ACIT 25(2), MUMBAI V. MOHD. SALIM YASIN BELIM, MUMBAI

ITA 9207/MUM/2010

• Counselvise Citation: 920719914 RSA 2010
• Duration Of Justice: 4 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER & SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER . / ITA NO.9207/MUM/2010 ( / ASSESSMENT YEAR : 2007-08 ) ACIT 25(2) C-11 IST FLOOR, PRATYAKSHKAR BHAVAN, BANDRA (E) MUMBAI -51 .. / APPELLANT V/S MOHD. SALIM YASIN BELIM, 102, DIAMOND APARTMENT, NEW LINK ROAD, OSHIWARA, JOGESHWARI(W) MUMBAI -400102 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AADPL9515E REVENUE BY : SHRI VIJAY KUMAR SONI (DR) RESPONDENT BY : SHRI DARSHAK SHAH ! '# / DATE OF HEARING 10.08.2015 $% &' ! '# / DATE OF ORDER 28.08.2015 / ORDER PER ASHWANI TANEJA (ACCOUNTANT MEMBER) THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGA INST ORDER DATED 25.10.2010, PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)25,MUMBAI, PASSED FOR THE ASSESSMENT YEAR 2007-08. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- MOHD. SALIM YASIN BELI M 2 I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN RESTRICTING THE ADDITIO N MADE BY THE AO ON ACCOUNT OF INFLATED PURCHASES TO RS.6,11 ,889/- AS AGAINST RS.19,12,155/-, IN SPITE OF APPRECIATING TH E FACT THAT THE ASSESSEE HAD INFLATED PURCHASES BY OBTAINING BILLS FROM M/S. MANJU ENTERPRISES AND M/S. AMBIKA ENTERPRIS ES. II)THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESORTED. III) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S. SWASTICK ENTERPRISE, ENGAGED IN THE BUSINESS OF TRADI NG IN STEEL AND CERAMIC TILES, BUSINESS MATERIAL ETC. IN THE ASSESSME NT ORDER, THE AO DISALLOWED PURCHASES FROM THE FOLLOWING PARTIES ON TH E GROUND THAT FOLLOWING PURCHASES WERE BOGUS: 1. M/S. AMBIKA ENTERPRISES RS.9,54,200/- 2. MANJU ENTERPRISES RS.9,58,255/- TOTAL RS.19,12,455/- ============= 3. THE AO MADE DISALLOWANCE ON THE GROUND THAT IN CON NECTION WITH THE ABOVE MENTIONED PURCHASES, IT WAS OBSERVED BY THE AO THAT SHRI DIVYESH M. PAREKH, THE PROPRIETOR OF BOTH OF THE ABOV E CONCERNS, IN HIS STATEMENT RECORDED BY THE DIT(INV) HAS ADMITTED THAT HE WAS ENGAGED IN THE ACTIVITY OF ISSUING FAKE BILLS OF SALES TO VARI OUS PARTIES AND NO ACTUAL GOODS WERE SUPPLIED TO THESE PARTIES BY HIM. T HE LD. CIT(A), GAVE PART RELIEF TO THE ASSESSEE. 4. AGAINST THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE APPEAL BEFORE THE TRIBUNAL CONTESTING THE RELIEF GRANTED BY THE LD. CIT(A) TO THE ASSESSEE. IT HAS BEEN INFORMED TO US AND CONFIRM ED BY BOTH THE MOHD. SALIM YASIN BELI M 3 PARTIES THAT NO APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A). DURING THE COURSE OF HEARING BEFORE U S, LD. DR HAS RELIED UPON THE ORDER OF AO AND HAS SUBMITTED THAT PA RT RELIEF GIVEN BY LD. CIT(A) IS NOT JUSTIFIED AND ORDER OF THE AO SHOUL D BE UPHELD. ON THE OTHER HAND, LD. COUNSEL APPEARING ON BEHALF OF TH E ASSESSEE HAS RELIED UPON THE ORDER OF LD. CIT(A) AND IT HAS BEEN S UBMITTED BY HIM THAT THE LD. CIT(A) HAS BEEN VERY FAIR AND JUSTIFIED IN DELETING EXCESSIVE ADDITION MADE BY THE AO. IT HAS BEEN FURTHE R SUBMITTED BY THE LD. COUNSEL THAT THE ASSESSMENT ORDER OF THE AO WAS C ONTRARY TO LAW AND FACTS AND WAS AGAINST THE WELL ESTABLISHED PRIN CIPLE OF REAL INCOME THEORY. 