ITO 22(1)(6), MUMBAI V. ABDUL RAUF BILAL AHMED, MUMBAI

ITA 7354/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4552 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 17 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: 02-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULTANIA SUBHAS
• Keywords: Bogus purchase
• Section: 143(3); 37

Judgement Text

ITA NO. 7354 /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. 7354/MUM/2019 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER 22(1)(6) MUMBAI. .. APPELLANT VS. ABDUL RAUF BILAL AHEMD .....RESPONDENT ROOM NO. 18, NOORANI BUILDING, 3 RD FLOOR, CADLE ROAD, MAHIM WEST, MUMBAI 400016 [PAN: AATPB3087H] APPEARANCES: SUNIL DESHPANDE FOR THE APPELLANT SULTANIA SUBHAS FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : MAY 13, 2021 D ATE OF PRONOUNCEMENT : MAY 1 9 , 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 04 TH SEPTEMBER 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: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD CIT (A) ERRED IN IGNO RING THE LATEST DECISION OF THE SUPREME COURT IN THE CASE OF M/S. N.K PROTEINS LTD. VS. CIT IN SLP NO. 759 OF 2017 DATED 16.01.2017(SC) WHEREIN THE HON'BLE SUPREME COURT HAS DECIDED THE ISSUE OF BOGUS PURCHASE WITH A DIRECTION OF MAKING ADDITION AMOUNTING TO ENTIRE BOGUS PURCHASES AS THE ASSESSEE'S INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE BOGUS PURCHASES OF RS. 8,33,056/ - WITHOUT APPRECIATING THE FACT THAT ANY EXPENDITURE NOT FOUND T O BE INCURRED AT ALL, LEAST OF ALL THAT THE SAME IS ALSO NOT LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IS NOT ADMISSIBLE IN TERMS OF PROVISIONS OF SECTION 37 OF THE INCOME TAX ACT. ITA NO. 7354 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 2 OF 3 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT ONUS IS ON THE ASSESSEE TO EXPLAIN AND SUBSTANTIAL THE GENUINENESS AND TRUE NATURE OF PURCHASE TRANSACTION. 4. THE APPELLANT PRAYS THAT APPE AL IS FILED BECAUSE IT IS COVERED UNDER THE EXCEPTION PROVIDED IN PARA 10(E) OF THE CBDT'S CIRCULAR NO.3 OF 2018 DTD. 11.07.2018 A S AMENDED VIDE F.NO. 279/MISC. 142/2007 - ITJ(PT) DTD. 20.08.2018. 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 DELETION 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. 04.05.2018 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 A SSESSEE 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 A CTUAL 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 ALLOWANC E 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 THROU GH 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 CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHA SES 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 T AX SHOULD BE REDUCED FROM THE STANDARD 12.5% BEING 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 BENC H ORDER, I CONFIRM ACTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. ITA NO. 7354 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 3 OF 3 5. IN THE RESULT, THIS APPEAL IS DISMISSED. PRONOUNCED I N THE OPEN COURT TODAY ON THE 1 9 T H DAY OF MAY 2021. S D / - PRAMOD KUMAR (VICE PRESIDENT) MUMBAI, DATED TH E 1 9 T H DAY OF MAY 2021. 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