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Income Tax Appellate Tribunal, MUMBAI ‘SMC’ BENCH, MUMBAI
Assessment Year: 2011-12 Page 1 of 3 INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘SMC’ BENCH, MUMBAI [Coram: Pramod Kumar (Vice President)] Assessment Year: 2011-12 Income Tax Officer Ward - 4 (4) Thane. …………………….. Appellant Vs. Israfahmed Liyakat Hussain Khan ....……………….Respondent A-104, Sunflower Building, Evershine Nagari En 10, Waliv, Vasai (E) 401208 [PAN: ANZPK7745A] Appearances: Milind Chavan for the appellant None for the respondent Date of concluding the hearing : November 03, 2021 Date of pronouncement : November 03, 2021 O R D E R Per Pramod Kumar, VP:
By way of this appeal, the Assessing Officer has challenged the correctness of the order dated 26th February 2020, 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.
Grievances raised by the Assessing Officer are as follows:
1. 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-3, Thane has erred by not appreciating the fact that the assessee could not establish the genuineness from the non-existent vendors by means of relevant supporting documents as per the information received from Sales Tax Department.
2. On the facts and in the circumstances of the case in law, Ld. CIT(3), Thane erred in deleting the above quantum of Rs. 24,34,021/- made on account of purchases made from Hawala parties.
3. The appellant prays that the order of the Ld. CIT(A)-3, Thane, may be vacated and that of the Assessing Officer may be restored.
Assessment Year: 2011-12 Page 2 of 3 3. Learned Departmental Representative fairly agrees that a coordinate bench of this tribunal, in the case of Rollon Hardware India Pvt. Ltd., in 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 Hon’ble Gujarat High Court in the case of Pr. CIT Vs. T.R. Kapadia in Tax Appeal No.691 of 2017.
In this case the Hon’ble High Court has confirmed the deletion of disallowance on account of alleged bogus purchase as necessary documentary evidence for the purchase were on record.
The special leave petition against this order has been dismissed by the Hon’ble Supreme Court in its decision dated. 04.05.2018 S.L.P. Civil Diary No.12670/2018.
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 Hon’ble 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 Hon’ble 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 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 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.
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.
In the result, this appeal is dismissed. Pronounced in the open court today on the 03rd 5. day of November 2021.