ASLAM BRAHIM MALIM, MUMBAI V. ITO 15(3)(3), THANE

ITA 4725/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7122 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 20-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Keywords: Bogus purchase; Unexplained expenditure; Peak credit
• Section: 143(3); 133(6)

Judgement Text

ITA.NO.4725/MUM/2015 ASLAM IBRAHIM MALIM ASSESSMENT YEAR- 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.4725/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) ASLAM IBRAHIM MALIM 140/4,B.F.WADIA COMPOUND, OPP. REAY ROAD RAILWAY STN. REAY ROAD,MUMBAI-400 010 / VS. INCOME TAX OFFICER - 15(3)(3) 6 TH FLOOR, ASHER I.T. PARK ROAD NO.16Z WAGLE INDUSTRIAL ESTATE THANE- 400 604 ! ./ ./PAN/GIR NO. AMMPM-7901-Q ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : N. HEMALATHA, LD. DR / DATE OF HEARING : 24/05/2018 / DATE OF PRONOUNCEMENT : 22/06/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)-17 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-26/IT-69/15(3)(3)/13- 14 DATED 29/05/2015 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED ITA.NO.4725/MUM/2015 ASLAM IBRAHIM MALIM ASSESSMENT YEAR- 2010-11 2 BY LD. INCOME TAX OFFICER-15(3)(3), MUMBAI [AO] U/S 14 3(3) OF THE INCOME TAX ACT,1961 ON 28/03/2013 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.66.87 LACS AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.6.69 LACS E-FILED BY THE ASSESSEE ON 12/10/2010. NONE HAS APPEARED FOR ASSES SEE DESPITE BEING PROVIDED WITH SEVERAL OPPORTUNITIES OF BEING HEARD AND NO VALID ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AVAIL ABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE, MS. N.HEMALATHA. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF INSTALLATION & REPAIR OF AIR CONDITIONERS AND RESAL E OF AIR CONDITIONER PARTS UNDER PROPRIETORSHIP CONCERN NAMELY TEMPERATURE & ENGINEERING WORKS WAS SUBJECTED TO SCRUTINY ASSESSMENT U/S 143(3) WHEREIN IT WAS NOTED THAT THE ASSESSEE MADE AGGREGA TE PURCHASE OF RS.59,66,347/- FROM TWO SUSPICIOUS ENTITIES NAMELY RUPANI & CO. AND SAGAR STEEL TRADERS. THE NOTICES ISSUED U/S 133(6) TO THE SAID ENTITIES ELICITED NO SATISFACTORY RESPONSE. ACCORDINGLY, THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES MADE FROM THESE TWO P ARTIES. THE ASSESSEE, WHILE DEFENDING THE PURCHASES, SUBMITTED COPIES OF INVOICES AND SUBMITTED THAT PAYMENTS WERE THROUGH BANKING CH ANNELS. HOWEVER, NOT CONVINCED, LD. AO TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/05/2015 WHEREIN LD. CIT(A) CONSIDERED THE VARIOUS SUBMISSIO NS MADE BY ASSESSEE AND JUDICIAL PRONOUNCEMENTS ON THE SUBJECT MATTER. FINALLY, ITA.NO.4725/MUM/2015 ASLAM IBRAHIM MALIM ASSESSMENT YEAR- 2010-11 3 CONSIDERING THE GROSS PROFIT RATE OF 12.5% ALREADY REFLECTED BY THE ASSESSEE, LD. CIT(A) DIRECTED THE LD. AO TO INCREAS E THE GROSS PROFIT RATIO IN RESPECT OF THE BOGUS PURCHASES TO 16.5% AS AGAINST 12.5% SHOWN BY THE ASSESSEE IN RESPECT OF OTHER PURCHASES . THE LD. CIT(A) FURTHER OPINED THAT SINCE THE ASSESSEE PURCHASED TH E GOODS FROM GREY MARKET, THE PAYMENT MADE TO HAWALA PARTIES REPRESENTED UNEXPLAINED CASH OF THE ASSESSEE, THE PEAK CREDIT OF WHICH WAS LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE. ACCORDINGLY, LD. CIT(A) WORKED OUT PEAK CREDIT OF RS.45.51 LACS AGAINST THE SAME AND PROPOS ED ADDITION THEREOF AS UNEXPLAINED EXPENDITURE U/S 69C. THE LD. CIT(A) ALSO PROPOSED ANOTHER ADDITION @2% TO ACCOUNT FOR COMMISSION AGAI NST THESE PURCHASES WHICH WORKED OUT TO RS.1,19,326/-. AGGRIE VED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. DEPARTMENTA L REPRESENTATIVE HAS PLACED RELIANCE ON THE STAND OF LOWER AUTHORITIES. 4. UPON CAREFUL CONSIDERATION, THE APPROACH OF LD. FIRST APPELLATE AUTHORITY IN PROPOSING ADDITIONS FROM VARIOUS ANGLE S WAS NOT JUSTIFIED SINCE THE NATURE OF ASSESSEES BUSINESS REQUIRED PU RCHASE / CONSUMPTION OF MATERIAL AND THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF GOODS. THE ASSESSEE ALREADY REFLECTED NET PROFIT RATE OF 6.53% ON SALE TURNOVER OF RS.2.27 CRORES. THE TURNOVER AC HIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND T HE PAYMENTS WERE THROUGH BANKING CHANNELS. THE ASSESSEE WAS IN POSSE SSION OF PRIMARY PURCHASES DOCUMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT SUBSTANTIATE THE DELIVERY OF MATERIAL AND FAILED TO PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF ACCOUNTS. NOTICES ISSUED U/S 133(6) ELICITED NO SATISFACTORY RESPONSE. ALL THESE FACTORS CAST A SER IOUS DOUBT ON ITA.NO.4725/MUM/2015 ASLAM IBRAHIM MALIM ASSESSMENT YEAR- 2010-11 4 ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES. THEREFORE, ON FAC TUAL MATRIX, A COMPOSITE ADDITION @12.5% OF BOGUS PURCHASE, IN OUR OPINION, WOULD BE A REASONABLE ESTIMATION OF ADDITIONS. HENCE, WE EST IMATE THE SAME @12.5% OF ALLEGED BOGUS PURCHASES OF RS. 59,66,347/- WHICH COMES TO RS.7,45,793/-. ACCORDINGLY THE ADDITION TO THE EXTE NT OF RS.7,45,793/- STAND CONFIRMED WHEREAS OTHER ADDITIONS, IN THIS RE GARD, STAND DELETED. 5. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE,2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22.06.2018 SR.PS:- THIRUMALESH ! / 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