Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI PAWAN SINGH, JM
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM
ITA No. 5623/Mum/2018 (Assessment Year: 2010-11)
ITO-12(3)(3) M/s. Matcon Engineers India Pvt. Ltd. Room No. 224, 2nd Floor, 7, Ramkrupa, Road No. 6, Aayakar Bhavan, M. K. Road, Vs. Pandurangwadi, Goregaon (E), Mumbai-400 020 Mumbai – 400 063
PAN/GIR No. AABCM 0815 D (Appellant) : (Respondent)
Appellant by : Shri Akhtar H. Ansari : None Respondent by
: 20.11.2019 Date of Hearing Date of Pronouncement : 07.01.2020
O R D E R Per Shamim Yahya, A. M.:
This is an appeal by the Revenue wherein the Revenue is aggrieved that the
learned CIT-A has deleted the addition of Rs.12,80,172/- by sustaining only 12.5% disallowance on account of bogus purchases, vide order dated 27.04.2018 pertaining to Assessment Year 2010-11.
The assessee in this case is engaged into manufacturing business.
The assessment was reopened upon information from sales tax department that
assessee has made purchases from bogus dealers. The assessing officer in this case has made hundred percent additions on account of bogus purchase amounting to Rs.14,63,054/-.
2 ITA No. 5623/Mum/2018 M/s. Matcon Engineers India Pvt. Ltd. 4. Upon assessee's appeal learned CIT-A has noted that the sales has not been
doubted. Accordingly placing reliance upon several case laws and upon the facts of the
case he sustained 12.5 % disallowance out of the bogus purchases
Against the above order, the Revenue is in appeal before the ITAT.
We have heard both the counsel and perused the records. We 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 rationale 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 18.6.2014). In this case the Hon'ble High Court has upheld
hundred percent allowances 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 our 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 we uphold the order of learned CIT-A.
The decision of M/s NK Proteins Ltd. Vs. DCIT (No. 769 of 2017 dated 16.01.2017
(SC) referred by revenue in grounds of appeal has already been distinguished by Hon’ble
Bombay high court in the case of M Haji Adam& co ITA no 1004 of 20016 dt 11/2/2019.
3 ITA No. 5623/Mum/2018 M/s. Matcon Engineers India Pvt. Ltd. 8. In the result, this appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 07.01.2020
Sd/- Sd/-
(Pawan Singh) (Shamim Yahya) Judicial Member Accountant Member Mumbai; Dated : 07.01.2020 Roshani, Sr. PS
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,
(Dy./Asstt. Registrar) ITAT, Mumbai