ITO 20 (1)(1), MUMBAI V. ALIAKBAR HAIDERALI MUKHI, MUMBAI

ITA 6374/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0741 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Assessee Lawyers: R B POPAT
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 201; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH MUMBAI BEFORE : SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M.BALAGANESH, A CCOUNTANT M EMBER ITA NO. 6374 /MUM/ 20 19 ( ASSESSMENT YEAR : 201 1 - 1 2 ) INCOME TAX OFFICER 20 (1)(1) ROOM NO.124, 1 S T FLOOR PIRAMAL CHAMBERS LALBAUG, PAREL MUMBAI 400 012 VS. SHRI ALIAKBAR HAIDERALI MUKHI 22 - A, KHARWA GALLI, 2 TANK, OPP. ANJUMAL ISLAM COLLEGE, MAULANA AZAD ROAD MUMBAI 400 008 PAN/GIR NO. AGKPM4793N (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI B RAJENDRA KUMAR ASSESSEE BY SHRI R.B. POPAT DATE OF HEARING 21 / 06 /202 1 DATE OF PRONOUNCEMENT 14 / 07 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 6374/MUM/2019 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 32, MUMBAI IN APPEAL NO. CIT(A) - 32, MUMBAI/10543/2018 - 19 DATED 19/07/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 27/12/2018 BY THE LD. INCOME TAX OFFICER - 20(1)(1), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 6374/MUM/2019 SHRI ALIAKBAR HAIDERALI MUKHI 2 2. THOUGH THE REVENUE HAS RAISED THE SEVERAL GROUNDS, WE FIND THAT ONLY ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS WITH REGARD TO ADDITION MADE O N ACCOUNT OF BOGUS PURCHASES. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. METAL PROFILE AND ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL ITEMS COMP RISING OF M.S. ANGLES, M.S. CHANNELS, M.S. FLATS, M.S. SHEETS, M.S. TEE ANGLES AND TMT BASE. WE FIND THAT THE LD. AO OBSERVED THAT ASSESSEE HAD MADE PURCHASES FROM VARIOUS PARTIES TOTALING TO RS.3,87,81,204/ - WHICH ARE LISTED IN PAGE 2 OF THE ASSESSMENT OR DER. THESE PARTIES ACCORDING TO THE LD. AO APPEAR ED AS TAINTED DEALERS IN THE WEBSITE OF SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA WHICH INFORMATION WAS APPARENTLY PASSED ON TO THE INCOME TAX DEPARTMENT WHICH ULTIMATELY TRIGGERED THE REOPENING OF A SSESSMENT IN THE CASE OF THIS ASSESSEE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO SOUGHT TO VERIFY THE VERACITY OF AFORESAID PURCHASES MADE BY THE ASSESSEE. THE ASSESSEE FURNISHED THE COPIES OF PURCHASE INVOICES FROM THE AFORESAID SUPPLIERS TOGET HER WITH THE COPY OF THEIR LEDGER ACCOUNT. THE LD. AO ISSUED NOTICES U/S.133(6) OF THE ACT TO THOSE TAINTED SUPPLIERS WHICH WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THE ASSESSEE ALSO SUBMITTED COPY OF BANK STATEMENTS VIDE LETTER DATED 17/10/2018 D ULY HIGHLIGHTING THE PAYMENTS MADE TO THOSE SUPPLIERS BY ACCOUNT PAYEE CHEQUES. THE ASSESSEE ALSO FURNISHED THE DETAILS OF CORRESPONDING SALES MADE BY HIM OUT OF THE PURCHASES MADE FROM THOSE SUPPLIERS. HOWEVER, THE LD. AO DISMISSED THIS PLEA OF THE ASSESS EE THAT CORRESPONDING SALES MADE BY THE ASSESSEE OUT OF DISPUTED PURCHASES WERE NOT FILED BY THE ASSESSEE. HOWEVER, THE LD. AO PROCEEDED TO TREAT THE PROFIT ELEMENT EMBEDDED IN THE VALUE OF AFORESAID PURCHASES @25% OF RS.3,87,81,204/ - WHICH ITA NO . 