Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
This is an appeal by the revenue wherein the revenue is aggrieved that Learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] has reduced the addition for bogus purchase 23,32,804/- @ 100% by the Assessing Officer by sustaining only 12.5% vide order dated 20.3.2019 for A.Y. 2011-12.
The assessee in this case is engaged into the business of manufacturing of steel metal components. The assessment was reopened upon information from sales tax department that assessee has made Rs. 23,32,804/- purchases from bogus dealers. The AO made 100% addition of the bogus purchase.
Upon assessee's appeal learned CIT-A has noted that the sales has not been doubted. Accordingly placing reliance upon several case laws and up on the facts of the case he sustained 12.5 % disallowance out of the bogus purchases.
Against above order revenue is in appeal before the ITAT. I have heard both the parties and perused the record. I find that in this case the sales or 2 M/s. Riddhi Siddhi Industries other working have not been doubted it is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860 order dt. 18.6.2014). In this case the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However the facts of the present 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 expense 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 done by the learned CIT-A meets the end of justice. Accordingly I uphold the order of learned CIT-A.
The decision of N.K. Proteins Ltd. (250 ITR 22) relied by the revenue was a dismissal of SLP by the Hon'ble supreme court and has already been explained and distinguished by Hon'ble Bombay high court in the case of M. Hazi Adam & Co. (ITA No. 1004 of 2006 dated 11.2.2019).
In the result this appeal filed by the revenue stands dismissed.
Order pronounced under Rule 34(4) of the ITAT Rules on 27.10.2020.