUM/2017:ASST.YEARS 2010-2011 & 2011-2012 SHRI SANKET CHAMPAKLAL SALIYA PROP. M/S.VIDHI TRADERS 1 ST FLOOR, KULKARNI BUILDING GHANTALI DEVI PATH, NAUPADA THANE 400 602. PAN : ATFPS0606N. / VS. THE INCOME TAX OFFICER WARD 3(3) THANE. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : MS.RITIKA AGARWAL /RESPONDENT BY : SHRI V.JANARDHANAN (DR) / DATE OF HEARING : 04.07.2017 / DATE OF PRONOUNCEMENT : 05.07.2017 / O R D E R THESE ARE APPEALS BY THE ASSESSEE DIRECTED AGAINST COMMON ORDER OF LEARNED CIT(A) DATED 30.11.2016 AND PERTAIN TO ASSESSMENT YEARS 2010- 2011AND 2011-2012. 2. THE ISSUE RAISED IS THAT THE LEARNED CIT(A) ERRED IN MAKING ADDITION OF RS.5,38,694 FOR ASSESSMENT YEAR 2010-2011 AND RS.14,39,036 FOR ASSESSMENT YEAR 2011-2012. 3. IN THESE CASES THE ASSESSING OFFICER MADE A DISALLOWANCE OF 100% OF BOGUS PURCHASES AMOUNTING TO RS.5,38,694 AND RS.22,09,509 FOR THE RESPECTIVE YEARS. ITA NOS.729 & 730/MUM/2017. SHRI SANKET CHAMPAKLAL SALIYA. 2 4. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) APPLIED THE GROSS PROFIT RATE ON THE TOTAL BUSINESS AND SUSTAINED ADDITION OF RS.5,38,694 AND 14,39,036. 5. AGAINST THIS ORDER, ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. 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 VS DY CIT , ORDER DATED 20.06.2016, WHEREIN HUNDRED PERCENT OF THE BOGUS PURCHASES WILL 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 COURTVIDE ORDER DATED 16.1.2017 AS UNDER: 'DELAY CONDONED. THE SPECIAL LEAVE PETITIONS ARE DISMISSED. PENDING APPLICATION(S) IF ANY STANDS DISPOSED OF ACCORDINGLY'. 4. I FIND THAT DISMISSAL OF SPECIAL LEAVE PETITION BY THE HONBLE APEX COURT BY A SIMPLE NON-SPEAKING ORDER DOES NOT MERGE ORDER OF THE HONBLE HIGH COURT WITH THAT OF THE HONBLE SUPREME COURT. FURTHERMORE, THE ADDITION/DISALLOWANCE FOR BOGUS PURCHASES DEPENDS UPON THE FACTS OF EACH CASE. ITA NOS.729 & 730/MUM/2017. SHRI SANKET CHAMPAKLAL SALIYA. 3 5. 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. THIS PROPOSITION FINDS SUPPORT FROM THE HON,BLE GUJARAT HIGH COURT IN THE SAME COMBINED ORDER AS MENTIONED ABOVE IN CASE OF ITA NO 241 THEREIN. THIS PROPOSITION IS FURTHER 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 PURCHASE THROUGH THE GREY MARKET GIVES THE ASSEESSEE SAVINGS ON ACCOUNT OF NON-PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SIMILAR SITUATION ON THE FACTS AND CIRCUMSTANCES OF THE CASE A DISALLOWANCE OF 12.5% OF THE BOGUS PURCHASE HAS BEEN CONSIDERED TO MEET THE END OF JUSTICE IN A NUMBER OF CASES AT THE MUMBAI TRIBUNAL FOLLOWING HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF SIMIT P SETH. ACCORDINGLY I HOLD THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. 6. LEARNED COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THE DISALLOWANCE OF 12.5% OF THE BOGUS PURCHASES. SHE DID NOT PRESS THE MATTER ANY FURTHER. 7. IN THE RESULT, THESE APPEALS BY THE ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 05 TH DAY OF JULY, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 05 TH JULY, 2017. DEVDAS* ITA NOS.729 & 730/MUM/2017. SHRI SANKET CHAMPAKLAL SALIYA. 4 / COPY OF THE ORDER FORWARDED TO : TRUE COPY / BY ORDER, / (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.