6374/MUM/2019 SHRI ALIAKBAR HAIDERALI MUKHI 3 WORKED OUT TO RS.96,95,301/ - AND MADE AN ADDITION TOWARDS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT IN THE ASSESSMENT. 3.1. WE FIND THAT THE LD. CIT(A) HAD AGREED TO THE FACT THAT ASSESSEE HAD FILED THE DETAILS OF SALES MADE BY THE ASSESSEE OUT OF THE DISPUTED PURCHA SES. THE LD. CIT(A) ALSO OBSERVED THAT THE NOTICES ISSUED U/S.133(6) OF THE ACT BY THE LD. AO WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES AND ASSESSEE ALSO COULD NOT PRODUCE THE ALLEGED SUPPLIERS FOR EXAMINATION OF THE LD. AO. ACCORDINGLY, HE CONCLUDE D THAT ASSESSEE WOULD HAVE MADE PURCHASE S IN THE GREY MARKET BUT SINCE THE CORRESPONDING SALES MADE BY THE ASSESSEE HA VE BEEN PROVED BEYOND DOUBT , ONLY THE PROFIT ELEMENT COULD BE BROUGHT TO TAX IN THE ENTIRE TRANSACTION FOR MAKING PURCHASES IN THE GREY MA RKET. ACCORDINGLY, THE LD. CIT(A) ESTIMATED THE PROFIT ELEMENT AT 3% ON THE VALUE OF DISPUTED PURCHASES. 4. AGGRIEVED BY THIS ORDER , ONLY THE REVENUE HAD PREFERRED APPEAL BEFORE US AND ASSESSEE IS NOT IN APPEAL. 5. WE FIND THAT ASSESSEE HAS GIVEN BEFORE THE LD. AO THE DETAILS OF PURCHASE INVOICES, COPY OF LEDGER ACCOUNT OF THE SUPPLIERS FROM WHOM SUPPLIES WERE MADE, DETAILS OF CORRESPONDING SALES MADE OUT OF DISPUTED PURCHASES, TOTAL QUANTITATIVE DETAILS OF GOODS PURCHASED AND SOLD THEREOF AND EVIDENCES IN THE BANK STATEMENTS SHOWING PAYMENTS MADE BY ACCOUNT PAYEE CHEQUES TO THE DISPUTED SUPPLIERS. WE FIND THAT ASSESSEE HAS PROVIDED THE FOLLOWING GP RATIO BEFORE THE LD. CIT(A) WHICH HAS BEEN TAKEN DUE COGNIZANCE BY THE LD. CIT(A) WHILE DECIDING THE ISSUE AS UNDER: - ITA NO . 6374/MUM/2019 SHRI ALIAKBAR HAIDERALI MUKHI 4 YEAR ENDED G.P. RATIO 31/03/2007 2.67% 31/03/2008 1.91% 31/03/2009 2.71% 31/03/2010 2.49% 31/03/2011 (IMPUGNED ASSESSMENT YEAR) 1.27% 5.1. THE AVERAGE OF THE GROSS PROFIT RATIO FOR ALL THE FIVE YEARS WORK S OUT TO 2.21% AND CONSIDERING THE FACT THAT ASSESSEE COULD HAVE MADE PURCHASES ONLY IN GREY MARKET FOR HAVING SOME BENEFIT IN INDIRECT TAXES, WE HOLD THAT THE LD. CIT(A) HAD RIGHTLY ESTIMATED THE PROFIT ELEMENT EMBEDDED IN THE VALUE OF DISPUTED PURCHASES AT 3% ON WHICH NO INTERFERENCE IS WARRANTED. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 14 / 07 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 14 / 07 / 2021 KARUNA , SR.PS ITA NO . 6374/MUM/2019 SHRI ALIAKBAR HAIDERALI MUKHI 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//