5. WE HAVE HEARD BOTH THE SIDES. IT IS NOTED BY US THA T WHEN THE ASSESSEE CONTESTED THIS ISSUE BEFORE THE LD. CIT(A), HE SUBMITTED FURTHER EVIDENCES IN HIS POSSESSION WITH RESPECT TO THESE PURCHASES AND ALSO PRODUCED EXTRACTS OF STOCK REGISTER TO SHOW TH AT THE PURCHASE MADE FROM PARTIES WERE ENTERED AND THESE WERE SOLD TO M/S. HOUSING DEVELOPMENT PVT. LTD. THE ASSESSEE ALSO SUBMITTED THE Q UANTITATIVE RECONCILIATION OF THE PURCHASES AND SALES. THE ASSE SSEE FURTHER SUBMITTED THAT WITHOUT PURCHASE OF GOODS, THE ASSESSE E COULD NOT HAVE SOLD THE SAME. HE FURTHER SUBMITTED THAT AT THE BEST, THE AO COULD HAVE ESTIMATED CERTAIN PROFIT ELEMENT IF HE DOUBTED THE GENUINENESS OF PURCHASES FROM THESE PARTIES AND UNLESS THE STOCK REGI STER WAS REJECTED BY THE AO, HE COULD NOT HAVE DISALLOWED THE ENTIRE PURCHASES. IT WAS FURTHER SUBMITTED BY HIM THAT THE PAYMENTS WERE MADE TO BOTH THESE PARTIES IN THE NEXT YEAR BY ACCOUNT PAYEE CHEQU ES. THE LD. CIT(A) SENT COPY OF THESE WRITTEN SUBMISSIONS AND EN TIRE PAPER BOOK TO THE AO FOR THE REQUISITE EXAMINATION AND REMAND REP ORT OF THE AO. THE AO MADE EXAMINATION AND SENT HIS REMAND REPORT DA TED MOHD. SALIM YASIN BELI M 4 30.10.2010. THE LD. CIT(A) CONSIDERED THE REMAND REP ORT AND ALSO CONSIDERED THE REPLY OF THE ASSESSEE WITH RESPECT TO THE REMAND REPORT OF THE AO. IN THE REMAND REPORT, THE AO ACCEPTED THE FACTS OF MAINTENANCE OF STOCK REGISTER AND QUANTITATIVE RECONCI LIATION. AFTER CONSIDERING THESE EVIDENCES AND QUANTITATIVE RECONC ILIATION, THE LD. CIT(A) HELD AS UNDER: QUOTE: THE A.O. HAS NOT POINTED OUT ANY MISTAKE IN THE STO CK REGISTER BUT HIGHLIGHTED THE FACT THAT THERE WAS NO DELI VERY CHALLAN/TRUCK NO. FOR TRANSPORT OF MATERIALS. IN A C ASE WHERE DAY TO DAY STOCK REGISTER IS MAINTAINED AND THE SAME ARE AUDITED U/S.44AB AND THE AO COULD NOT ANY DEFECTS IN TH E STOCK REGISTER AND THE GENUINENESS OF SALE IS ACCEPT ED, IT HAS TO BE FURTHER ACCEPTED THAT THERE CANNOT BE ANY SALE WITHOUT PURCHASE. THUS I ACCEPT THE PLEAS OF THE REPRESENTATIVE THAT THE APPELLANT COULD NOT HAVE SOLD GO ODS WITHOUT PURCHASE OF CORRESPONDING MATERIALS. HOWEVER , IT IS POSSIBLE THAT THE APPELLANT HAS INFLATED THE PURCHASES BY OBTAINING BILLS FROM M/S. MANU ENTERPRISES AND M/S. AMBIKA ENTERPRISES AND SUCH INFLATED PURCHASE COULD BE EST IMATED AT 15%. ACCORDINGLY, 15% OF THE PURCHASE AMOUNT FROM THE ABOVE PARTIES IT TO BE DISALLOWED. THE TOTAL PURCHASES MADE FROM THE ABOVE PARTIES IS RS.19,12,155/- ON WHICH 15 % OF THE SAME WORKS OUT TO RS.2,86,823/-. FURTHER EVEN THOU GH THE APPELLANT MADE ACCOUNT PAYEE CHEQUES TO THE ABOVE PARTIES, ACTUALLY THE PURCHASES WERE NOT MADE FROM THE M AND CASH WAS TAKEN BACK WHICH WAS UTILIZED FOR PURCHA SES FROM UNORGANIZED MARKET. IN THE CIRCUMSTANCES, DISALLOWANCE U/S.40A(3) IS TO BE MADE TO THE EXTENT OF 20% OF THE CASH PURCHASE. ACCORDINGLY, THE DISALLOWANCE I S WORKED OUT AS UNDER: PURCHASES CLAIM RS.19,12,1 55 LESS: INFLATED PURCHASES @ 15% RS.2,86,823 --------------------------------------- BALANCE PURCHASE RS.16,25,332/- FURTHER DISALLOWANCE OF 20% ON CASH PURCHASE RS.2,25,066/- MOHD. SALIM YASIN BELI M 5 UNQUOTE: 6. IT IS NOTED BY US THAT THE LD. CIT(A) HAS CONSIDERED THE ENTIRE MATERIAL AND AFTER EXAMINING QUANTITATIVE RECONCILIATIO N HE HAS RIGHTLY GIVEN APPROPRIATE RELIEF TO THE ASSESSEE AND BALANCE AMOUNT ON ACCOUNT OF INFLATION IN PURCHASE AND ON ACCOUNT OF CAS H PURCHASES HAVE ALREADY BEEN ADDED BY THE LD. CIT(A) HIMSELF. THE A SSESSEE HAS NOT FILED ANY APPEAL WITH REGARD TO THE ADDITION SUSTAINED BY LD. CIT(A). UNDER THESE CIRCUMSTANCES AND KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND PECULIARITY OF THIS CA SE, WE FIND THAT THERE IS NOTHING WRONG IN THE ORDER OF LD. CIT(A) AND SAME IS HEREBY CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF AUGUST, 2015. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28 .08.2015 PATEL $% ! '() *)' / COPY OF THE ORDER FORWARDED TO : (1) +' / THE ASSESSEE; (2) , / THE REVENUE; (3) -'() / THE CIT(A); (4) -' / THE CIT, MUMBAI CITY CONCERNED; (5) )01 '2, # 2, / THE DR, ITAT, MUMBAI; (6) 14 5 / GUARD FILE. )' ' / TRUE COPY $% / BY ORDER MOHD. SALIM YASIN BELI M 6 6 / 7 , / (DY./ASSTT. REGISTRAR) # 2, / ITAT, MUMBAI